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Yuji Otsuka: I am Otsuka of OTSUKA CORPORATION, as introduced just now. Thank you very much for gathering here today despite the unstable weather, with the typhoon either approaching or perhaps moving away, it’s a bit unclear. I would like to explain with all my energy. Now, let me begin by reporting on the business results for January through June. As you can see, both consolidated and non-consolidated results exceeded the plans, with figures showing over 20% growth. For H1, this marks nearly three consecutive years of record highs. With sales up by 20% and each profit category growing by 25%, we view IT investment in IPOs as showing strong underlying strength. Although we are a company with over JPY1 trillion in consolidated revenue, just like in past years, our consolidated-to-non- consolidated ratios remain close: net sales at 1.13, operating income at 1.10, ordinary income at 1.06, and net income at 1.03. Most of these figures are close to those of the core entity, OTSUKA. Among them, the largest contributor in terms of volume is Networld, which recorded JPY88.1 billion, a 34.5% increase, showing significant growth. This amounts to a JPY22.5 billion increase, driven by strong performance in areas such as virtualization and storage, which contributed to the consolidated results. Sales and profit performance are as shown. First-half net sales totaled JPY695.1 billion, just shy of the JPY700 billion mark. This represents a 22% increase, or JPY125.4 billion in monetary terms, an increase of over JPY100 billion in H1, which is likely the first time this has occurred. Gross profit amounted to JPY128.7 billion, an increase of JPY15.4 billion, although the gross profit margin declined slightly by approximately 1.4 percentage points. This is believed to be due to the impact of special demand for PCs, including large-scale deals and licenses. Operating income was JPY49.1 billion, a 26.6% increase, or JPY10.3 billion in value. Performance is progressing steadily. Segment-wise results show similar trends. SI, [inaudible], and services and support, achieved double-digit growth. Notably, SI achieved double-digit growth for the third consecutive year. All individual items also posted increases, so we will omit the detailed explanation here, but the overall results are solid. Looking at quarterly net sales, we have now recorded 13 consecutive quarters of revenue growth and four consecutive quarters of double-digit increases, delivering a very strong performance. This increase, JPY76.5 billion YoY, marks the largest quarterly growth in our history. Ordinary income, like net sales, also posted strong results, with 13 consecutive quarters of increases and four consecutive quarters of double-digit growth, yielding significant figures. Please refer to the results for April to June, where both consolidated and non-consolidated results show increases in both revenue and profit, with all items exceeding 20%, indicating steady performance. As you can see from the five-year average trend, there has been consistent growth, and particularly in the current fiscal year, we have seen a substantial increase. In Q2, net sales increased for the fourth consecutive year, and all profit categories increased for the third consecutive year, showing a favorable growth trajectory. As for segment performance, although all segments are showing growth, some parts were [inaudible]. Within these, contracted software, supplies, and especially maintenance have shown significant growth. While SI naturally recorded significant growth, maintenance, as shown by the green line, is growing steadily in a linear fashion. This is a reassuring trend. While there are fluctuations in hardware-related business, maintenance is showing stable and consistent growth, as can be observed here. As for the breakdown by annual sales category, there has been little change. However, we have modified the presentation format starting this time. Previously, the most recent data was displayed at the top, but now the latest is shown here with the order reversed. At the same time, this also illustrates the types of customer segments we are serving. Although we have discussed this in detail at various company briefings, customers with annual sales of under JPY1 billion account for around 20% of our revenue but make up 76% of our customer base. The middle segment, those with sales between JPY1 billion and JPY10 billion, represents 25% of customers, approximately one-fourth, with a sales share of 18.54%. Large accounts, which contribute 55.68% of total sales, account for just 4.6% of customers. This is how the composition looks in terms of customer numbers. There has been no major change in the overall composition. In addition, both sales per company and the amount of increase or decrease have grown, indicating steady progress. OTSUKA does business with many small- and medium-sized enterprises. Naturally, many of these companies do not have dedicated IT professionals, and we consider it our role to provide strong foundational support for them. By industry, while there has been little change in composition, this time all industries posted sales growth, indicating positive momentum. Turning to cash flow, the format has changed slightly, but operating cash flow came to a negative JPY7.2 billion YoY. This was due in part to strong sales, which led to a sharp increase in accounts receivable and the outstanding balance of accounts receivable. Investment cash flow and financing cash flow are also shown. Financing cash flow was a positive JPY4.6 billion, of which dividends accounted for JPY4.7 billion, so this can be viewed as almost entirely reflecting dividend payments. We will continue making steady investments aimed at achieving stable growth. The equity ratio and interest-bearing debt ratio came to 51.7%. Shareholders’ equity increased by JPY32.7 billion, showing steady progress. The current ratio stood at 182%. Although we have set a target of 200% as a benchmark, this falls slightly below that level. This is primarily due to an increase in accounts receivable, which reflects strong business performance, as well as an increase in inventory in anticipation of special demand. Inventories amounted to JPY28.9 billion, and accounts receivable totaled JPY59.2 billion. Interest-bearing debt remained unchanged. Next, regarding personnel, we have now exceeded 10,000 employees. Although the YoY increase was 346 people, or 3.5%, which may appear to be a significant increase for OTSUKA, this is actually due to a revision in our internal retirement policy. Previously, the mandatory retirement age was 62. After retirement, employees could continue working up to 65 under mutual agreement between the Company and the individual, typically in a reemployment-type arrangement. However, starting this April, we changed the system to allow employees to choose to extend their retirement age to 65. Those who wish to retire at 62, for personal or health-related reasons, may still do so. We have not made 65 a mandatory retirement age across the board, but instead, employees may choose their retirement age between 62 and 65. Due to this change, 151 individuals who had previously become reemployed contract workers after reaching retirement age have now returned to employee status, with time remaining until the new 65-year retirement age. This is the main factor behind the increase in employee count this time. Excluding this factor, the growth rate would be 2%. In addition, under mutual agreement with the Company, we have introduced a system that enables employees to work until the age of 70. We intend to continue valuing our employees and will support those who are able and willing to continue working. While pension systems may change going forward, we have established a structure that allows for extended employment through mutual consent. I will touch on net sales per employee later, but this has reached a record high. Regarding strategic products, we have posted very strong figures from the Windows 10 upgrade business. There have been various reports suggesting that copiers are a thing of the past, but contrary to that impression, the copier business has shown resilience, recording a 6% increase in the January to June period and an 11.6-point increase in the April to June period. While the industry as a whole may be showing signs of slight contraction, it appears that we are capturing users from other companies. Security-related products are also progressing steadily, benefiting from both special demand and additional orders. As for Tanomail, it posted JPY111.7 billion in H1, representing a growth rate of 7.6 points, indicating a steady and solid performance. In terms of Tanomail accounts, as you can see, they increased by 4.3%, suggesting stable growth. Accordingly, our stock business, what we call the addition business consisting of supplies and contract maintenance, amounted to JPY192.1 billion for the January to June period, representing 31.1% of total sales. However, due to the boost in top-line revenue from special demand, the ratio appears slightly lower. Nevertheless, the underlying trend remains steady. As you can see, despite events such as the Lehman Shock, this area has continued to grow steadily. Although the impact of the Lehman Shock, COVID-19, and changes in accounting standards, which rendered copier-related revenue unrecognizable in some cases, may give the appearance of a decline, reversing those effects shows that growth in this segment has, in fact, remained stable. Please also refer to the copier unit growth figures. Although JEITA data has not yet been released, we recorded double-digit growth in Q2, and we believe this likely exceeds the industry average. Similarly, with regard to client devices, what we previously referred to as PCs, we have decided to revise the classification and begin referring to them as clients starting this time. This is because, in addition to GIGA-related demand, a large number of Android-based machines are also being shipped, and we cannot disregard them. The term client allows us to include all such devices, regardless of system, in our reporting. This change enables us to compare results using a consistent standard, including previous GIGA-related figures. In Q2, we achieved a substantial 40.3% increase. For the January to June period, we shipped 1.03 million units, and we believe the full-year target of 2 million units is now clearly within reach. We aim to firmly capture this demand. In this way, we have been able to achieve significant growth. As for our outlook, there are no changes to the statement shown here from previous presentations. Regarding the 7% figure, in H1, we actually achieved 7.1 points. While we have surpassed 7 points in the past, there tends to be a slight decline in H2. However, we intend to make every effort this year to maintain and exceed that level. This time, we have also provided a comparison between the previous EOS and the current EOS. While the timing differs slightly, we have compared data from the January to June period of 2019 with the January to June period of this year. While monetary figures are important, the balance between the hardware portion and the services and support portion, including after-sales support such as maintenance, has changed significantly this time, as you can see. During the previous wave of special demand, hardware sales increased, but the follow-on contributions from services and support were limited. To be honest, we were not able to fully capture that opportunity. Reflecting on that, we revised our approach under the Total Office policy, recognizing the changes in sales methods that emerged during the COVID-19 period. As a result, the impact of this round of special demand differs somewhat in terms of how the numbers are reflected compared to the previous time. Gross profit increased by 1.6 times compared to 2019, contributing more substantially to earnings. We have prepared another graph to illustrate this. Comparing the previous EOS phase, the COVID-19 period, and the current situation, you can observe growth in the services and support business and in stable growth areas. While the decline in hardware sales is more visually prominent, stock-type businesses have steadily grown, and the results of that are now beginning to emerge. Our Total Office strategy led to the formation of the MST Total Solutions Team in 2023, followed last year by the MM Division, Total Marketing Division, positioning us to connect our full range of products and services to integrated business solutions. In addition, the figure shown here is the net increase in maintenance contract acquisition value, being disclosed for the first time. As for cloud services and other areas, including the copier segment we mentioned earlier, the overall copier market is not expected to grow significantly going forward. However, within that market, copier maintenance fees have shown a slight downward trend. Although there have been public claims of 20% to 30% declines, we are not seeing drops of that magnitude; instead, the decline is occurring gradually, by a few points. To compensate for the decline in copier-related maintenance, we have been focusing more heavily on non-copier maintenance and web services. From this perspective, looking at past trends, we have made strong efforts to enhance our maintenance business, particularly in line with the timing of the EOS. For these figures, one-twelfth of the contract value is recorded monthly for one-year contracts. Compared to the Windows 7 period, maintenance-related figures have roughly doubled. Let me also briefly touch on our cloud services. Cloud-related business recorded JPY34.1 billion in H1, representing a 25.9% increase YoY. OTSUKA is often viewed as a company focused on direct sales and not particularly strong in the cloud business. While cloud still represents a portion of our overall business in terms of volume, full-year revenue for last year reached JPY57 billion. In fact, our cloud business began in 1995, when we launched internet connectivity services. In that sense, our internet business actually started a year before Yahoo! JAPAN was founded. Although the JPY57 billion figure may be hidden within the scale of the Company’s overall business, it is quite substantial in its own right. Compared with industry players like OBC, Sansan, and Cybozu, this figure is actually larger. So, while it may not stand out within the overall Company, if viewed independently, this represents a significant cloud business entity within the Company. This segment is also growing rapidly, with a 25.9-point increase, making it a very strong driver of growth. As for order intake, there has been no significant change from the previous period, but we are seeing steady growth. This is also being disclosed for the first time: sales per customer company. During the COVID-19 pandemic, our traditional sales approach no longer worked, prompting us to shift toward the Total Office concept, where we leverage our entire product and service lineup to develop comprehensive business solutions. The previous EOS period is indicated here, and you can see that by last year, our sales per customer had already surpassed that level. This indicates that growth is not being driven solely by special demand but also by other factors. Looking at the 10-year average, including periods of special demand as well as peaks and troughs during COVID-19, we have maintained an average growth rate of approximately 5 points, or 5%. We view this as the cruising speed of OTSUKA’s business. In addition to special demand, we have steadily increased maintenance and expanded services by engaging with a wide range of customers. This engine for growth is embedded within OTSUKA. Even after a wave of special demand ends, there may be some decline or fluctuations, but we possess the internal engine to continue growing. I would like to reassure you of that, and we intend to continue pushing forward. Regarding the Total Office concept, upon researching both domestically and internationally, I found that, unfortunately, no other company offers a business model that handles this entire range of products and services. In that sense, this is a globally rare business style. In the 1990s, there was a tool called Lotus Notes. At that time, while we were working with Microsoft, we were also the number one dealer of Lotus. At the same time, we were also the number one dealer for Microsoft Exchange. However, this kind of dual positioning was difficult for people at the US headquarters to understand. They would say, “There’s no way a company handling Lotus could also be the top dealer for Exchange.” In overseas markets, many SI firms tend to be relatively small, so the idea of a company handling an entire range of products and simultaneously being the top dealer for each vendor is probably difficult for them to imagine. Although this model may be hard to grasp and has no real equivalent globally, I wanted to take this opportunity to clearly explain that we handle everything, from sales to support, entirely in-house. At present, many of our customers only purchase PCs or use Tanomail. For those customers, we aim to add more tools and offerings. As you can see, an office, regardless of size, requires a variety of products, and just listing a few off the top of my head, there are easily more than a dozen necessary items. But if another company only provides email services, then that customer is sourcing the rest of their needs from other vendors. We see this as a significant business opportunity going forward for our company. In that sense, we looked into how large the overall potential market, the automatic park, so to speak, might be. Office supplies account for roughly JPY10 trillion, system development about JPY13 trillion, and while the AI business is still small at around JPY1 trillion, it may in fact be larger. Based on various reference materials from other companies and industry sources, we estimate that the total market size could be around JPY50 trillion. These estimates are based on data from various industry organizations, so we have prepared them with a reasonable basis. Within that context, our own business has just surpassed JPY1 trillion, which suggests there is still considerable market potential, what we refer to as the park. In the diagram shown earlier, we use the term O1 to refer to customers who only use Tanomail or only purchase PCs from us. The O stands for OTSUKA, and the 1 signifies that they are using only one of our services. Unfortunately, these O1 customers still account for just over two-thirds of our customer base. That means the remainder of their purchases are going to other companies, which implies that the untapped market, or park, remains vast. I would also like to touch on what we call Grand Strategy II, which I have explained several times in the past. This represents the background behind the direction OTSUKA is heading. Let me briefly revisit it today. In 2007, 18 years ago, the price of copy paper was raised for the first time. We decided to notify Tanomail customers and others about this price increase. At the time, we felt confident because we had a real sales force and support structure in place. However, we were only able to directly speak to about 56,000 companies. The remaining 150,000 customers had to be informed by postcard. Honestly, we had thought OTSUKA was secure because we owned the last mile. But this experience made it clear that we were not as secure as we believed. There were many customers we could not reach through sales and support alone. This realization led to the question of how we, as a company, should respond. With that in mind and aiming to establish a new kind of relationship with our customers, we launched the Grand Strategy II project in 2007, 18 years ago. While the traditional real channel remained in place, the core idea of the strategy was to utilize our central operations and web platform to more effectively gain customer control as a company. Let me explain this initiative in more detail. This is the Customer My Page, a dedicated portal site tailored for each customer. We currently have 30,000 user IDs registered across 430,000 companies. With 300,000 companies actively using the site annually, we have reached a level where a significant portion of our customer base is now covered through this platform. For each customer, we are experimenting with using AI to determine how and what to present, based on the customer’s behavior and profile. Although we are still in the trial and tuning phase, monitoring customer reactions and refining the system accordingly, we are providing tailored information through this portal. For example, customers may receive suggestions such as trying a particular app, participating in a certain e-learning program, or accessing it free of charge. The portal also allows customers to register for various seminars directly from the interface. In that sense, until now, the main points of contact with customers were our sales and support teams. But going forward, we aim to establish another face of OTSUKA that connects directly with customers. In fact, we have compared customers who are registered on My Page with those who are not. Naturally, over time, some customer relationships tend to drop off, but when we analyze the drop-off rates, there is a clear difference between the two groups. There are customers whom neither sales nor support can consistently reach, those who risk being neglected. Through My Page, we want to continue providing such customers with information directly from the Company, thereby maintaining and strengthening those relationships. This is one of the core concepts of Customer My Page and Grand Strategy II, creating new relationships with customers. It is about the Company taking the initiative to stay connected with our customers. We offer free e-learning content, helpful articles for companies struggling with labor shortages, and trial menus, all designed to provide support in various forms. If deeper discussions are needed, the system can escalate and bridge the customer to the appropriate higher-level contact. My Page is now entering a stage where it is beginning to be fully operational. And moving on, as we have shown in the past, we are also making progress in the area of sales support through tools such as the iPhone. Based on the use of iPhones, customer information is integrated into the system. This initiative began in 2019. The system provides information about the day’s appointments and destinations, reminding the salesperson, for example, “You need to visit that client today.” It also allows voice interaction through the smartphone, enabling the creation of quotations on behalf of the user. In addition, the system helps prepare templates for daily reports, thereby reducing clerical work after returning to the office. There are also recommendation functions, suggestions on what products or services to propose, linked with SPR. In this way, each salesperson is supported by this assistant tool, functioning like a personal secretary, creating an environment where they can receive various forms of assistance. This initiative has indeed contributed to improving productivity. Accordingly, here is our usual report on net sales and operating income per employee. We are comparing results for the January to June period, and both net sales and operating income have reached record-high levels, as shown in the presentation booklet. The Company has 8,366 non-consolidated employees, marking a 3.7-point increase. Net sales per employee for the half-year stood at JPY73.76 million, showing strong growth of 15.4% YoY. Operating income per employee also rose significantly to JPY5.32 million, a 22% increase YoY. We have been making internal IT investments and steadily implementing the kinds of systems I mentioned earlier. While we have not yet reached the final stage, we will continue making efforts to further improve productivity as part of our ongoing growth. Now, turning to sales and profit plans, we have revised our forecasts upward to reflect the overperformance in H1. This is in line with what we typically do. We have raised our full-year forecast by JPY48 billion in net sales, representing a 13.8% increase, and by JPY3.9 billion in operating income, or 15.9%. As you can see, this period also benefited from special demand. For reference, during the Windows 7 EOS, our sales were around JPY600 billion. Now, for Windows 10, we are looking at JPY1.2 trillion. Compared to 2014, just over 10 years ago, our sales have effectively doubled. In that sense, it is not simply that special demand alone is driving growth, we are seeing steady expansion even after that temporary boost. This is the path we are currently following. Of course, when the peak is high, a valley tends to follow. We will do our utmost to minimize any such valleys and continue striving into the next fiscal year. At the same time, we aim to further raise our performance this fiscal year through the dedicated efforts of all employees. As for dividends, which our shareholders highly anticipate, we will be implementing our first-ever interim dividend. The scheduled payment date for the interim dividend is set for September 3. The interim dividend is set at JPY45, and the year-end dividend is currently projected at JPY40. However, depending on our business performance going forward, if we are able to significantly exceed our targets, we will consider increasing the year-end dividend as well. That said, this remains hypothetical at this stage, so we will continue to do our utmost to achieve strong results and aim to deliver even greater returns to our shareholders. Compared to the 2019 EOS, our services and support business has expanded significantly and now serves as a stable earnings foundation. In terms of quarterly sales, we have consistently recorded an average growth of around 5%. Taking into account the strength of our Total Office business model and the size of the addressable market, or park, a growth rate of about 5 points could be considered our cruising speed, in a sense separate from the impact of special demand. As explained earlier, we estimate our total addressable market size to be around JPY50 trillion, and I believe there remains considerable room for growth. We have worked hard throughout H1, and now, as we head into the summer season, this is when the final surge of special demand from small- and medium-sized enterprises will [inaudible] begin in earnest. In addition, by building businesses that lead to ongoing support and maintenance, we aim to achieve stable growth beyond this fiscal year as well. While it’s difficult to say definitively what will happen simply because we are coming off a high peak, I want to emphasize that OTSUKA is not a company that grows solely on the back of special demand. That said, we will continue to firmly capture such opportunities when they arise. As President, I would like to take this opportunity to reaffirm this commitment to our shareholders. Thank you very much for your attention. [END]