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Shohei Yoshida: We'd now like to start the analyst meeting of INPEX Corporation. Thank you very much for gathering today despite your busy schedule. My name is Yoshida. I'm from the Corporate Communications and IR unit, and I'll be serving as the MC for the meeting today. So please allow me to introduce the speakers today. We have Mr. Takayuki Ueda, Representative Director, President and CEO; we have Mr. Takimoto Toshiaki, a Director, Senior Executive Vice President, Corporate Strategy Planning; we have Daisuke Yamada, Director, Senior Managing Executive Officer, Senior Vice President in Financial Accounting. So we'll spend about 35 minutes for the presentation, and we'll spend about 25 minutes for the Q&A session, 60 minute in total. Today's meeting is going to be a hybrid meeting with online participants as well with simultaneous interpretation between Japanese and English. [Operator Instructions] Mr. Ueda will talk about the business overview to start with. And Mr. Yamada will describe the consolidated financial results for the fiscal year ended December 2025 and our forecast for the year ending December 2026. And Mr. Takimoto will give a progress update for the sustainable growth of the corporate value. So Mr. Ueda will start now.
Takayuki Ueda: Thank you, everyone, for gathering despite the busy schedule today. And for those people participating online as well. Thank you very much. And today, I would like to explain about the financial results as well as the forecast for this fiscal year. So to begin with, the results for fiscal year 2025. As you are well aware, our result for 2025 was a net profit of JPY 393.8 billion. But if we adjust for the oil price and foreign exchange rate, what is the number? So that is what we have announced. So on an absolute basis to JPY 393.8 billion, which is the third highest on record. But in 2025, $68 an average the oil price, JPY 149 was the exchange rate on average. And so if we actually do the calculation, and in terms of an absolute number, we we're third highest on history. But if we adjust for oil price and foreign exchange rate, the number for 2025 is the best on record. Of course, we are affected by the external factors, and we don't intend to talk just based on those numbers. But I think we have developed ability to generate earnings. And the share price has continued to increase recently as well, [ your area ]. But we are often asked about our share price. Now for myself, and the fact that the share price has increased is probably the great understanding of investors in our company. And so I'm very appreciative of that to begin with. But the PBR is now nearing 1x as well. But if we compare ourselves against many companies in Japan, for example, the Prime in the Tokyo Stock Exchange, so there are some 86 companies. And so, PBR, on average of 3.8x. Exxon or Shell, the peers on a global basis, the [ PB ] ratio is around 2x. It's at 2.10x, which I think is the average. So the oil and gas companies in Japan, if you look at the PB ratio, 1.3x to 1.4x, I think, is the general level if we take that into consideration for myself, the share price has increased quite significantly. I'm very appreciative of that. But our financial basis, our growth strategy, our shareholder return, if you look at the details, I think we certainly are not second to others. And despite the high level of increase, it's still not a very high level. We feel that we are kind of, I suppose, discounted to, I suppose, peers in that regard. So this is the highlight for this year. So if we just pick up on the numbers, as I said, for the dividend, JPY 100 for the year. So the total shareholder return ratio is 55.4%. And so -- and we have made somewhat of a conservative outlook for the oil price and for the foreign exchange rate, but we're expecting about JPY 330 billion of profit for this fiscal year. We'll talk about this in more detail later on. You may think that this is somewhat low, but I will come back to explain about that later. For dividend, what we are assuming for now, annual dividend of JPY 108 per share and total share return ratio of more than 50%, which is our commitment. So we will make sure that we will stick to that. And so based on our forecast at this point in time, we are expecting to pay JPY 108 per share for the dividend. But let me just talk about the external environment a little and I'll go to the next page. In this page is the one-page description of the changes in an external environment even before the Ukraine war, the oil and gas related external environment for us has changed. And I think we're going through 3 different stages. So before the Ukraine war, many companies were really focusing on energy transition. So a rapid transition towards clean energy including renewable energy, and there were growing concerns over stranded assets associated fossil fuels. And so when we were speaking with investors, they were saying when are we going to leave from fossil fuel, what will happen if they become a stranded asset? But we are saying that oil and gas will not disappear immediately and renewable energy or clean energy, we will make challenges to all those areas as well, but we're still very much focused on doing the oil and gas business as well. So that was the year that we were in for a while. Then after the start of the Ukraine War, the energy security became more important, the stable supply became more important. So great emphasis on security and affordability, the appropriate volume at appropriate pricing was what people had wanted. So not just all decarbonization, but the balance needs to be struck with energy security and that was the new, I suppose, the viewpoint on a global basis after the start of the war. But what is the situation more recently. Energy addition is the recent -- the popular word, so the demand for primary energy is expected to increase by about 30% from the current level to 2050. This is mainly due to electricity, AI or data center has generated a greater demand for energy. In fact, the energy consumption will increase going forward. So on a global basis, will increase. So in that regard, clean energy centered around renewable energy continues to be important. We want to work on that, but that will not be enough. And so how are we going to address the energy addition? How are we going to accommodate that from the supply side? And this is probably the global energy the transition that we've seen over the past year to 1.5 years. So from energy transition to striking the balance between energy security and now energy addition, and so that was 4 or 5 years with the Ukraine war, the recognition regarding energy around the world has changed significantly. So that was a point that I wanted to mention. So that being the case, and if we look at the various forecast right now, and this is IEA and also IEEJ so how would the things change towards 2050 in regards to the energy. Oil may reach a peak somewhere, but the plateau situation is likely to continue for some time. Natural gas, you can see the demand here. So it will continue to increase towards 2040, 2050. Coal will come down, renewable energy will increase. I think this is the expected situation. So natural gas our main products. So let's focus on this a little bit more. So right now, the LNG demand on a global basis, and was about 400 million tonnes per year, so right now and what is going to -- this is going to reach 600 million tonnes in 2030, then 700 million tonnes in 2035 and even up to 800 million tonnes in the future. So more than double the current level. So where would the demand come from? And please look at the map on the right, and it's quite evident. It's quite clear. It's Asia, we will see a significant growth in demand with a shortage of the supply. This is what is expected in 2035. In the United States, Europe, Indian, the Pacific Ocean, we will see increases in demand, but we'll see greater growth in the supply. So if we look at the energy balance around the world, where we will see shortage is Asia. So LNG demand until 2040, 2050 will continue to increase in a straight manner and what -- we will see shortage in Asia. So how we to supply natural gas in Asia? This is the main issue for the energy industry. So this is the basis of our strategy at INPEX. This is the key point. So going to the next page. So I've been talking about the total picture. But talking about this year for Ichthys, this year, we have 112 cargo shipments and the production. We had a shutdown in 2025, and there was some delay in the restart up. But overall, compared to the initial plan, it was close to the initial plan at 112 cargo. And the profit contribution was about JPY 270 billion. And for 2026, what are the views and it's kind of hard to understand. But because of the BCM start-up, so talking about this product, Ichthys, the more you produce, we will be extracting from the basement, and there will be less pressure under the ground and with the lower pressure in order to have a long-term stability in the production, there are about 5,000 tonnes or a booster compressor where the compressor will be used for -- to connect to the CPF, the offshore CPF. And that went well. But in 2026, we don't have a shutdown maintenance, but this booster compressor will have commissioning. And in that process, there will be some stop of the facility. So the production will not be fully recovered. Therefore, it's not like we will have a large recovery in production. More -- compared to this year, there will be increase, but there are about 10 cargoes in a year. And then for the future backfill and the Train 3 expansion for the new asset acquisition, we are working various activities today. And at this moment, it's still hard to mention the details at this moment. However, at some point in time, we hope we can disclose. For Abadi, we had a large production in last year. In August of 2025, we had moved to FEED. And today, the FEED work, which is a basic design that is working steadily today at this moment. And by end of this year, some cost estimate will be clear and marketing as well as financing is the activity we have started. For marketing, from many potential customers, we already have discussions. At this moment, as mentioned at the beginning, the Asian LNG is very precious. And many from America and from Qatar, there are many LNG. But from Asia, there's not so many LNG coming out of the region. So the Asia-produced LNG will not have any homes straight issue and the distance of the ship transportation is short. Therefore, there are a lot of popularity and when it comes to the final binding agreement, we're not able to sign those contracts yet. Wherever there's a lot of needs and we're able to have a good marketing activities. So going forward, as we go into the FID, I would like to go into a more detailed condition negotiations. And then for the financing. Looking at the recent situation in the global market. For the natural gas, the bank and the finance situation is welcoming more than in the past, and that is working well at the same time. And for the permits, we are going to receive shortly, the permits. And for Abadi today, various challenges are still what we are facing, but we are having a steady progress in those activities. And then for Abu Dhabi, unfortunately, UAE actually a president passed away, and we cannot really communicate well. But the production increase in Abu Dhabi is what we are working on today. Between us and Abu Dhabi, Abu Dhabi as a country, 4 million to 5 million BT or, in some cases, 6 million BT is going to be planed, and we are going to make investments. 2026 investment is large and the biggest reason is Abu Dhabi increasing the capacity. So these are the reasons where we will be increasing production and profit will also be increased. And then outside of that, we have Norway, Indonesia and Malaysia, various activities are in place today. Next page, please. And then the so-called clean energy, the blue hydrogen area. As you know, in Niigata last year in November, we had the demonstration project for the blue hydrogen in Niigata, Kashiwazaki, we had an opening ceremony in November last year. And the natural gas -- domestic natural gas will be used for the blue hydrogen production and also the CO2, which is the byproduct in that process. The gas field in the Higashi-Nagasaki area is using the CCS technology will be storing those gas and then that is the CCS activities we are planning. And then we have methanation, the e-methane facility together with Osaka Gas, we have the construction in place in Nagaoka today, and we also started the commissioning. For the renewable energy, as a whole Japan is still in a difficult situation. However, we have the Potentia Energy which is the European company called Enel, and it's a subsidiary of Enel, but we have a 50-50 joint venture in Australia and through this we have this renewable energy investment in Australia. And this is 838 megawatts of production energy generation based on our stake in the project. And then for Indonesia, we have the Muara Laboh geothermal project. And for the expansion, we have the FID. And then also in the Goto -- offshore Goto of Nagasaki Prefecture, we have the first-in-kind in Japan, the floating offshore wind farm. And we are also participating in that project. And then for the electricity side, we have the collaboration with the Hokuriku electricity that we signed the comprehensive contract last year, and we are working on those projects as well. And for 2026, for the profit, as mentioned, we are JPY 330 billion targeting that amount for this fiscal year. And then the Brent is $63 and JPY 151 to a dollar. And both for the oil and the forest, there are a lot of discussions. But today, the oil price is at -- just less than $70 on the Brent. And compared to that, it's quite conservative. But many consultants are saying that today or this year, there will be some supply -- oversupply situation. So considering all of the situation, it's $63 in the assumption, I think it might be slightly conservative, and that's my view. And if you look at the ForEx, it's JPY 151, so it's also difficult to explain. But it's JPY 330 billion per year. But if we are to make adjustments on ForEx in the oil price, JPY 151 and $63 of oil price. If we make adjustment based on next year, and then the one-off, if you exclude the one-offs, and then making adjustments on the oil price in ForEx. If we exclude this one-off profit, the core profit is, let's say, JPY 330 million is JPY 315 million for this year. And then the oil price may go down. So it will be JPY 312.3 billion. So it's mostly the same level as 2025. And the forecast of JPY 330 billion is not so high. So you might say it's too low. However, looking at the current oil price situation, we think we can have this level of profit, and that's the estimate today. For the dividend, we have JPY 108. And also with the profit going down to JPY 330 billion, why we are still increasing dividend? That might be another question. But my view or our view is INPEX' growth basically is still high. We still have a high level of growth with a sound financial situation, and we have a good steady progress in the project, and we have Abadi. However, this year, we are going to -- we have a lot of investment amount, I think you have seen this year for 2025, overall, they were about JPY 400 billion in total. Next fiscal year, we are good to have double to JPY 850 billion or so of investment. And part of that is pushed out from last year to this year. But these investments will be long term for Abadi. But before Abadi in the mid- to short term, we have the existing assets or the acquisition of assets -- production assets and there will be, for the meantime, growth for the meantime, and that's why we have JPY 850 billion. And then for these investments, we have a high accuracy in these investments. So we think that with this investment, we can have a growth in index. So for the dividend, we are having the same view as before, so we are going to have a growth, and then we will be returning -- rewarding our shareholders. And for the profit, because of the oil price, we have JPY 330 billion of profit forecast. But in the mid- to long-term perspective, for the growth of our company. From that direction, there is no change in our views. Therefore, based on that, we will have cash flow and profit also depends on the external environment, but the mid- to long-term growth is still going to happen and we have that confidence. And for the market, the JPY 330 billion is the forecast we have for this year. But just like I mentioned, we have confidence, and we would like to reward our shareholders the outcome of those growth. So that's why we have JPY 108 of dividend for this fiscal year as a forecast. So that's all for me. Thank you.
Shohei Yoshida: So next, Mr. Yamada will provide the explanation.
Daisuke Yamada: So last fiscal year, for the year ended December 25, I'm supposed to operate the slide myself. So as the CEO has explained, net profit for last fiscal year was at JPY 393.8 billion or so. So it's a decrease but the oil price has come down, then we had the Ichthys shutdown maintenance. And so there were significant factors to push down the profit level, but we have the profit booster or the balance sheet control or we had a significant return of the income tax. And so we ended up with this number of JPY 393.8 billion. So how are we going to assess this? Well, at the oil price in the $60 level and almost JPY 400 billion of profit. And so we have -- this is a proof that we are now able to generate earnings. And as the CEO has explained, if we adjust for oil price and foreign exchange rate, this would be the highest record in history. So we do consider this very positively. This is the analysis of the revenue and profit. And so you can see crude oil at the top and the natural gas below. The crude oil sales volume increase, mainly due to Abu Dhabi and so in terms of unit price, it came down significantly because of the rate coming down. And so the operating -- the profit did actually come down. But for natural gas, the sales volume come down. This was due to the Ichthys shutdown. And for the unit price is linked to Brent down. And so in -- so we saw a decrease here for the natural gas as well. They are more than JPY 4,000. So last year was JPY 393.8 billion. If this is the previous year, it was JPY 427.3 billion, a decrease of JPY 33.5 billion because this is the decrease in the revenue that was due to the oil price and exploration expenses last year, we did not have a successful exploration in Australia last year. So that kind of came back and the divestment on the far right. Now last year, in Southeast Asia, we had earnings from the divestiture. And so these are kind of the comparison against the previous fiscal year. And for this fiscal year, the revenue come down and also exist downstream. And this also links to the oil price, and so this came down in terms of the Shell profit investment account of an equity method but we saw the JPY 153.8 billion positive impact in terms of income tax expenses. And so here -- and that is actually included in the others as well, but the profit booster. And so this is the recycling or the investment the benefit in Europe and the Middle East growth, JPY 80 billion in delta, it was about JPY 60 billion. And so this is essentially balance sheet control. So about JPY 80 billion of these earnings are accounted for by that, which is one of the key earning pillars for us. So the forecast for this fiscal year, JPY 330 billion is what we have placed and so $63 for the Brent price and JPY 151 to dollar. So I may think this is somewhat conservative. Some of you may be aware, but last year, too, so we started with the forecast for the fiscal year at JPY 330 billion. And so the oil price was $75 that we have assumed. But if we look at the end, it was $68. So it was $7 less in terms of the oil price, but we still ended up with where we were. And so about JPY 40 billion to decrease against the start of the last fiscal year and essentially came up with this number of JPY 393.8 billion last fiscal year. So it's not going to be in parallel to what we did last year, but we have a greater ability to generate earnings right now. And as you know, if you look at our balance sheet, we have quite a large amount of fixed asset and we have the financial -- the unrealized gains or losses included. So things that we can do now and can do now, we have those, the profit, booster thing, but we can't include all of that at the budget at the start of the fiscal year. And so you kind of go through the year to turn those into actual earnings. So JPY 330 billion is kind of a kind of starting point in that regard. And these are the factors analysis, and the biggest is the oil price. But in the middle, you have the Ichthys, please have a look at this. So Ichthys, JPY 4.9 billion of increase and there is some up and down in this number. So last year, shutdown impact occurred. So we had about drop of JPY 60 billion or so in the sales volume, but that has recovered. So that is an increase of JPY 60 billion. But on the other hand, as explained by our CEO, we have the booster compressor module connection. And by having this, there will be some drop in the utilization. And then we also have the oil tax. Last year, it was only a 6-month effect but this year, it will be a full year impact. So about JPY 16 billion of decline in profits, and including that, it's plus JPY 4.9 billion. And then for the profit booster next year -- for this year, CEO [ recycling ] about JPY 90 billion. And in Delta, these are the numbers. So that profit, in total, will be JPY 330 billion. So I might be repeating myself, but these are just a kind of a number we have for this interim. And then for the sensitivity of the oil and ForEx so it's JPY 5.5 billion for the oil price and the JPY 3 billion for the ForEx. And then next is the investment. So the cash flow before investment or exploration is shown. But this year, for the growth investment, JPY 850 billion is a large investment we're expecting this year. Last year was JPY 386 million but we have about JPY 463 billion of increase, which is for the pillar number 1, which is mainly around oil and gas for the investment. And as you know, Abadi, before going to Abadi, how much we're going to -- how we're going to generate profit is the question. I think there were some questions. But having these investments from the late 20s to early 30s, we'll have the outcome from these investments. So we'll be focusing on investment this year. However, this JPY 850 billion is a large amount. But if you look at the bottom left, in the midterm, we had the plan -- intermittent plan in '25 was JPY 380 billion, but this year is this amount. So it might be a large amount, but it's a 25% over the 2-year period. So it's a run rate -- based on the run rate. And as you can see, this is the overall breakdown of the JPY 850 billion. So the blue, the dark blue is the Abadi investments. And then the exploration as well as the increase in capacity. So for the Abadi -- Abu Dhabi is an investment. And then the new investment, we cannot mention the detail here yet, but the acquisition of interest and the core area, mainly Australia, Indonesia, Asia, Norway, Japan will be investment -- making these investments overall. And then ROIC, unfortunately, will be some decline this year. It was 7.3% last year, but it's going to go down to 6% or so. And ROE, although it's not stated here, we have about 7% this year. And I'm sure there are [ various views ]. But in terms of the total equity being so large. So if you work on that, it might increase the ROE. But we are not going to lower the equity by lowering the total amount by buyback. We are not thinking of that at this moment, but we have a trustee borrowing, the corporate finance and depending on the credibility of our company, we have to do financing. And considering that, we have to have a certain amount of equity and there might be different views from the creditors compared to the investors. But from the creditor standpoint, we should have a certain amount of equity or else it will be difficult to finance. So we have to maintain a certain amount for the financing standpoint. So that's all for me. Thank you very much.
Toshiaki Takimoto: So please allow me to explain about sustainable growth of our corporate value. And in March 2023, the Tokyo Stock Exchange has made a request that we need to work on realizing the management of the company in view of the share price as well as the efficiency. So we were working on that and so I'd like to talk about the -- what we've done last year as well what we will be doing this fiscal year. So next slide, please. So what you can see on this slide is looking at the transition in the share price and the PB ratio. Dark blue is the PB ratio, green is the share price. And at the end of 2022, our share price was JPY 1,396, and that 0.48x was the PB ratio by at the end of last fiscal year. Our share price was JPY 3,127 and PB ratio of 0.77x. And -- so based on the share price, we were at JPY 3,998, so 0.98x, it was where we were at as of today. So as you can see here, and the reason behind why PB ratio increased. And so we have some ongoing initiatives as well as changes in external environment. So first of all, so we have been strengthening shareholder returns and dialogue with investors. We have also worked on enhancing capital efficiency. But above all, there's been significant change in external environment, particularly the natural gas and LNG importance has been revisited and that has now been recognized by the market and our core business, the natural gas LNG business, the importance thereof has led the share price to increase, which has led to improvement in the PB ratio. Next slide, please. So here, we are talking about enhancement of capital efficiency as well as building confidence in our future growth. And as we have been explaining so far, in the early 2030s, the start of Abadi, and that is the significant expectation for our next large growth but from August last year, as you can see on the slide, we have entered into the FEED phase for Abadi. So now we are nearing the start of development for Abadi. I think the market has recognized that. And in the early 2030s, when we start the Abadi production, in the meantime, what type of growth the story can we paint? And that is the more immediate issue for us. And when we speak with investors, then -- of course, performance is not bad. Shareholder returns is not bad as well. And that is a comment that we receive from investors and for IR meeting and the investors have expressed their satisfaction. But the growth story, until we start production from Abadi, how are we going to come up with that? And that may be the only maybe the issue that we need to address. And so acquiring new assets by working on these in a concrete manner, we want to be able to build that competence in the market in regards to our future growth. And we need to also enhance the earnings base. So we will continue -- we are continuing steady production increases in regards to our project in Europe and Middle East and also enhancing our profit base through a profit booster 500. We intend to lift our ROE by some 1% over the next decade. I think we have the ability to do that. And if you look at the graph on the right, and Abadi investment is likely to increase [indiscernible] from 2028 into the early 2030s. But even in that period, we still are able to invest for growth as well as make returns to the shareholders. And of course, debt will increase somewhat. But the net debt-to-equity ratio should be controlled within 0.3x to 0.8x and are able to do both the investment for growth as well as making returns to the shareholders. So that is what the graph on the right show. So the growth investment, we talked earlier for a single year of investment from Yamada-san, but the midterm vision that we announced last year, and we have a 3-year investment plan, which is JPY 1.9 trillion. And growth number 1 -- growth pillar #1, we have the natural gas and LNG investment, especially and there will be, over 3 years, the amount to JPY 855 billion over 3 period and then we have the Abadi exploration expansion, new asset acquisition, JPY 938 billion for growth pillar #1 as well. And then for growth pillar 1 investment, a JPY 1.9 billion and then 2 and 3 are shown. These are the amount for investment for growth pillar #2, #3. So in the vision, as we set the target, the operating cash flow, a 60% increase or the increase of the business is what we like to achieve going forward. Next slide, please. And on the left-hand side, you have the shareholder return and also increase in our dialogue with our shareholders. On the left-hand side, the blue line is the share price trend from 2020 and onwards. In the gray line is the Brent oil price trend over the 5 or 6 years. As you can see, in 2024 from the latter half of that year to the early 2025, and since then, just like an increase in the allocator space, the oil price is going down, but the stock price is going up. So one of the factors is in 2022 onwards, we have started to do a shareholder return of more than JPY 200 billion. And as mentioned before, about the business environment change, practically reducing GHG and furthermore, having energy security as well as affordability of energy. And those are the -- coming from natural gas and LNG and there's more importance of these resources. Therefore, that's the main reason why we have been accepted, we believe. And of course, we don't think that's the only factor. But for the retail investors as well compared to 2019, there is an increase by 17x. So we think that it might be a difference in our credibility and also the fact that we are able to have a frequent dialogue with our investors and explain about the business versus the expectation from the market. We think there is more deepened understanding towards our business and operations. With PBR, 1x, we cannot be satisfied and that was explained from our President and CEO. But with that in mind, we would like to have awareness of these capital costs going forward. The right-hand side, the increase in the dialogue with our investors. Last year, we had 495 dialogues or interviews with our investors and analysts. By this, as you can see on the bottom right, the various initiatives as an example, from our dialogue, there are about 6 or 7 items. So these are the initiatives that we have also been evaluated for our investors. And as explained we have JPY 3,900 or so share price today. So with this, we have been evaluated, and we think that our understanding of our business as well as the support to our business has increased. So I'd like to have these initiatives continued, so that the stock price and also the capital cost will be in our mind through our operation. So that's all for my presentation.
Shohei Yoshida: We will now like to receive questions. We will receive questions from this venue first. Then after that, we will receive questions from Zoom. [Operator Instructions] So I'd like to invite questions from the floor.
Unknown Analyst: Okay. So I have two questions. The first question is to do with the core earnings, JPY 330 billion. The analysis that you have explained. This was something that we've learned for the very first time. So based on JPY 330 billion. And on Page 16 today, and based on JPY 330 billion, ROE, 7%, the ROIC of 6.0%. Now your ROE medium-term target I don't think you have the quantitative number, but to be more than the equity cost tend to be in excess of WACC. I think that is how we have explained. Now on Page 16, you actually did show WACC and the sales equity cost, the 8% and 6%, respectively. So based on the core earnings, the shareholders' capital, the cost, this is lower. And so for ROIC as well, unfortunately 6% -- WACC 6%, and the conclusion is that you have not generated corporate value. And so based on core earnings, ROE to be more than 8%. So we are right through the midterm data plan right now. Now can that be realized before Abadi starts generating earnings? So that's the first question. And the second question is in regards to the free cash flow. Now last fiscal year, you explained about the investment amount. But in terms of investment cash flow, free cash flow was more or less neutral or -- and this fiscal year, the free cash flow because we are going to be increasing investment, so likely to be slightly positive or even negative. But -- so if we define the investment cash flow has been the free cash flow last year to this year, what are the changes? So that's my second question.
Daisuke Yamada: So I will start. So the CEO has explained about the core earnings. And let me explain the logic behind that, and I think that was described on Page 10. So the core earnings is something that we have shared with you for the very first time and JPY 330 billion for this fiscal year, we wanted to say that this is not a bad number. So we ended up with JPY 393.8 billion last year, but the oil price and the exchange rate for this fiscal year, $63 and JPY 151. So if we actually modify to that. And if we exclude for the one-off earnings last year. So if we exclude that, then we end up with JPY 312.3 billion, the JPY 330 billion this fiscal year. And so the oil price and exchange as I say, if you exclude for the one-off number, we end up JPY 315.2 billion. So you may look as though the earnings has come down, but the core earnings itself hasn't really changed. That is what we wanted to communicate through this number. ROE and ROIC. Now we are not using the core earnings as the basis. So we are using net profit for that. And of course, one-off earnings, so that it would be positive or negative from year-to-year and the ROE, the ROIC is calculated based on that. And as we have indicated, and the JPY 330 billion for this fiscal year, ROE is 7%, and what we are calculating, so 8% for the equity costs will fall short of that. ROIC too, we now disclose this number. For this fiscal year, based on JPY 330 billion, we will be at 6% which is more or less the WACC level. So based on these numbers, we are not responding to your expectations. But the JPY 330 billion is budgeted at the fiscal year. So that's the performance at the start of the year. But like with last fiscal year, throughout the fiscal year, and there are a number of things we have in mind, but not something that we can share with you at this point in time, but we started with JPY 350 billion. But we'll give a full year forecast in May or [indiscernible] later in the year as well, and we hope to be able to increase that for our ROE and ROIC at those stages. We're hopeful of those numbers increasing. We need to give it a go, but that's the reasoning behind this number. For the free cash flow, maybe we should go to the investment page, which was this page. So the December 2025, this is cash flow before exploration and investment cash flow, if there is a difference. This is more than JPY 130 billion, so positive. So we had that much of free cash flow, which was quite a steady number, but we were actually making profit. So based on this budget, investment is JPY 850 billion. So that's the investment. And so free cash flow will be negative. In other words, so we are investing more than the operating cash flow. And so unless we raise money, we will not be able to fund investment free cash flow is negative for the first time since March 2019. So we have been making returns to shareholders based on our own cash. But this year, we are going to make a large investment. And so 50% of return, that means that we need to do JPY 156 billion, so we need to raise some money. So free cash flow becoming negative as to whether this is going to be a major issue for our management, not really. And so we will raise funds for the investment. So we raised debt, and I think that's quite healthy. But the key is the financial discipline in doing. So I didn't touch this before, we want to invest this year even if we actually raise some debt. The net ratio will still be at 0.39x. And we are saying that the financial discipline is between 0.3x and 0.5x. So we are going to raise debt to the investor. And we feel that this is not going to be a financial, I suppose, issue. So I'm looking forward to the additions to the core earnings.
Yoshihiro Wakita: So I'd like to ask two questions. So number one, this time, the investment plan compared to last year, there will be an increase -- significant increase compared to last year. So as shown on Page 20, looking at these investments, the existing project investment to increase capacity, Abu Dhabi and the Middle East. You mentioned about the increase in the production capacity. But if you can talk more in detail about the content of those investments and also the profit contribution, I think this is for the growth before Abadi. So I think for these existing projects, investment. You can -- if you can talk about the time frame as well as the maybe not so much in size, it might be difficult, equity IRR, in the mid-10% range, whether that is still the case. And in terms of the time line and also what kind of content of investment and how much contribution from the profit side will be made in the time frame. So it's a Middle East project. So I'm sure it's difficult, but if you can maybe give us more details on that. That's number one. And then the second question is regarding the Abadi project, the FEED started from summer last year in a full scale. And by end of this year, is there any expected milestone for this project in this fiscal year? So in 2027, that is the target year. But in '26 -- between the year '26 with the Indonesian government, is there any timing for negotiations or any milestone of such or with the lender, if there's any agreement or any timing for agreement? So in 2026, is there any milestone related to Abadi? If you can explain what is the expected milestone for this fiscal year.
Daisuke Yamada: So I'd like to explain first. For that investment question, JPY 850 billion of investments. So these are quite a significant number in the past several years. But Abadi exploration and increase capacity as well as the new investment. So Abadi is the investment for Abadi, and then exploration is as you can see. But expansion of existing assets, these are the investment for the increase in capacity of existing assets. For example, Abu Dhabi increase in the production, we have investment there. And then when it comes to new asset acquisition, these are acquiring new interests or M&A might also be included but these are the type of investments. So for the increase or expansion of the existing assets, we have JPY 282 billion and the new asset acquisition, JPY 106 billion. So in terms of the area, we have the Australia or Perth or Ichthys, the connection or tie-in investment. And then the growth area, which is Asia, in Abu Dhabi or Japan. The oil and gas mainly where we have quite a diversified investments. And then when it comes to exploration, it will take some time for these investments. And we cannot give details around the number of projects. But quite a quick area of investment we also are expecting this year and next year, where we can generate profit quickly from such investments. Those are expected as well. And for these investments. Cash flow actually tends to go up and down. But in 2030, early 2030s with JPY 850 billion times 10%, they'll be up and down, of course, but that's the amount that we can expect of profit or cash flow contribution and that's the expectation. Of course, depends on the project, there might be investment upfront, and that might be the case. But basically, we have the operating cash flow. And then as our CEO mentioned earlier, until we go to Abadi, we have the bridge, and that is the imminent challenge we are faced today. So last year to this year, we have accelerated activities. The environment is not bad, $60 or above with oil price and the acquisition of interest and those new investments are a certain amount we can expect to make investments in, and those are the target. Free cash flow will be negative. And with the financing, even we have to finance, we'd like to try to make these investments for the future outcome.
Takayuki Ueda: So the milestone for Abadi, I'd like to answer that question. So basically, this year, we will do FEED. So whether we can call it milestone, we don't know. But the biggest is the environmental permits AMDAL is what we call, but that's one of the biggest milestone. And from the nation government, if we can obtain that from the government, various activities can start. So that's one milestone we're expecting. And then AMDAL. After receiving AMDAL permit, this project is in the rural area of Indonesia. So we have to have engagement with the community and increase that engagement. So those are the milestones we're expecting. More than that, we have been marketing activities for LOI we have already received many agreements. But having that in detail agreements, so that kind of interim activities, the key term sheet is how we call it, but the kind of a term sheet is something we have to work in a more detailed manner. And those are things we are expecting as one of the milestones. And with the Indonesian government, the negotiation on the conditions should come after the FEED outcome, and we cannot go without the outcome, but we also have preliminary activities. What kind of project cost and how much we have to pay, that can bring storming activities already started. So this year, these are the negotiations that will -- or discussions that will go in a more full scale. And as for the investment, as Yamada-san said, in the short term to midterm profit, we have to secure those profit and those are important as well. And there are still many things or some things we cannot mention today. But when we say exploration, we have 6 blocks of exploration in Malaysia that we have already acquired. And we will have about 9 drilling this year. But if there's a lot of pipelines in Malaysia. So if we are able to have a success, we can have a mid- to long-term increase. And we also have Norway -- Pandion with the company called Pandion. We were able to acquire the stakes or interest. And those are things that will increase the profit over the short term to midterm to increase the production as well as profit. And then we also have the assets, and we have very some considerations of these assets. So once these become more specific, then we have this midterm profit securing until Abadi. So this year, we have a certain amount of assets or budgets, but Abu Dhabi is one of the largest, but we have these various investments in plan.
Unknown Analyst: So I also would like to ask you a question. The first question is related to investment. And I talk about the interest acquisition. So in terms of interest acquisition, you said the environment is favorable right now. But at the same time, buyers -- sorry, the sellers, if my memory serves me correct, there are always, I suppose, taking quite an aggressive stance. So there is always the fear of buying -- end up buying something that is not too profitable. So in regards to the new investment, could you give more description in regards to the environment? And the second question is regards to the profit booster. I wanted to confirm for this fiscal year, sorry, for December 2025, I think the level was about JPY 80 billion. Is that correct? And for December 2026. So you said the profit boost JPY 500 billion. So the basis is, I think -- you were saying kind of a starting point. The base is JPY 50 billion. And so the JPY 50 billion is already included there may be others that you may be able to add on top. I don't know how much, but you expect for further addition to that. Is that the kind of thinking that you have? So that's my second question.
Takayuki Ueda: So first question in regards to investment, as to whether the environment is favorable, not biased may be quite aggressive. But as to whether the environment right now is favorable for buying things or not, I don't know for sure. But as I said before, we need to place the natural gas as the core. So there are many, I suppose -- the players wanting to sell or buying to -- wanting to buy the natural gas assets. So you're probably right, the timing to consider right now. Of course, we set a hurdle rate for the oil and gas business. So the country list does differ from country to country. So we look at the details. But generally speaking, we are looking at the mid -- team as a hurdle rate. So for this fiscal year, that would be the time of project that we seek to invest in. So this is an issue of investment discipline so we are very much mindful of that. So please allow me to respond to your second question. Profit boost of JPY 500 billion. And we've discussed this with you for the first time last year. And one is TA recycling. And so what is included as a part of the foreign exchange translation adjustment, this is put through PL. And the other is the investment incentive effect. And so last year, I've mentioned two numbers, JPY 80 billion and JPY 60 billion. Now what they are is that from the accounting -- these two have contributed to profit by JPY 80 billion. But when we speak with you, we need to kind of define them. So this is something we started from 2025. Now in 2024, we did have those -- the investment -- investment incentive effect. When we speak about the profit boost, on a gross basis, it's JPY 80 billion or so. But in terms of the delta, we need to subtract for the number from the previous fiscal year, which was about JPY 20 billion. So that's the reason we end up with JPY 60 billion. So we actually shared with you two numbers. So from the settlement of account perspective, you've been hearing JPY 80 billion, but the number that we have, speaking with you, we've removed the delta portion so it's JPY 60 billion. And so against the profit-based JPY 500 billion last year, we were able to do JPY 60 billion. So that was the accurate situation. And that number is JPY 90 billion this fiscal year. And so JPY 10 billion more than last year in terms of material recycling. Now -- so throughout the year to generate additional earnings, of course, many things. It's not just based on the balance sheet control, but the reduction or other factors generating earnings. But one thing that we can think about is that, in our case, the tax expenses. As you know, JPY 800 billion or JPY 900 billion, and that's the kind of level of tax that we are paying. So to generate great -- the tax benefit. Of course, we need to pay tax properly. But we shouldn't pay tax that we shouldn't be paying and so paying tax properly means that they're generating proper tax benefit. So we need to target for that. So in that regard, we have a significant balance sheet. Our balance sheet is in excess of JPY 7 trillion. And so for example, our currency translation, all fixed assets. And so given the fact that the oil price and FX are changing on a daily basis, so the financial, our profit and loss, the taxation, profit or loss or taxation based unrealized gains and losses. We have all of these generating at all the times. How can we combine them? So we need to control the balance sheet to generate earnings. And this is something that we intend to do, of course. And so we report based on the IFRS. And so our balance sheet is accurate. And so we do have the balance sheet to reflect the actual situation. And also emphasis that we have the PL, the profit and loss. And so our balance sheet is so correct. And so we need to come up with a P&L, which is accurately reflecting the difference. So what's realized on the balance sheet unrealized profit and the financial profit and losses and taxation profit and loss, we need to combine them well. That is one way of putting a financial position and starting point and the expectations to see additions to that. So inclusive of all of that, we are hopeful generating earnings in that way. I hope I answered your question.
Unknown Analyst: So I'd like to ask two questions. Number one is about Ichthys. The low pressure BCM with the connection, there will be an increase in profit. But maybe I didn't recognize this before, but I think we never heard this, so we haven't heard this before. So this BCM with this utilization, we won't have so much production this year. Was that planned from the past or started from '26 or something that you have started to look at this year or recently? And whether that will be fully recognized next year or whether there'll be some shutdown in maintenance at some point. So if you can give some update about the production profile of Ichthys. And then the second question is on Page 17 about the forecast for this year, the impact of oil price. JPY 556 billion of minus impact based on the oil price assumption and the past assumptions. I think there are a lot of a large impact. So maybe the timing issue, maybe it's a timing issue or -- as you mentioned, the JPY 330 billion is the number you have. But whether there will be some conservatism in this number as well. So you'd like to ask whether that's the case or not.
Takayuki Ueda: So the production profile of Ichthys over the BCM connection. Of course, this is something that we have been expected as a company. And talking about the low pressure module. So even though the pressure in the well will go down over the future, we will still have a production secured. So for that, we have a booster compressor which will be used for -- to connect to the CPF, the offshore facility, and we have this installed. So at the beginning of last year, we started that installation. And then this year, we have started decommissioning and after installation, we have to collect the lines. So there are huge lines and pipelines in a huge amount of workload. So to do the commissioning, that was the plan before. And then with the actual commissioning, how much time will require and how much drop in production we will have those forecast is something that we were able to come up recently. And so we have not mentioned those details in the past. But those work is something that we have been expecting from the past. And then this is sort of a one-off factor. And of course, the production amount or the -- if the commissioning will be delayed, then that would also impact the schedule, but that is a one-off. And then for 2027, we are going to start planning for this, however, but some sort of maintenance will be required. So how those will be unfolded is something we have to discuss and decide and we have to put that together.
Daisuke Yamada: And the second question. The initial budget with the oil price of JPY 52 billion impact. So this is including the natural gas, LNG, the lagging factories included. So if you look in detail, there are about JPY 30 billion on the oil price. And then the -- based on the dropped oil price, there are 4 months delay. So that's the LNG marketing or sales. And the spread is also being adjusted. So that's about a JPY 20 billion of impact. So in that sense, JPY 50 billion breakdown is the breakdown as mentioned. And then from the beginning of this year, if you look at from the beginning of this year, the sensitivity multiplied by these 6.8x to 6.3x the sensitivity, that's not the case. But initially, we have the oil price and then looking at the lagging factor. So in total, we have the oil price sensitivity and JPY 52 billion or so. And then this is different from the earlier factors. But just plainly looking at the oil price, that is the number we have. So thank you very much for the answer.
Unknown Analyst: I also have two questions. And I wanted to ask a little more about the low-pressure production facility and the impact of this is likely to come in the first half of the year. Because I wanted to understand the scheduling aspect. And the second question is in regards to cost. Production cost forecast is shown on Page 31. If you could give some background information to that not including royalty we expect some increase. But if you include royalty, it will come down slightly. So could you explain the background to the extent possible?
Takayuki Ueda: And in regards to the low-pressure production facility or the booster compressor module, BCM, it's not like a shutdown maintenance stopping everything to link the equipment. So we are actually doing a link up while being in operation. When you are linking pipeline, we need to stop the related facilities. And once the line up, you start the operation again. And so it's not the case that you kind of shut down for a period, we will connect and restart. So it's a little bit different from that type of shutdown maintenance in that regard, where we're going to do this rather than it being a first half of the year or the second half of the year, we are going to do this work gradually throughout the year. So in terms of our cargo number, we are expecting about 10 cargo per month, that is the assumption that we have for this fiscal year. And so reflective of this impact, that's the kind of level of production we're expecting for the year. In terms of the production cost per barrel, and $5.3 was expectation last year and the production volume in the Europe and the Middle East, liquids production volume and OpEx related to this the balance that will have the impact on this number. And so those, including royalty or not, the royalty will have more impact in terms of the European than the Middle East. How much contribution from that business will have that impact. So -- and last year, those that include royalty coming down and those increasing that does not include royalty that the Australian or the associated production volume, that is having the impact. So the cost increase overall is not what you're expecting. It's just a change in balance where the increase from -- the production of acquired cost is higher, that -- yes, for cost reduction, Ichthys project that we are the operators, we are working on further cost reduction. And so the Ichthys portion, we will aim for further the cost reduction. But we have already made a significant progress on this, and we are currently nearing the lowest level. And so to what extent can we still do. And also overall, the production volume. So it's a balance of these 2 that is reflected in these numbers.
Unknown Analyst: One question. So this time, about the increase of dividend against the growth in the business and the cash flow is returned, and I think that's really welcomed. But JPY 108, the level of this dividend, what kind of discussion was made? And how did you come to the decision? I think it was an overall comprehensive discussion. But in the past, 30% of payout ratio was the -- that typical case. But this time, from that, it will be 40% or less of increase in payout ratio. So what kind of discussions were in place? And then how did you come to that JPY 180? It's not really a clear number. It's not so clear. Maybe it's kind of a halfway, but how did you come up with that number?
Takayuki Ueda: Well, there are a lot of discussions. And one thing is the EPS already profit -- against the profit this year, how we're going to return to our shareholders. And this time, JPY 330 billion, let's say. With that, it will be 50% total payout and then JPY 156 billion or so. But if it's JPY 108 per share of dividend, it's JPY 120 billion of cash required, and there is a difference between those numbers. Therefore, of course, the JPY 330 billion is just an outlook so we don't know whether that will be the exact number. But with the certain visibility, if we have JPY 108 per share of dividend, then in order to achieve that 50% total payout in the interim, we may have an increase in dividend or have a change. But we wanted to have that kind of room in the dividend. That's one number. One idea. And the other side is as we're not increasing so much profit, so we can set the same level of dividend as this year. But because of the inflation or in the past, it was a deflation. So the yield -- dividend yield in the deflation, let's say, if it was 3%, that would lead to returning to our shareholders. But then with the inflationary environment, there will be a decline in real. So it's not a situation welcome situation. So that's why we came up with the number, JPY 180 of share this time.
Shohei Yoshida: So we'd like to conclude the session at this as we have reached the scheduled time. And for those that we were unable to respond to, please contact our IR group. Thank you very much for your participation despite your busy schedule today. [Statements in English on this transcript were spoken by an interpreter present on the live call.]