Ajinomoto Co., Inc. (2802) Earnings Call Transcript & Summary

Hello, everyone. Thank you for joining Ajinomoto's IR Day despite your busy schedule. My name is Kaji from the IR group. I will be the moderator today. First, let me introduce who is here. Director Representative, Executive Officer President, Mr. Fujie; Director Representative, Executive Officer and Executive Vice President, Shiragami; Director, Executive Officer and Senior Vice President, General Manager, Corporate Division, Sasaki.

Hello. Nice to meet you.

Director, Chair of the Board, Iwata.

This is Iwata speaking. Thank you.

Director, Chair of Nomination Committee, Nakayama.

This is Nakayama. Hello.

Executive Officer and our Vice President, in charge of Finance and Investor Relations, Mizutani.

This is Mizutani.

Executive Officer and Vice President, in charge of Sustainability and Communications, Morishima.

This is Morishima. Hello.

General Manager, Intellectual Property Department.

I am Izui.

Intellectual property department, [ Taremi ].

This is [ Taremi ].

So we have 9 people with us today. So today's program is comprised of 4 parts. First, Part 1 will be from our President, Mr. Fujie, opening remarks. Part 2 will be a dialogue between our Outside Directors, Iwata and Nakayama, who will be talking about evolution of governance to enhance corporate value. Part 3 from Mr. Izui, the GM of the Intellectual Properties Department, will be delivering a speech presentation regarding enhancing corporate value through the Ajinomoto Group's intellectual property strategy. And Part 4 will be a Q&A session covering all the sessions. So we are planning to have a session over the next 90 minutes, and the materials are available on the IR section of Ajinomoto's website. Please take a look if you would like to refer to the materials. And the session will be recorded and including the Q&A session. On a later date, it will be uploaded to our IR site. So now we would like to get started. Over to Mr. Fujie.

Ladies and gentlemen, nice to speak to you. This is Fujie speaking. Thank you very much for your support on a day-to-day basis. And despite your busy schedule, thank you very much for joining our IR Day event. Today, I'd like to give some opening remarks on this IR Day to deliver my messages. There are 3 points that I'd like to raise. Number one, as we already announced regarding the 2030 Roadmap, after the announcement, the entire management and employees are working together to make progress towards the achievement of 2030 Roadmap. And in order to make progress, governance needs to evolve itself, and we need to enhance our intangible assets as well. And in terms of intangible assets, there are 2 points. Well, in terms of the enhancement of governance as well as intangible assets. Number two, I'd like to -- as for the governance, regarding the effectiveness of BOD, we are once again revisiting the definition of the effectiveness of BOD. And there are 3 major points. Number one is to set a broader direction, and number two is to encourage risk-taking and execution, and number three is to supervise the executive side. Those are the 3 roles associated with the BOD, and the BOD Chair, Iwata-san as well as Nakayama-san are going to have a dialogue session today. And regarding number three, as for intangible asset enhancement, our topic today focuses on patent rights as well as trademark rights, and we'd like to outline our IP strategy, intellectual property strategy. In 1908 -- well, we were incepted in 1909, and Dr. Ikeda Kikunae actually obtained his first patent, and he was designated as a very important inventor. And this is how we accumulated our inventions and IP-related patents as well as trademarks to create and secure our economic profits. Let me quickly introduce. In the 21st century and onwards, Ajinomoto as well as MSG-related accumulated business profit topped JPY 400 billion. And those are the total profit that we have generated or business profit we have generated. So since inception, our patent as well as trademark-related IP has contributed significantly in terms of generating our profits. And this creates and secure our entry barriers and competitive edge. And we'd like to ensure the shift to growth through BMX. And that is a key point that I'd like to deliver today. So those are the 3 topics that I'd like to raise. And on Page 9, on August 31, as we already externally communicated, ASV report has been published both in Japanese as well as English. And at the end of October, we are going to distribute the pamphlets or leaflets for your perusal. So now we'd like to pass the baton to the presenters for today.

Thank you, Fujie-san. Now we would like to move on to Part 2, which is a dialogue around evolution of governance to enhance corporate value. Iwata-san, Nakayama-san, welcome. From here on, we will have a discussion with Iwata-san and Nakayama-san, who our Outside Directors. Regarding the themes that are shown here, I am [ Kyoto ] from Investor Relations, and I will be the moderator. Hello, hello. So first and foremost, I'd like to introduce the speakers that we have with us today. First is Kimie Iwata. She has worked for the Ministry of Health, Labor and Welfare for about -- and has been involved with corporate management as outside director at a number of companies for 20 years in total by leveraging her experience in corporate management. She has been appointed as Outside Director at our company from 2019 and, from fiscal '21, has been serving as Chair of the Board and member of the Nominating and Compensation Committees. Next is Joji Nakayama. He has served as a President and Chairman at a global health care company and is serving as an Outside Director since 2021. He's the Chair of the Nominating Committee this year and also is serving on the Compensation and Audit Committees. Iwata-san, Nakayama-san, thank you for both coming today.

Thank you.

Now let's start off with the first theme. I'd like to hear your thoughts of what is required of the Board of Directors and what its role is to enhance corporate value. In the evaluation of the effectiveness of the Board of Directors last year, the Ajinomoto Group discussed and defined the effectiveness of the Board of Directors in the company, the degree to which the Board of Directors is able to properly fulfill its purposes, discussing and examining key management matters that significantly affect corporate value, encouraging risk-taking and execution by indicating major directions, verifying the validity of execution processes and outcomes and appropriately supervising execution. What exactly do you mean by the 3 points of indicating major directions, encouraging risk-taking and execution and appropriately supervising execution?

I will talk about those 3 one by one. So regarding the first point, in conducting this year's evaluation of the effectiveness of the Board of Directors, we took a renewed look and defined what we mean by the effectiveness of the Board of Directors and in terms of the 3 points you just mentioned. So we look at 7 important management issues, which are corporate value, capital policy, balance sheet optimization, decision-making processes, medium-term management plan, restructuring on the business portfolio, large-scale M&A and large-scale investments. So when we say indicating major direction, this refers to important management issues that have a major impact on corporate value and to discuss the direction of these important management issues from a medium- to long-term perspective at the Board. And we had an organizational change 2 years ago. And when we did so, the Board substantially transferred to the executive side the authority so that the executive side where execution would happen in a speedy way. So regarding these important items, the Board was able to indicate a major direction. So regarding these 7 management items throughout the year, at least once a year, each of the 7 important management items are taken up and deliberated. And I believe that the accumulation of deliberations to date has led to the formulation of 2030 Roadmap. Regarding the second item, encouraging risk-taking and execution, in order to improve corporate value over the medium to long term, it's necessary for the executive side to clarify risks and take appropriate risks. The Board should indicate in advance the major direction of management, which in itself creates an environment that facilitates risk-taking on the part of the execution side. The 2030 Roadmap sets forth very challenging targets. And I believe that executive side is required to take considerable risk in order to achieve these indicators. In the process of supervising that implementation and deepening of the 2030 Roadmap, the Board would like to encourage specific risk taking on the part of the execution side, if necessary. The third point, appropriate supervision of execution. Regarding this item, this refers to checking the appropriateness of the execution process and results. From this year, the execution side, when it comes to the way management is done, major changes are poised to happen, meaning to form a vision from a long-term perspective, backcasting from there to set challenging ASV indicators and formulating a road map to get there and also doing monthly rolling forecasts and, if necessary, making quick course adjustments where necessary. So that's the way we are trying to manage the business. The Board, we would like to focus on whether this new way of managing the company is going to go well or not. And of course, needless to say, in whatever times we are in, if there's anything, we would like to ensure that there is nothing that is going to undermine this process, and we would like to ensure that no corporate value is undermined, and we will, therefore, focus on reports regarding internal control and look at updates from the Business Conduct Committee regarding compliance and other matters. That's it for me.

Thank you very much. The company -- I was able to understand that the rule has been clarified based off the definition of the effectiveness of the Board. The company has transitioned to a company with a Nominating Committee from 2021. Nakayama-san, you're currently serving concurrently on the Nominating, Compensation and Audit Committees. Can you share with us the role of each committee?

Yes. This is Nakayama, and I would like to give some flavor on that. First of all, the Nominating Committee -- Nomination Committee evaluated and selected candidates for CEO, and we decided to select Mr. Fujie as the new CEO candidate. Each committee member interviewed several candidates and discussed and decided based on their own judgment. The committee plans to work on the fiscal '22 evaluation of our CEO, Mr. Fujie, and internal directors; the development and valuation of mid- to long-term internal director candidates; and the search for candidates for outsiders. For the Compensation Committee, we considered and decided on the validity of fiscal '22 compensation for internal directors and executive officers. We will look at the consistency with the 2030 Roadmap going forward. And we will look at and consider a compensation system that enables the recruitment of global and diverse human resources and their active engagement. And we will establish a fair and civil compensation system. That consists with the 2030 Roadmap. For the Audit Committee, it supervises business execution while closely partnering with internal audit and audit firms. In light of changes in the organizational design, new management structure and management measures, the committee is promoting activities to ensure legal and appropriate business execution and to ensure the enhancement of corporate value. When urgent matters are identified, information is properly shared and discussed. We also placed emphasis on cooperation with the corporate auditors of each group company. The 3 committees engage in lively and in-depth discussions led by outside directors, and we believe that the division of roles between the 3 committees and the Board of Directors is appropriate. In addition, at the suggestion of Chairman Iwata, a number of committee members serving concurrently has been increased in order to share information among the committees, which I feel has been effective in deepening discussions in each committee.

Thank you for commenting on the 3 committees Nakayama-san. So next, moving forward, regarding how we -- engagements on how to create a highly effective Board of Directors. Iwata-san, you have been an Outside Director since 5 years ago. And in '21, we had organizational designs, and you can experience the changes. And what do you think is necessary to improve the effectiveness of the Board, strengthening corporate governance and involving ASV management after the changes in the organizational design?

Yes. I'd like to talk about recent changes mainly then. In order to enhance effectiveness, I think there are 3 important factors. One is composition of the Board, meaning who participates in the Board. Secondly is agenda at the Board, what is discussed. And thirdly is the quality of discussions that take place in the Board and how high we can elevate that level. Regarding the first point, composition of the Board from this year. We have newly -- welcomed a new member. One of them is Mr. Scott Davis, which is a first non-Japanese director. He is an expert in sustainability and corporate governance. We also have invited and welcomed Mr. Takeshi Saito. This person had many companies and has been involved in the management of several companies, especially in harsh environments. So he is a management professional. And this person has joined us as an internal director from this year. So the Board has evolved in its diversity of its composition. Regarding number two, agenda. It's exactly as I've explained earlier. But based on the 7 important management issues, in order to indicate a major future direction, we have deliberations at this, and we have an annual plan for the year. And along with the plan, we manage the Board. So we have been -- we would like to manage the Board in that way this year as well. Regarding the quality of discussions. Well, it's obvious that all members participate in discussions and engage in a vigorous exchange of opinions. We are also taking on the challenge of improving the quality of the discussions. So we're attempting to do so. So specifically, we decided in advance what issues will be discussed for each of the agenda item and ask participants to prepare materials accordingly. And we follow this on the very day that the discussions take place. So last year, the Chair, myself and the secretary have consulted with another to determine the issues to be discussed. But starting this year, the Liaison Committee of Outside Directors will consider what issues should be discussed. So that is where we are. And in this way, the Board been evolving.

Thank you very much. I was able to understand that the insuring -- by ensuring member diversity and agenda setting and clarifying discussion points, you are enhancing the quality of discussions. Nakayama-san, based on your experience as an outside director or as business management, could you please tell us how governance should be to support corporate value enhancement and what you are particularly conscious of as an outside director?

When I think about management and management issues, I separate short-term issues from long issues. How the way these issues differs from industry to industry. But in the pharmaceutical industry, where I used to work, long-term issues such as the progress of new drug pipeline had a greater impact on market valuation and stock prices than short-term issues. In the case of Ajinomoto, a timely price hike in response to cost increases slays earnings in the food business. Therefore, the ability to analyze and respond to situations in a timely manner or, in other words, marketing intelligence makes a big difference in corporate valuation and in stock price. However, even if a company successfully responds to short-term issues, should the country's economy as a whole stalls, then the business growth in the country will hit the ceiling at some point. Therefore, it is necessary to consider the long-term portfolio of areas or geography and markets in parallel to decide, for example, which countries should we expand our business foundation. For Ajinomoto to grow worldwide, it is essential to simultaneously address both short-term and long-term challenges. We believe that the executive side has excellent knowledge and judgment in dealing with short-term issues. Therefore, as an outside director, I raise questions and confirm whether their actions are in line with the basic corporate philosophy and purpose and whether they are appropriate in the light of compliance. To address long-term issues, 2030 Roadmap is at the crux of our response. We also need to add strategic elements to the deliberation such as how to consider the long-term market portfolio of Foods, for example. For that, we are proactively raising questions to stir debate with the executive side.

Thank you very much. Now I'd like to ask you about what specific topics are being deliberated at the BOD meetings. We heard that the substance of the discussions has changed considerably and that there is a lively exchange of ideas between the internal and outside directors. So could you please tell us about how you are devising ways to deepen discussions at BOD?

Well, I already mentioned that discussion points are decided in advance. And we are also devising other ways to ensure active discussions, including small items. First, in terms of the frequency of our meetings and duration, for example, last year, BOD was convened 18 times; the Nominating Committee, 10 times; the Compensation Committee, 13 times; and Audit Committee, 15 times. And the duration of each meeting is usually 3 hours in the case of BOD. And because we are dealing with so many agenda items, for each agenda item, we arrange a specific -- allocate specific time for each agenda item, sometimes ranging from 5 minutes or 45 minutes, depending on the nature of an agenda item. And starting from this year, for the first time, we decided to adopt the document-based briefing. And we omit those from agenda items in order to reduce the number of agenda items. And in terms of the presentation materials, 2 years ago, we created a manual how to -- as to how to prepare a BOD meeting's materials. And the executive side is fully informed and to be in line with the policy. And from an outside director, the -- it is -- the documents are very easy to understand from outside directors. And in terms of the pre-sessions, every time we have the BOD, the agenda items are fully understood in these prearranged sessions that usually take a long time. And this is where we are briefed in advance. And those who are unable to make these pre-sessions, then the recording is distributed to promote their understanding. And also separately from these pre-sessions, but the outside directors are provided sessions in order to deepen their understanding about Ajinomoto. So we arrange -- or the company arranges study sessions quite frequently. And this is very proprietary to Ajinomoto. And in terms of the attendees -- well, in terms of the seating for BOD, the Chair as well as CEO are -- their seats are already fixed, but the other seats are not prearranged. And the model here is that, well, the outside directors tend to sit across inside directors or internal directors, but we would like to avoid the situation so that each member -- all members can actually come together to have a free and invigorate their discussions. And then the proponent of the agenda item may be the Executive Officer or General Manager who is in charge, so they may participate in our sessions. And also the Chair of each committee presents materials for their respective committee. And in these prearranged sessions, we already walk through those presentation materials. So at the actual meeting, we don't need to double the effort to go through these presentation materials. So we go straight into a Q&A session after the presenter attends these sessions. Usually, outside directors raise questions, and internal directors tend to answer those questions. We used to have that structure. But we revisited the restructure because -- the structure. So because all directors are responsible for the entire company, we wanted to make sure that they -- those -- both outside directors and internal directors are on equal footing by participating in a vigorous debate.

Thank you very much. Now here, we'd like to show you a video clip of the BOD meeting to give you a sense of our discussions being taken place. And we visited the BOD meeting in July and recorded the discussion over an agenda item and created this short video clip, which I'd like to show you now. [Presentation]

Iwata-san, could you please comment about the video clip?

Yes. Throughout the BOD, we set the agenda items throughout this year. And that day, we spent about 40 minutes to discuss this item, but you created a very short summary of it. As you can see from the video, it is our basic policy to attend it in-person, but someone could actually attend remotely. And all members are participating in the discussion in a very relaxed manner, and they are actively involved in this open and honest debates.

Nakayama-san, what is your view?

Personally, I wanted to be a more talkative person, but overall, we don't actually prearrange discussions. And this was a very -- this video shows our -- demonstrates our ability to freely discuss agenda items.

Thank you very much for your feedback. Now we'd like to move on to the next topic. Now I'd like to ask you about the specific team discussed at the BOD last year. The paramount topic was the 2030 Roadmap under the midterm ASV initiative. And in preparation for the road map, how did you proceed with the discussion?

Let me first deal with your question. As I mentioned earlier, in 2021 through 2022, we spent the last 2 years. The major mid- to long-term perspective of the management direction has been the core issue of debate. And this has culminated as the 2030 Roadmap in my view. In addition, the past 2 years, the Sustainability Advisory Council, which is the subcommittee of the BOD, has delivered materiality issues. And these outcomes are incorporated into the road map as well. Last year, at BOD, we discussed the topics of road map from August 2022 to February 2023, and there were a total of 5 times of -- 5 meetings of BOD. And as the discussion progressed, based on the executive size, we accumulated our discussions as well. And on this occasion, as the Chair of BOD, I actually presented the agenda item. But as an outside director, I made my comments. And in relation to this road map of 2030, the reason -- my comments include the topic of the environmental issues. And let me introduce some of them. With the goal of having our environmental impact by 2030, we worked diligently on CO2 reduction and others, thanks to the executive side. But my concern is that Scope 3, there are still room for improvement, and we may fall short of hitting the target in Scope 3, although Scope 1 and 2, we are doing okay. So this is my concern, and I'd like to solicit the executive side's cooperation -- collaboration. And as a company who depends on agricultural and marine products, Ajinomoto should be taking more unique approach to address biodiversity issues, and we need to actually tap this externally as well. Also, my comments on amino acids, which underpin our entire group business, green amino acids are being produced. And once they are produced, then it can be conducive to our entire society. And also, it represents a huge business opportunity for our company. Therefore, green amino acids need to accelerate its pace in its R&D. That was my recent comment. So in terms of global environmental issues, for any business, it poses risks but also opportunities for all companies. Therefore, we hope that Ajinomoto learn best practices from other companies, not only from the domestic -- other domestic food companies but also from cutting-edge companies in other industries and across geography in order to aim for a world-class entity in this specific item. That is my high expectation for Ajinomoto.

Nakayama-san, could you please comment?

I also participated in the discussions of SAC, and I also witnessed the discussions at BOD. And at the SAC, I regard the contents covered by the SAC are long-term issues to be addressed by the society as a whole. In a sense, there are long-term issues that we must fulfill as a member of society for the future. But at the same time, they are intertwined with the issues that Ajinomoto must face in order to further grow in the future social environment. With this in mind -- or with these in mind, I mentioned that Ajinomoto should consider materiality should be based on the following 2 points. Number one, Ajinomoto is a food business that resides with the social infrastructure sector. And number two, Ajinomoto's AminoScience business involves bioscience and biotechnology. So in these 2 aspects, Ajinomoto has a great potential in both social contribution and corporate growth. In food business, we're in a position to help extending the healthy life span through [ low food ] initiatives and remarkably improve production efficiency of our supply chain and agriculture. And they are already being executed. As for our bioscience R&D activities, throughout the evolution of life on this planet, Ajinomoto can -- has accumulated our know-how and can unleash its know-how in this respect -- specific item. For example, plants use light and water to photosynthesize and convert CO2 to glucose in an efficient manner. If our biotechnology can industrialize the photosynthesis, it may present an effective way to fight against global warming. So the word bio often conjures up products such as biopharmaceuticals. However, bioscience has a much greater opportunities for Ajinomoto. And I believe the company is one of the companies that can realize and unleash its great potential.

So thank you very much for high expectations for Ajinomoto. Finally, what are your current perceptions of the current state of affairs and expectations for Ajinomoto pertaining to achieving a sustainable growth in the future?

Speaking of the 2030 Roadmap, it stipulates challenging goals, and Fujie-san describes those goals as challenging as climbing Mount Everest, not Mount Fuji. So the targets are set very high. And the management approach itself, as I mentioned earlier, involves backcasting, road mapping and rolling forecasting. Those are the key words of management approaches. So they are very cutting-edge. And the approach themselves is very challenging as well. So for the time being, we need to further evolve the road map, if necessary. And then we need to fulfill or achieve those road maps. So as a member of BOD, we need to make sure that we monitor the entire process, and we'd like to optimize ourselves as well through the process of trial and error. But we'd like to find an appropriate way to supervise the process. And I mean as my last comment, Fujie-san presides the ASV management in earnest and shares the purpose with each and every one of our employees in order to contribute to the society as well as the human race -- human -- mankind. And each and every personnel at Ajinomoto shares his view. And at this point, if we remain steadfast in this regard, then I'm convinced that we'll be able to enhance our corporate value in terms of both the economic and social value. And therefore, ASV management itself represents the core proprietary features of Ajinomoto. And this is where our Ajinomoto strength lies. Therefore, we'd like to aim higher in terms of Ajinomoto's management. That is my expectation.

To climb Mount Everest, each and every personnel or employee must first want to climb -- feel that they want to climb the mountain and then believe that they can and make concrete preparations to do so. This is a vision envisaged by the 2030 Roadmap and the milestones to be achieved by backcasting from the vision. I firmly believe that Ajinomoto can contribute to the whole world and grow further as an indispensable organization. While dealing with short-term issues, we need to tirelessly progress towards long-term goals. In the food business, we need to rearrange our geopolitical -- geographical market portfolio, reflecting the current geopolitical risks and to do more on actively utilizing our group companies and accelerate diverse and global talent development and talent deployment. And those will be the key challenges going ahead.

Iwata-san, thank you very much. And Nakayama-san, thank you very much for your contribution. Through this dialogue, I renewed my commitment to contributing to our group vision by -- with my colleagues as one of the employees. Thank you very much for all your participation. And to those investors joining us online, I hope this session proves effective for deepening your understanding towards the effectiveness of BOD and governance leading to corporate value enhancement. So we'd like to solicit your continued support. With this, we'd like to conclude this dialogue session. Thank you very much.

Iwata-san, Nakayama-san, thank you very much. We'd like to now start Part 3, enhancing corporate value through Ajinomoto Group's intellectual property strategy. Izui-san, over to you.

Thank you for your introduction. I'm from the Intellectual Property Department. My name is Izui. I'd like to talk about enhancing corporate value through the Ajinomoto Group's intellectual property strategy today. Next page, please. So what I want to talk about today is the 3 points. First point is strengthening the intellectual property that arises through organic connections among intangible assets is crucial to realizing ASV. And since its founding, the Ajinomoto Group has built up the strength of its intellectual property strategy and has created competitive advantages and barriers to entry. It has done through the steady acquisition and utilization of intellectual property in line with the development of its technologies and businesses. Thirdly, looking ahead to the realization of our 2030 Roadmap will involve our intellectual property strategy and strengthen its foundation in order to make a steady shift to grow through business model transformation. By doing so, we will dramatically and continuously enhance our corporate value. So this is the agenda for today. I'll first talk about realization of ASV through the strengthening of intellectual property; secondly, the strength of the Ajinomoto Group's intellectual property strategy; and evolution of our intellectual property strategy to achieve our 2030 Roadmap; strengthening the foundation of our intellectual property, thirdly; and then lastly, strengthening the foundation of the intellectual property strategy. So first is realization of ASV through the strengthening of IP. Like mentioned in the -- here, intellectual property is a part of intangible assets, and we will reinforce our intellectual assets and maximize them so as to create ASV value. Next page, please. You could see intangible assets on the left-hand side. They comprise by organization, customers, human resources and technology. And the organic connection of intangible assets, as you can see on the right, create intellectual property, which includes patents, trademark rights and expertise. The Ajinomoto Group's intellectual property strategy has strength centered on patent and trademark rights that lead to a maximization of competitive advantage and the barriers of entry. Through these, we have enhanced corporate value. Today's topic is about the realization of corporate value enhancement through an intellectual property strategy centered on patent rights and trademark rights. Next page, please. So chapter 2, the strength of Ajinomoto Group's IP strategy. Next page, please. The Ajinomoto Group has put importance on intellectual property since its founding. As you can see in red, with a great ambition and wish to improve nutrition for people in Japan through umami, the scientist, Dr. Ikeda, discovered umami. And the businessman, Mr. Suzuki, launched a product, Ajinomoto. And we were able to realize the concept of eat well, live well, which was how our company was founded. Back then Dr. Ikeda had the mission of making a scientific discovery useful to the world. This connected well through open innovation with Saburosuke Suzuki's ambition to relieve the malnutrition of Japanese -- Japan's people and contribute to improvement of their physique. For more than 100 years ago, technologies for patent and products were registered at trademarks, and this became the foundation of our intellectual property. And as you can see in the center, it's a AminoScience. As we continue to involve the great aspiration described on the previous slide, we will continue to develop a variety of products from Ajinomoto's propriety scientific approach, AminoScience, which is a source of competitiveness. The global development of these various businesses has been supported by IP rights, such as patents and trademarks. Next page, please. The following slides illustrate our strength in patent rights. This slide shows the wide range of advancement in technologies patented by AminoScience. In the center of this slide, the number of patents in each of the various patent technologies is in green. Created by AminoScience is shown in blue. The total number of patents held by the Ajinomoto Group as a whole, including these patents is 4,016. In particular, we have granted patents for a wide range of technologies in response to the development of our businesses. This contributes to building a high competitive advantage and barriers of entry. Next page, please. As our business strategy and business portfolio and evolve, we are also promoting the evolution of our patent portfolio. This slide shows the changes in our patent portfolio over the past 10 years from to fiscal 2012 fiscal '22. The left-hand side shows the percentage of patents held by segment, which is in green as well as the light blue colors. It reflects the fact that we've achieved high business growth in recent years by increasing number of patents held in the Healthcare and other segment, which is in light green. And as you can see at the bottom, the right side of the slide shows the percentage of patents held by area, which is in accordance with priority applications in the Healthcare and other segment. As shown in the lower part of the slide, a number of patents held by the Ajinomoto Group has increased from 3,713 in fiscal '12 to 4,016 in fiscal '22. This reflects the expansion of patent holdings in Healthcare and other segments. On the slide on Page 12, I'd like to present an example of an external evaluation of Ajinomoto's patent rights. This table shows the ranking of Ajinomoto Group's restraining power with respect to domestic patent applications in the food industry. The higher the rank, the higher the restraining power against other companies. As shown on the table, Ajinomoto is ranked #1 in 2022 and has been ranked #1 9 times in the past 10 years. We believe that this result reflects our IP strategy, which is strongly focused on competitive advantage and building barriers of entry. Next page, please. In the next 3 slides, I'd like to introduce 3 examples of our patent strategy. The first one is the seasoning and amino acid production technology. That supports the global expansion of our sauces and Seasonings and amino acid business. As shown above on the left, we have established high barriers of entry by patenting key technology for the entire manufacturing processes from raw material sugar to seasonings and amino acids, specifically the amino acid-producing bacteria fermentation process in isolation and purification process. In addition to holding patent rights, we've taken a firm stance against patent infringement by late comers and have one lawsuit against U.S., Chinese and South Korean companies, thereby securing a continuous competitive advantage in the market. Next page, please. So this is an example related to functional materials and ABF. This slide shows an example of ABS in the Functional Materials business. In the development of ABF, R&D and IP departments work in unity and knowledgeable development on the IP strategies are synchronized. This enabled us to realize a high-speed development system and to maintain a de facto standard position. showed the number of ABF related patents in the graph and patent value. In order to maintain our de facto standard position, it's important to strengthen the number and value of our patents, and we have dramatically increased both the number and value of our patents. At the same time, as shown in the figure on the right-hand side, we are developing new product groups as part of the deployment of ABF core technologies. Furthermore, as a next-generation development field at the bottom, will the development of optical wave materials for photonics and electronics convergence packages through participation in the advanced platform consortium, thereby contributing to future society. Next slide, please. Third example here is about the biopharma service business in AJICAP. As shown in the purple box, AJICAP is a platform technology for synthesizing ADCs, or antibody drug conjugates, that control the position and number of drugs bound to antibodies through which we hold patents. On the other hand, pharmaceutical companies design the combination of antibodies and drugs. In contrast, we use AJICAP technology to create and license ADCs that are optimized for each pharmaceutical company. The pharmaceutical company develops and launches the ADC as a pharmaceutical product with the controlled number and position of drug binding, which is made possible by the AJICAP technology. In this case, we will receive royalty payments. Strong patent rights are essential for such intellectual property-based businesses. To continue this kind of business, we need to enhance the value of our patents and maintain them. As you can see on the graph on the right-hand side, you could see the number and value of health care patents, including AJICAP. Both the number and value of patents have increased significantly, especially in value, which we put focus on towards our partners, we would like to -- we believe that this is proof that we have been able to enhance our company's presence. Next page, please. This chart shows the correlation between patent value and business profitability in the business areas where the patent portfolio has been strengthened. This chart shows a business area where patent value is very important, Functional Materials and Biopharma Services combined. And you could see that patent value and business profit is highly correlated. And in these business areas where patent value is important, we will further strengthen measures to increase patent value. Next slide, please. Well, changing gears, now I'd like to speak about trademarks. As the graph indicates, the Ajinomoto Group has 3,069 trademarks in 2012 and 5,434 in 2022. And the number of trademarks is on the rise, partly due to business expansion. But in addition, pertaining to design element and shape, we enhanced our trademark registration for these elements. And this pie chart indicates the breakdown by geography. And the number of trademarks or percentage of trademarks in EMEA shown in yellow may seem decreasing. This reflects the fact that countrywide trademark registration processes were streamlined through the use of collective regional registration system. The Ajinomoto Group logo shown below has been registered in 143 countries and regions. Ajinomoto MSG logo has been registered in 172 countries and regions. This means that our trademarks are registered in almost all countries and regions where we operate worldwide. Next slide, please. In the case of trademarks just like patents, we don't only possess the rights, but we also protect or defend the rights and take action to demonstrate or present the market. And this slide shows our initiatives to eliminate imitation and unauthorized use of our brands. The left side summarizes recent activities, whereby we eliminated unauthorized use of our brands. And in 100 -- we resolved 100% cases of unauthorized use of our trademark through warning and other measures. We won 4 out of 4 lawsuit cases pertaining to our trademark. In addition, we reduced the number of unauthorized of our brands found on major e-commerce sites by approximately 12,000 over the past 5 years. In Thailand, for example, it was widely reported that 50,000 bags of counterfeit products were seized in a criminal investigation. In China, we work with the e-commerce sites to remove counterfeit stores. In Bolivia, we successfully banned the sales of imitation products through a civil lawsuit. In Vietnam, we worked with the relevant authorities and told them how to discern counterfeit products to enhance their ability to detect and persecute counterfeit products. Next slide, please. And number three, evolution of IT strategy toward realizing the 2030 Roadmap. I'd like to touch upon this matter. In the 2030 Roadmap, we will be leveraging BMX to shift to growth in the 4 outcome-driven growth areas to attain a highly profitable, unique and robust structure. And this is the overall direction for the entire group. And we are evolving our IP strategies along this line. This slide shows the key points of strengthening IP strategy based on visualization. Business strategy, R&D strategy and IP strategies will be working together to acquire patents ahead of others in the 4 BMX areas based on digitalization in order to establish competitive edge. To be more specific, as shown in this diagram, digitalization allows us to understand our own and other competitors' patents technologies as well as market trends. And this way, we can identify key technologies and patent -- and patent those technologies as early as possible, establishing represents as a player. And in addition, we will search for ecosystem partners to form partnerships in order to establish a competitive edge in growth areas. As the diagram indicates, business to R&D strategy and IP strategy, you need to work together to execute a range of activities. And for this, we need to work with the innovation strategy team to build the ecosystem as well. Next slide, please. From here on, let me now explain the evolution of our API strategy by citing an example of cell culture media for regenerative medicine. In this particular case, we utilize our research network to deal with -- to work with CiRA’, Center for iPS Cell Research and Application Kyoto University. And such research network is very important for creating innovation, and we created a de facto standard cell culture media throughout of this initiative. As shown on the left, we -- our business evolved from serum free culture media to biopharmaceutical culture media, whereby we cultivated our strength and our knowledge of not using animal-derived raw materials, our ability to customize cell culture media for each customer and our quality control. And because our technological strengths match the needs of CiRA’, we began the collaboration. And now we are jointly developing cell-culture media for regenerative medicine. So this is a good example of innovation spurt from the research network. And this method can be rolled out in elsewhere as well. Number two. In commercializing the joint research project with CiRA shown in the previous slide, R&D and business as well as IP strategies, we're always in locksteps with one another. Together, we planned and executed strategies and successfully established a business as a new field -- in a new field. As part of the R&D and business strategy shown in blue, on the left, we will leverage our knowledge and optimize -- on optimized formulation, which was accumulated through the experience of antibody cell culture media to realize the rapid development and commercialization of a cell culture medium jointly developed with CiRA. So those 3 parts work together in synchronizing with one and another to create the -- to ensure our competitive edge and build entry barriers by patenting in-house technologies and preventing infringement of other patents as well. And this has been adopted as a standardized method elsewhere as well. Next slide, please. We have been promoting the IP landscape by using various tools to analyze our own and other companies' patents and to visualize patents and technologies from bird's-eye view. And this landscape is used to analyze IP information and to formulate management strategies and promote corporate decision-making. Let me cite an example. The diagram shows an example of in-house patent analysis, which is based on value chain used case. And in the middle, this is the analysis of other competitors' analysis of IP on the -- the pink portion is us. And on the X-axis -- on the Y-axis, depending on culture media components, we are analyzing the strengths of other companies. And by doing this, we can identify where we are excel and where others excel. And in the right, this is a bird eye of -- the landscape view in the regenerative medicine. And this diagram shows areas of high interest where patents are concentrated where you can see a peak in the diagram. And how their interwind with other inside the regenerative medicine area. So the purple portion, cell culture equipment as well as cell production in black. Those are the adjacent areas where we've been identifying, thanks to this diagram. And we are collaborating with the players in areas that attract attention in this particular area, and we can further expand our ecosystem. By utilizing these information, we'd like to further promote this formulate strategies and this method has been widely adopted beyond cell culture media for regenerative medicine. And let me introduce newly established innovation strategy team and how they are involved in building the ecosystem. The innovation strategy team, as indicated in a footnote is responsible for promoting speedy examination and decisions on organic investment, ecosystem creation and partnering opportunities by directly accessing global markets, customers and innovation in order to realize our growth strategy. As shown on the left, the team operates globally and promotes innovation in the 4 BMX areas. IP resources will be also accelerating global expansion under this global concept. As you can see on the right, this shows the member breakdown. The IP business, CVC, M&A and R&D are all encompassed, especially with IP, 10% of that team joined the innovation strategy team to promote the integrated management. Doing this will ensure R&D business and IP strategies to be fully integrated in such a way that we can establish and promote business, CVC and M&A strategies through information gathering, discernment and technology scouting. Number four, enhancing the foundation that addresses IP strategy. To improve the IP skills for the entire genomic group stepwise, we formulated plans by hierarchy and by purpose in order to raise the entire level of IP-related skills. This is why we continue providing training programs to about 1,500 employees per year or 30% of the target employees. As you can see, the training programs are provided by different levels and at each hierarchy and doing so will ensure continuous and effective skill training and not only the ones who are involved in IP, but the entire group personnel can enhance their own IP-related skills. So this is a focus area in our activities as well. Next slide, please. Using this slide, I'd like to explain how we are strengthening our IP specialists as you can see in the 2 red portions. One is the IP specialists who are propelling this activity. And more than 30% of our Ajinomoto IP staff are lawyers or patent attorneys. So we have a very deep bench of IP specialists in this sense. In addition, we are training IP strategist who can formulate strategies from IP perspective. And we are promoting talent development in the future. And in addition to the ongoing dispatched to patent firms and molecules, we are also strengthening our efforts to encourage those personnel to gain more experience of business and strategy divisions as a form of cross-sectional experience. This will help us to develop IP strategies we are well versed in discerning businesses and formulating strategies. Next slide, please. As for the direction of investment in intangible assets regarding the current strength of our strategy, as shown in the upper portion, we will maintain and grow them. Those include patents and trademarks to be maintained and enhanced as well as our patent trademark portfolio to be evolved, which are covered in my presentation today. On the other hand, we will accelerate the evolution of our IP strategy. The evolution of that strategy, as I mentioned earlier, encompasses early patenting of key technologies, exploration for partners and globalization of the business as well as synchronization with business and R&D strategies, improvement of IP skills and specialized human resources. Doing so will increase our corporate value through appropriate investment in tangible assets. Lastly, by continuing to evolve our IP strategy, we will secure entry barriers, enhance our competitive edge in order to ensure shift to growth and to maximize ASV value, both social and economic value -- contribute corporate value enhancement. With this, I'd like to conclude my presentation. Thank you very much.

Thank you, Fujie-San. I'd like to move on to an overall Q&A session for other session. First of all, let me explain and ask a question. If you have a question, please press on the raise-hand button on your screen. We will be calling upon you. If you're called, please mute and go ahead with your question. Even if you're participating from abroad, you are able to ask your question in English, your question will be interpreted simultaneously and will be responded to simultaneously. Please understand and keep your questions within about 2 per person. We would like to ask you for your cooperation. If there's too many people who want to ask a question, we might not be able to call you. We hope you understand. So now we would like to open the floor to any questions that you may have.

Does anyone have a question? Thank you very much. Mizuho Securities, Mr. Saji, over to you.

So first of all, I would like to thank you. Regarding the Board and disclosing how board goes to -- goes in and video, I was able to confirm how active it is, and it was great, and I was really able to understand it well. So that's one piece of feedback. My question is to Iwata-san. Regarding the effectiveness of the Board, you're going to promote encourage the executive officers to risk take. But in order to facilitate risk-taking, you have been talking about various initiatives underway, but I was wondering from what standpoint, these initiatives are in place because if you're encouraging risk-taking, I think this sounds easy, but is probably not. So can you share with us what you're exactly doing? And also with leadership under Mr. Fujie, you have been creating a road map, which is on a rolling basis, and I'm sure this is challenging. Regarding -- you have changed the management method and you update the rolling forecast on a monthly basis. And you were saying that it's important for the Board to do this as well. And I think your engagement around this has already started. But regarding this rolling forecast, what is the perspective from which you supervise this? If there's anything you could share on that front, that would be appreciated.

I will answer your question if that's okay with you. Thank you very much for your question. Well, I mentioned this in discussion earlier. But the road map itself has extremely ambitious targets in place. And it was the executive officer side -- the execution side that has put these targets together. And the conventional way of doing business will probably not enable the company to achieve its targets. So the road map itself requires a high level of risk taking. So that's accounted for in the road map. So that's one thing I tried to communicate. Another thing I cited earlier was the 7 management -- important management issues. So board, we constantly deliberate about these items. So the executive side, when it comes to the Board and what kind of things are on the radar, they understand what we are deliberating. So I think we're able to share what we see as issues. So you don't have to make management just by asking the Board all the time because we have been giving out a major direction already. So based on this major direct, we really hope that the executive side accelerates the speed of management and takes risk accordingly where necessary. So that's what I spoke about earlier. So there's no one specific theme that we're trying to address right now. But if necessary, we also have been discussing at the board about -- we would like to discuss at the Board which items are items where we should take more risk. And regarding the rolling forecast that you also mentioned to your question, at this point in time, as the Board, the new way of managing the company, the way it's being executed on the negative side and whether it has been successful or not, we haven't yet had the opportunity to deliberate this. But we are planning to do so in the fall season this year. So right now, as of today, I am not able to give you anything in detail. But from the executives, I don't know if you had anything to add, I would like to ask you to speak out here.

So this is Fujie. I'd like to add a few comments. So we would like to share what happens together with executive officers. But regarding the rolling forecast and its purpose is so that we could have better executional capabilities in power or in China as well as the fellow teams. I have experience of looking at cash flow every month. And I did face a situation where we were about to run out of cash at one point in time. So at least for that month or a month, we should look at the cash balance, and we should look at other KPIs. And if conditions are poor, maybe over the short term or the medium term, we should think about what kind of countermeasures should be underway. And the leader as well as the organization should take the opportunity every month. to think about these is. And I think that's how your executional power is going to go out. For fiscal '23, officially on a global basis, we have started to work on this, officially. So there were some countries and regions that have started in advance. So they're doing well. But it's not as if all parts of the world are in sync yet. But at least what I can say is, they now understand what we were not able to understand in the past, which I think is really important. So we are sharing this with the Board but we would like to work in this way going forward as well.

For your outside directors, many outside directors happened to be supervising the execution of the company. But today, you've been talking more about and have corporate value together. So I really hope that I'd like to follow it going forward as well, but I would like to extend my gratitude.

Thank you very much, SajI-san, for the questions. Now we'd like to entertain questions from , Mitsubishi UFJ Trust Bank.

This is speaking. I'm the Fund Manager of the Trust Bank. Thank you very much for a very constructive presentation and discussion today. And I was very impressed by the video clip that you have shown. And I understand that you are taking great effort to enhance corporate value enhancement. Well, in terms of governance structure, are there any challenges or issues to be resolved? Or any clear target for you to achieve or improve in terms of the governance situation? I understand the performance has been very good for your company and the stock price is trading very favorably. So it may be difficult for you to come up with the issues to be dealt with, but I think it's -- on this occasion, I'd like to seek your opinion about any issues that we are facing regarding governance. This is not particularly of the Ajinomoto, but I'd like to a question about generic level of CEOs now generation organization, which tend to be lower than from the global standard. What is your take on this matter? Well, if there is no return on taking risks, but for Ajinomoto to be a truly company, you need to pay a very high compensation for the CEO. And this may be an opinion reflected from the Compensation Committee. Do you hear the same opinion as well? Those are my 2 questions.

I'm not nominating someone to of this question. But this is Nakayama speaking. I'd like to take your questions. Long time, no see. Thank you for the questions. This is Nakayama speaking. I'd like to take those questions. Regarding the growth potential and where we identify issues. From my perspective, for the entire group, the -- well, the group consists of very promising subsidiaries. So not only the General Motor headquarters, but they -- of those subsidiaries or can exert their true potential. In terms of cash and fund they need to make necessary investments, of course, for them to spurt or exert their full potential. And in terms of the compensation level, I think this is a generic challenge facing Japanese companies. But regarding the 2030 Roadmap and others, they stipulate very ambitious goals. So in terms of compensation for the executives, I think we need to improve the compensation scheme or level to be commensurate with the entire structure. We cannot be on par with the United States or American companies. But overall, as you rightly mentioned, the Japanese company CEO compensation tend to be lower than from the global standard. And as an outside director, we have -- we'd like to raise this as a Competitor Committee. We've been deliberating this internally, but I think we need to carry on deliberation of the Compensation Committee as well.

This is Iwata speaking. I would like to expand on this matter. I sit on the nomination as well as the Compensation Committee as well. And that like is my perspective. Starting from this year, the compensation level and compensation system has been reviewed. And we are -- you will raise a particular question about the CEO compensation. But at this point in time, we are referring to a benchmark. The -- low companies, Japanese companies with nominating companies are the use of the benchmark reference point because we -- Ajinomoto itself shifted to a company with Nomination Committee and CEO appointment delegation has been expanded. So that is why we are narrowing down on the companies with Nominating Committees. And that allowed us to raise a certain level of compensation to a certain extent. As Nakayama-san pointed out earlier, from the global perspective, whether or not we are in lockstep or at the same level as global companies, no, there is still room for improvement. For example, in the case of the United States and Europe, to attract those talents from these regions and also the personnel who are from Japan, there is a significant compensation level discrepancies and that remains to be resolved. So this is a midterm issue in my perspective. So this is an area of improvement.

Well, I'd like to delve into a question as an issue related to BOD. My point was that whether or not business withdraw or M&A, those key management materials. If there is a negative aspect, for example, withdrawal or termination of a certain business, then return on investment -- I just wouldn't know that you discuss return on investment to reach a final decision making. I just would like to understand that the process is appropriate not in terms of the BOD item.

Yes. Thank you very much for the clarification. In terms of business portfolio and how it should be we are internally deliberating this topic. And to your point, yes, this is an area of trust for us to monitor. In the past, during the previous MTP, we often talked about structural reform and made sure that the reform was making progress. And during that process, we made a significant number of or determined a significant number of business termination and withdrawal and M&A as well. But going forward, we are going to region shift to growth, and that could encompass large-scale M&A in the future. If that happens, then in an accelerated manner, we'd like to share information or gather information from the executive side so that we can make a swift business decision on an appropriate basis.

The next person from SMBC Nikko Securities, Takagi-san.

This is Takagi. Can you hear me?

Yes, you're clear.

Regarding IP, I have a question for you. Not only are you reinforcing your experts on this, but you're talking about IP capabilities that all of your employees have on a group-wide basis. Why is that necessary? And why is that important? When -- why -- when have you acknowledged that this is in? So if there's a story around this, I would like to know because whatever company you look at, there is always some experts on the subject. But we the capabilities on a company-wide basis is something that's pretty new. So I think that's a characteristic of Ajinomoto, and I do believe it's going to an entry barrier. So why did you decide to do this on a group-wide basis? So I'd like to understand the depth or the passion around this.

Thank you very much for asking this question. Takagi-san, I'll talk about the overall picture and then Iwata-san will be talking about the details. So when we were discussing the 2030 Roadmap, regarding our strength as well as our competitive advantages, we were asking the question about what they are, and it all came down to AminoScience. And intangible assets out of all things is the most important. And when you break out now, it's human resources, technology, customer as well as organizational assets, you could break it up into these aspects. And in 1908 since the discovery of Ajinomoto, regarding patents and trademark rights, we have been establishing entry barriers and we have able to enhance our competitive advantage. And we were discussing this, but actually, this has not understood that well internally is what we were saying when we debated about this. So then we were doing about how can we enhance our employees' awareness towards this. So we did this at the net level. so Iwata-san, can you talk about the details then?

Thank you very much for your question. At IP, operationally, it's about R&D and the discoveries or inventors there are turned into patents. That was the conventional way we did operations. And of course, right now, it's business and R&D as well as IP departments that are working in sync to promote our strategy, and we do so. Everyone needs to know about IP or else, we're not able to run this mechanism. And if we are able to have this mechanism in place, things will move smoothly. And that's why we have an overarching target backcast create strategies involve business units and the production people and work in unity to promote the IP strategy. And we really feel that this is necessary. And that's why we put a lot of importance on this. So it's an evolution, it's a path that we definitely need in order to evolve our IP strategy. So I hope this answers your question.

So it's not just the experts, but I guess you need more than that in order to be successful?

Right. It's not just experts, but we need everyone in all departments to understand what IP, and we need to work together.

If I may ask a brief question to Iwata-san as well. Iwata-san, when you were speaking today, you were talking about the 2030 Roadmap that is extremely challenging, and you've been repeating that over and over again. So from your point of view, Iwata-san which part of it is so challenging? For example, where is the high target or wall that you see in this plan?

Thank you very much for your question. Specifically, I'd say the 2030 ASV indicators KPIs was quantified. In the previous 3-year plan, if you go back to that, compared to what we were assuming then in some of the items and targets, the targets have been stretched. Therefore, it's about achieving the 2030 ASV KPIs. That will be the focus. So I think when he communicated to you, Fujie-san has been extremely careful about what he says, but he was saying that this is an ambitious target. It's not a target that can be achieved easily by resetting to the conventional way of managing the company. So I do believe that the most challenging part of it is the vision based on the vision that has been depicted the 2030 ASV KPIs have been set in place. And I believe the KPI itself are pretty ambitious and challenging.

Yoshida-san, JPMorgan Stanley.

This is Yoshida speaking. Can you hear me now?

Yes.

Now to speak to you. I'd like to raise specific questions. One is pertaining to IP strategy. Once again, I understand that that Ajinomoto has functional materials and ABF market share is 100%. And that is because that you have secured your patent rights in the past. And the mechanism of this recently, well, the same factor demands are growing. But ABF grade is enhancing and you are obtaining patents as you hire in terms of the quality of your products. And regarding the current state of functional materials where you have nearly 100% market share, which has a highest value of a patent in terms of your core technologies, key technologies? This is my first question.

Yoshida, thank you very much for the questions. This is speaking. I'd like to take your questions. Regarding functional materials IP. Well, ABF grade of upgrading, whether it is linked to the or the patenting new technologies. Well, the composition patent is key what components are used at what percentage and under what conditions to composite this product and how it affects the ABF function and how it meets the required specifications in terms of higher quality. Those are the new patents that we filed for and already granted or registered. And that is creating even more greater entry barriers. In addition, as it was mentioned in the material, ABF wider applications on the Y -- the X-axis or in the photo-related or light-related areas in the future, we are patenting new technologies as well as we go advance. And depending on the property, whether or not it is culminating as a business, the time line differs for each technology. But by accumulating this, we are creating even more patent values going forward. And another element is that speaking of this road map, we mentioned IP strategies and patent strategies and what the key elements are that was your question. And to repeat ourselves, AminoScience is the core of our business. And we are advancing to these adjacent technologies where we excel or exert our strength by patenting those technologies. And in addition, we need to make sure that we capture the key points in the value chain. And then for the noncore areas, we can partner with someone else so that technology-wise and business-wise we can create values to be more efficient in terms of business management. So those are our core areas in terms of formulating IP strategy.

Understand. So speaking of your technology, of -- your margin is going up. And thanks to these technologies, is that why your profitability is increasing, not by the supply-demand relationship. On page 16, the patent value as well as the correlation between patent value and BP margin.

As you rightly pointed out patent value, these 2 value creation by enhancing entry barriers, and that can visualize the business profit margin. But as it is said in this diagram, functional materials and biopharma service by their business nature, the technology itself serves as a core of business expansion potential. So there is a strong correlation between the 2. Having said that, though, I'd like to mention 2 other things. Speaking of functional materials, because we are impacted by the current market trends, so we are not actually talking about short-term scenarios. We need to implement a long-term view. And the other element is that, as I mentioned earlier, our technology is engendered and that is converted as an IP, and it takes time for us to actually commercialize it as a product. And this time lag is to be incorporated in terms of considering future contribution of our technologies culminating as a new business going forward.

We are getting a lot of questions, but unfortunately, we are drawing close to our closing time. So the next person will be our final person Morita-san from Daiwa Securities.

Okay. I'm the last person. So I just have one single question. I have a question for Iwata-san. From earlier, you've been talking about active risk-taking encouraging it is essential. I think that was one of the key words that arise in today's session. But in some cases, how about stepping on the brakes if -- maybe there are risks that are too excessive that there may be some phases where the decision needs to be made, but you're not going to take that risk. So accelerating or decelerating in risk taking, what would be the threshold in making managerial decisions? So -- and what will be the basis of that? What are your thoughts around this? At the Board, have you reached the consensus? Or is there anything on your end?

Thank you for your question. It's a very hard question actually. And just this is probably my personal judgment, but and making a decision, we -- will philosophy of the group or the company, whether what's happening fits that philosophy is one measurement, I'll look at. And also I'll look at what Roadmap 2030 is striving to achieve. I'll look at the overall framework of things and over the medium to long term, the proposals are probably being made for certain projects. So I hope to make decisions based on the standards that I've said. One more thing I would like to say is it's not issues or these agenda items should not arise suddenly. So it's more -- it should be an accumulation of above business portfolio and also for M&A one specific company. If -- before a person starts saying that they would like to acquire that company, we should be knowing which business areas are missing or lacking something. And that's the reason why if a certain company is acquired, it will complement the business because there are 4 areas of growth that have been identified and what kind of companies want to be hired are something we should be talking about on a daily basis, and we are starting to have that kind of discussion. So upon having those daily discussions, the actual projects and based on that, we would like to make a decision inly. So there is a tendency that we tend to be cautious. So that is why I accentuated encouragement of our today. But I totally agree to your point as well as to whether we should take the risk or avert the risk, But we would like to make cautious decision from time to time.

If I may confirm one more thing, how about directionally about and making decisions? Even if the direction is right, aren't there a time the risk is so high that you shouldn't pursue it. So regarding the validity of the strategy as well as the validity of the direction, are there any other standards against which you make decisions?

Actually, for the Board, regarding what you have just asked about, right now, at this point in time, we don't have decision-making standards as such. So if -- as we accumulate a number of projects, if we believe that is necessary down the road, we would like to do so. But currently, we have nothing specific to share. But we are -- we have been able to share that kind of issue amongst us -- thank you.

Unfortunately, we have to conclude the Q&A session. And now we'd like to invite Fujie-san to give us final remarks.

Thank you very much for taking time out of busy schedules to attend our IR Day event. I'd like to raise 2 points. Number one, regarding today's IR Day. Of course, I self-attended this, but the atmosphere is very much like the atmosphere of BOD. What I mean by that is that at BOD, the level we require or aspire at BOD is very high. And from the executive side, we need to be accountable by explaining the details. And on a daily basis, we need to keep sophisticating our road map, and that is presented to the BOD. I myself sit on the panel, but once we are convinced, we need to take on new challenges. So the atmosphere today was very similar to that of BOD. And the attendees today include outside directors' perspective, in terms of how to further raise our corporate value. We are all achieving 90%, but in terms of climbing the Mount Everest, 10% needs to be tackled by further OE and other sophistication. So those are the high expectations we have today that penetrated this conference today. And as a CEO, I resonate with you, and I once again would like to renew my commitment towards the speed up and scale up model. And number two, in order to do this, the competitive edge that is proprietary to Ajinomoto or uniqueness is represented by the intangible assets we have. And today, our topic was IP. But we have other intangible assets as well that serve as a source of competitive edge and source for the road map. So we hope to provide a better image of that in the next round of IR events like this as well. Through exchange of dialogues or exchange of opinions, we'd like to ensure that we further spur the growth or enhancement of corporate value. And thank you very much for your participation for today.

With this, we'd like to conclude the ROE band today. Thank you very much for your participation, and the session is adjourned. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]