Welcome to the Dentsu Fiscal Year 2023 earnings call. This is a reminder that today's call is being recorded. This call will be held in Japanese and English with simultaneous translation for those joining online. Please choose your preferred language from the bottom of the Zoom screen. For those joining on the telephone line, you will only be able to hear the original language spoken. 恐れ入りますが、電話回線からご参加の方は通訳機能がご利用いただけません。オリジナル音声が流れますのでご留意ください. Today's presentation materials are available on the Dentsu Group website. Joining me today are President and Global CEO Dentsu Hiroshi Igarashi. 五十嵐です。よろしくお願いいたします。 Global Chief Governance Officer and Global CFO, Dentsu, Yushin Soga. 曽我でございます。よろしくお願いいたします。 CEO Dentsu Japan Takeshi Sano. 佐野です。よろしくお願いします。 CEO, dentsu Americas and Global President, Data and Technology, dentsu, Michael Komasinski. Good morning, everyone. Glad to be here with you. The agenda for today will start with a business update from Hiroshi Igarashi. Yushin Soga will then present the financial update, followed by a strategic update from Hiroshi Igarashi. We will invite you to ask questions after the presentations. Mr. Igarashi, please go ahead. Good evening, and thank you for joining our Fiscal Year 2023 and Q4 earnings call today. You will have seen the news this morning that Nick Priday has stepped down as CFO of Dentsu Group after 20 years of service, for which we thank him deeply. Mr. Soga will take on the role of CFO. He is known to many of you for having held the position for 3 years previously, which will provide continuity of leadership. So, Mr. Soga will present the financials today after I talk through the highlights. Fiscal Year 2023 saw the group report net revenues up 1.6% and organic decline of 4.9%, which was in line with our guidance issued at the Q3 results announcement. Our full-year operating margin was 14.5%, 100 basis points ahead of our guidance issued at the Q3 results, given a stronger-than-expected margin in Japan. However, as our results fell short of the guidance issued at the beginning of Fiscal Year 2023, we have already begun working on countermeasures, and I will talk about them later. Full-year dividend is ahead of guidance, and today we announced a share buyback of up to JPY 20 billion. Let me start the Q4 highlights by introducing some client wins in our business. We won media pitches for Heineken, and most recently we started the new year by being named as lead creative agent for T-Mobile in the United States. For sustainability and ESG, Dentsu was selected as a component of the Dow Jones Sustainability World Index for the first time. We are also proud to announce that we were selected as a component of the Dow Jones Sustainability Asia Pacific Index for the eighth consecutive year and have seen improvements in more than six of our ESG ratings during 2023. We have also issued DER Report and Sustainability Communication Guide 2023. Moving on to industry recognition and awards, we were chosen as a strategic partner of the World Economic Forum for the tenth consecutive year. For awards, Dentsu Creative has lately won Grand Prix in several awards such as the Clio Sports and the Strategy Awards. Additionally, we are proud to announce our long-term partnership with Microsoft was recognized this week. Dentsu was awarded the Agency of the Year by Microsoft U.S. and U.K. I now hand over to Mr. Soga to present financial updates. Thank you, Igarashi-san. Hello, everyone. This is Yushin. I will now update with our financial performance for the Fiscal 2023 results, providing the outlook for the full year at the end of the presentation. I will start with our key metrics. In the three months of the fourth quarter, the organic revenue decline was -6.6%, resulting in -4.9% organic decline in Fiscal 2023. Excluding the one-off DAC financial impact, the Fiscal 2023 organic decline would be -4.2%. Group operating margin was down 400 basis points on constant currency basis year-over-year. However, it was 100 basis points ahead of the November guidance. Excluding the one-off financial impact of DAC and the additional severance charge, the Fiscal 2023 operating margin was 16.1%. As a result, the underlying basic EPS is JPY 339.79, JPY 4.79 ahead of the November guidance. The board considers the DAC financial impact and the severance to be one-off in nature. Therefore, we have upwardly adjusted the underlying basic EPS by 59 JPY per share. This adjusted underlying basic EPS is 398.75 JPY. Based on this adjusted underlying basic EPS and the payout ratio of 35%, which was announced in November, the dividend per share for Fiscal 2023 is 139.50 JPY, which was confirmed by the board today. This slide shows the main items for our full-year profit and loss. Net revenues increased by 1.6% to JPY 1,129.5 billion despite the organic decline. Acquisition in FX had a positive impact on reported revenue growth. Underlying operating profit was JPY 163.5 billion, down 20% year-on-year, and underlying net profit decreased 31.3% to JPY 89.8 billion. On a statutory basis, however, we recorded a net loss of JPY 10.7 billion, largely due to the JPY 53.1 billion of impairment charge in APAC in Q4. I will come back to this point later in the original slide. Now, on the next slide, we will review our M&A activities to date. Since we announced our capital allocation policy at the beginning of 2022, we are now two-thirds of the way through the period. Our total invested capital is approximately JPY 200 billion and was invested across all regions as shown on the slide. As a result, we have made 11 acquisitions in total during this period, welcoming 6,500 new talents to the group. The acquisitions are delivering strategic benefits, joint pitch wins, and integrated solutions, as well as cost synergies. We have enhanced our ability to deliver Integrated Growth Solutions to our clients through the additional skills brought into the group. Based on these strategic investments, the composition of CT&T, Customer Transformation and Technology, has been expanded. In particular, CT&T performance in Japan remains strong, with double-digit growth in Fiscal 2023, while trading was weaker in the other regions due to a lengthening of the sales cycle as clients became more cautious on investing in larger transformational projects. We have made seven acquisitions over the last 24 months in this area as we shift our revenue into the structural growth area of our industry. In Fiscal 2023, CT&T ratio reached 32%. Going forward, the balance of investment will shift from acquisitions to internal investments for growth. Then let's move on to the regional slide. While Japan showed organic growth, the Americas, IMEA, and APAC all showed organic decline. The reported figures on the slide for IMEA include the one-off DAC impact. Excluding one-off DAC financial impact, decline in IMEA would have been -7.6%. Among our largest markets, Canada, Spain, the Netherlands, and Taiwan all reported strong results, while the United States and the United Kingdom both reported revenue decline. Japan, our largest region at circa 40% of group revenues, achieved steady organic growth in Q4, resulting in the third consecutive year of record annual net revenues. CT&T continued to lead our business in Japan, maintaining double-digit growth for Fiscal Year 2023. In particular, we saw strong growth in business transformation and digital transformation. In this area, markets are expanding, and our group also achieved double-digit organic growth this year. Going forward, we will continue to utilize capabilities to capture market expansion and deliver value to clients. In advertising, we saw softness in TV commercials and internet media during the year, but we are now seeing the improvement of internet media in Q4 and expect continued improvement for client spending momentum. Therefore, we expect the Japan business to be robust in Fiscal 2024. In the Americas, although the creative sector showed resilience with positive organic growth, the region reported the organic declines in Fiscal 2023 due to reduction in spending from technology and financial sectors. For CT&T, despite a challenging year, there were some positive signs in Q4, including an improvement in competitive win rates and increase in deal size. In media, in December, we saw the return of spending from technology clients that we expect to continue into Q1 and beyond. The first half of 2024 is viewed conservatively as it continues to be affected by client losses. However, we expect performance to pick up in the second half of 2024 as current momentum is building, including the appointment as T-Mobile's lead creative agency in the United States at the beginning of this year. In IMEA, all service lines, media, CT&T, and creative experienced a challenging environment, resulting in significant organic decline. In Fiscal 2023, IMEA was significantly impacted by one-off financial impact from DAC, which was recognized in the second and the third quarters. This financial impact has been fully resolved, and there were no additional financial impacts in the fourth quarter. After adjusting for this impact, the organic growth rate would have been -7.6%. For Fiscal 2024, we expect the region to return to growth due to new retail and luxury sector client wins in media and client expansion in the food and beverages sector in the fourth quarter. APAC remained in the same challenging market environment throughout the year. Due to the difficult business environment and profitability outlook in the APAC region, we recorded a total of JPY 53.1 billion in goodwill impairment and intangible asset write-downs as an impairment loss in Q4. A strategic review of the region's cost base was carried out in the fourth quarter, and Igarashi-san will detail in his presentation shortly the actions we will be taking to restore growth in this region on a more sustainable basis. Moving on to profitability, this slide shows a breakdown of the change in the group's underlying operating profit from the previous year. The decline in net revenues was partially offset by cost management implemented as the lower-than-expected net revenue was recognized. As a result, underlying operating profit was JPY 163.5 billion. This slide shows our leverage position. Our leverage at the end of December was 0.59 times based on net debt to underlying EBITDA for the last 12 months. Our leverage target remains 1.0-1.5 times. One achievement as a result of One Dentsu was the financing cost optimization program that we explained in August 2023. We have reduced finance expense to deliver a benefit of JPY 4 billion in Fiscal 2023, and we will see an annualized benefit of JPY 11 billion in Fiscal 2024. The next slide provides a summary of shareholder returns. The board has accelerated the dividend payout ratio to 35% for Fiscal 2023, and today we announced up to JPY 20 billion share buyback. As for the dividend in 2024, the board guides to a minimum dividend of JPY 139.5 per share, flat year-on-year. Moving on to our Fiscal 2024 guidance. In Fiscal Year 2024, the focus will be on returning to organic growth by operating as One Dentsu with internal investment to improve competitiveness and expand capabilities. Our organic growth rate for Fiscal 2024 is forecast to be around 1%. Operating margin is estimated at around 15%, down from 16.1% on an adjusted basis in Fiscal 2023 due to the internal investments I explained before. We expect the first quarter to show organic revenue decline, and therefore, our performance in 2024 will be second-half weighted. As a result, underlying basic earnings per share for Fiscal 2024 will be JPY 381.96, and the dividend is guided at flat year on year. So, in conclusion, Fiscal 2023 was a challenging year, but we will focus on returning to organic growth in Fiscal 2024. Increasing shareholder value remains a focus, as evidenced by the accelerated dividend payout ratio to 35% one year early and up to JPY 20 billion share buyback. In total, we have now delivered JPY 90 billion in buyback since 2021, the start of the current medium-term management plan. Looking ahead, we remain confident in differentiated positioning at the convergence of marketing, technology, and consulting. I will now hand back over to Igarashi-san. Thank you. Thank you, Soga-san. Let me now explain our group's strategy. First of all, the organic growth rate and operating margin set forth in the current mid-term management plan are not expected to be achieved this year, the final year of the plan. We are conducting an in-depth review of our medium to long-term strategy, but we would like to take some time to discuss and verify the matter, and we hope to speak with you later this year. Today, I would like to talk about our current response and policy. The reason why our organic growth rate and operating margin have not progressed as initially expected was due to the significant impact caused by sluggish business of our major customers, mainly financial and tech companies. On the other hand, the intensifying competitive landscape and several internal factors that impeded our ability to respond quickly to change also had a compounding effect. In this difficult business climate, we believe that what we need to do, especially in 2024, is to concentrate our resources on organic growth by strengthening our core businesses. In terms of investment, we have been expanding our capabilities through active M&A in the past. We are shifting our focus to internal investment. By doing so, we will focus on the evolution of assets already acquired and the promotion of integration with other capabilities. We will invest more than ever in the underlying data technology that will support this integration. Along with strengthening the capability of our client-facing and integrated planning talents, we will actively invest in talents in key strategic areas such as consulting and technology development. We will also work to transform our business portfolio. Under the One Dentsu structure, we will implement a consistent strategy to restructure and review unprofitable businesses and markets. We will strengthen our competitiveness by clarifying the role of each of the more than 140 markets we currently operate and allocating resources to the markets of strategic focus. Despite this shift, we are confident that the core of our growth will continue to be Integrated Growth Solutions. In the area where marketing, consulting, and technology merge, we believe we have the competitive advantage in strong client relationships, creativity to create solutions, and continuous improvement of marketing ROI through a database approach. The promotion of Integrated Growth Solutions is indispensable for responding to increasingly sophisticated client needs and providing end-to-end services. In order to accelerate Integrated Growth Solutions, collaboration beyond areas and functions is taking place throughout our organization, yielding results. We are supporting clients' business growth through providing integrated end-to-end services from strategy to implementation. Our collaboration with TAG, of which acquisition was completed last year, is proceeding smoothly and is gaining new businesses, especially in the Americas. Additionally, we continue to strengthen our partnerships with global accelerator clients, achieving steady results, including growth in business acquisition and retention rates. This momentum will be reinforced with more internal investments. First, we will accelerate investments in the areas of data and technology. While expanding data assets, we will develop tools and products that support the delivery of data-driven solutions with high accountabilities across all practices. We will also actively utilize cutting-edge technologies such as generative AI and collaborate with partners. We will improve the sophistication and efficiency of operations and use them in services for our customers. We also need to focus on training, retaining, and acquiring leaders and talents with various specialties who can provide advanced services. Finally, by simplifying business operations and rebuilding the business foundation, we will improve the transparency of our business status and increase the speed and accuracy of decision-making, leading to improved performance such as profitability. Here, I would like to explain the most urgent action that needs to be taken at this time, which is to deal with APAC, which has booked impairment losses. The main reason for the stagnation in the region has been the downturn in large markets of China, Australia, and India. In these markets, we will prioritize core customers and services in each market, focus on rebuilding businesses, review cost structures, and expect profitability to recover in the short term. On the other hand, we will expand the best practices in markets such as Taiwan and Thailand, where we have established a competitive advantage. In terms of client strategy, we will first focus on existing clients, aiming to increase revenues and improve the quality of service. We will comprehensively review our cost structure, including the management structure, which is multi-layered due to the complex market structure, to improve efficiency and profitability. As for regions outside of APAC, we are seeing signs of recovery in growth, even as we continue to overcome the challenges that each of these regions face. In Japan, sales increased for the third consecutive year due to steady growth in the CT&T area. Japan will continue to serve as a leading market for the group, contributing to the global expansion of the business transformation business, which originated in Japan. Americas continues to see meaningful competitive wins in terms of strategy through collaboration with TAG and cross-functional use of data capabilities. In EMEA, we are focusing on markets and businesses with growth opportunities based on our solid business in Spain and Italy and striving for quick recovery in business performance. What we hope to accomplish through the strategies and actions I have described so far is steadily increasing shareholder value over the long term. To do so, we must first ensure that profits and cash flow are improved. In terms of investments, we will manage resources with discipline and ensure that they lead to growth. As mentioned earlier, while we focus on organic growth, new M&A will be curbed for the time being, and focus will be on PMI of existing projects and synergy creation. And while we optimize our balance sheet, we will also be improving capital efficiency through business portfolio transformation and investment actions. The share buyback was also decided as part of these actions. We need to strengthen our financial discipline in order to review our business portfolio and transform our business by prioritizing internal investment. The finance committee, consisting mainly of outside directors, will be established as an advisory body to the board of directors. The finance committee will ensure thorough financial governance, such as developing disciplined strategies and policies, review capital allocation, set financial metrics from the shareholders' perspective, and monitor the progress of initiatives. It will also support to ensure financial discipline to execute strategies such as the transformation of the business portfolio. We hope to achieve disciplined and sustainable growth by having the finance committee support us. This year is the final year of the current mid-term management plan. Although it will be difficult to achieve our growth rate and margin targets, in terms of shareholder returns, we have fulfilled our commitments by gradually improving the dividend payout ratio and repurchasing a total of JPY 90 billion of our own shares during the period of the mid-term management plan, including those to be conducted this year. In addition, we have made progress in terms of corporate governance, such as reforming the board of directors and transitioning to a company with a nominating committee, etc. We will take decisive action to correct gaps in current business conditions and other aspects of the plan. Now, let me summarize. While the market environment remains uncertain, we are constantly transforming our business to adapt to the new environment. During this phase, we will focus on accelerating Integrated Growth Solutions and returning to organic growth by re-strengthening our core businesses. We will also review our business portfolio and clarify areas of management focus. We aim to increase shareholder value and achieve disciplined and sustainable business growth with the finance committee. We will share with you our management policies, such as business strategy, including business portfolio transformation and investment strategy and management KPI review, in the form of a new mid-term management plan as early as possible in the second half of this year. Thank you. I now hand back to the moderator. We will now begin the Q&A session. For questions, please use the raise your hand function on Zoom or press star nine on your telephone. I will ask you to unmute, then please introduce yourself. We are confirming several hands being raised. Please keep your hands raised as we are confirming your names. Thank you for your patience. Mr. Maeda from SMBC Nikko Securities, please unmute and introduce yourself. SMBC Nikko Securities. My name is Maeda. I have two questions. May I continue to ask the two questions together, or should we go one by one? Together, please. First question. Concentration on internal investment. To date, you had been focusing on M&A, and in comparison, what will be the amount of annual investment? Will that be a scale-down of investment, or will you continue to invest at a sizable amount? And if it's going to come down, can we expect shareholder return to improve? And in the new fiscal year, operating margin 15%. But what would be the short-term financial impact through the shift to internal investment? What's the forecast for next year as well as this year? That's my first question. Secondly, organic growth rate of 1%. That's the target. But by area, can you give us the breakdown of the target by area and the bases? Those are my two questions. Thank you. Thank you, Mr. Maeda, for your question. Your first question was on concentration on internal investment. In comparison to M&A investment, is the total amount going to become larger or smaller? If it's going to decline, are we going to contemplate new policies or new measures for shareholder return? Margin guidance 15%. Will the shift to internal investment be impacting that target? That question will be responded by myself, Igarashi. Your second question was 2024 group organic growth target, and you asked the breakdown per region, what the target would be for each region. And you also asked for the backdrop to those targets by region, and that question will be responded to by Mr. Soga. By the way, we also have with us the heads of the Americas and Japan, so Michael may add some comments regarding the Americas. To respond to your first question, concentrating on internal investment. To date, the proportion of investment we spent on M&A was larger, and the acquisitions to date were explained already by Mr. Soga. What would be the absolute amount of investment? As far as the absolute amount is concerned, we are still studying what measures we would be taking. So it's currently difficult to do a one-on-one comparison. And BAU will be reviewed [in the] One Dentsu operating model. Based upon the One Dentsu operating model, there will be areas where simplification will be pursued. So through our review of BAU, we will review costs and create room for internal investments. So the current amount of investment versus how much we would be investing, so far we do not believe that there would be any impact to margin. So I solicit your kind understanding that there would not be any impact to margin. Additional shareholder return, we will watch the situation and study where possible. That's my response to the first question, and Mr. Soga will take the second question. Thank you very much. This is Soga speaking, and Maeda-san, thank you for the question. Our CEO, Mr. Igarashi, had made a comment, but let me supplement. Currently, we are in the process of drafting the mid-term management plan. As far as financial targets are concerned, it's difficult to achieve the current targets in the current plan, unfortunately. Capital allocation framework is also being designed in parallel. We've been running that program for about three years. What lies at the basis of capital allocation framework? Through growth of business, operating cash flow will grow. Through optimization of balance sheet, there will be additional cash flow. We will spend that for M&A for growth. At the same time, we will increase shareholder return. That's the general framework. Of course, assuming growth, 2023 was a difficult year. As we already said, there was the one-off factor of DAC, and APAC struggled more than expected, and there was additional impairment expenses booked. Leverage 1-1.5 was our target. When we consider the capital markets situation, we don't know if you ask us whether it's peacetime or contingency, it's a contingency period. As Mr. Igarashi said, we will focus on maximizing the value of our existing assets. That being said, in capital allocation framework, rather than leverage being low, so spending that on shareholder return, we would like to solve the one-time off event factors like the impairment losses in order to build our business towards growth. So that's what we will focus on in 2024. So we will be engaged in internal investments for that goal. And I talked about that in my presentation. But within this P&L, within the 15% guidance, we will simplify business and organization in the One Dentsu operating model. Unnecessary cost will be ripped out, and we will make room for internal investments. So that is how we will be financing the necessary investments. Sorry for that prolonged response, but I wanted to supplement what was mentioned by Igarashi-san. So now I proceed to the second question. For reasons, organic growth, what's our view at the moment? The percentage for each region, we are refraining from mentioning that this time around. Very crudely speaking, I explained the performance of 2023 for each region, and I made a short comment for each region regarding forecast for 2024. We have Sano-san, the new CEO of Japan. As far as Japan business is concerned, stable growth, constant growth is being expected, and we are confident that that would be achieved. For the Americas, Americas following Japan is a very important market. We are assuming positive growth. For EMEA, last year was a tough year because of the business environment. But as far as 2024 is concerned, we are contemplating a positive growth. For APAC, we booked a significant impairment loss. We're rather conservative at any rate. In hindsight, for 2023, against the guidance we had issued, we continuously revised downwards, which should not have happened. So we want to avoid making the same mistake in 2024. We want to be thus conservative so that we can surely achieve the guidance. So that's the factor behind this conservative guidance, 1% organic growth. Business environment, which is not unique to Dentsu, but the business environment doesn't allow any agency to be complacent. So based upon the forecast for the four regions, we would like to achieve the 1% organic growth. Thank you very much. Thank you on Japan. Sano-san, would you like to make additional comments? Thank you. This is Sano speaking. Let me speak about the Japan market. As mentioned by Soga-san, certain growth is expected. There are two major bases. In 2023, you saw the numbers. Advertising AX. TV, internet, we struggled slightly, but in the second half, we saw recovery. One is the winning rate of competitors going up, and second, the spend of our major clients recovering. Seventh area, 2023, we did well in CT&T, and we expect that growth in CT&T will continue on to the next fiscal year. Thank you. Next, regarding the Americas, Michael, would you like to comment? Yes, thank you. Yeah, so just to go a little deeper into the organic decline that was cited earlier, -7.2%. The U.S. market in particular was impacted by the reduction in spend from technology and finance clients, and that had a disproportionate effect on our media and CT&T services throughout the year. We had several client losses in the media part of the business in the first half of 2023, and that continues to impact comps as we roll through the second half of the year and the first half of 2024. The CT&T part of the business reported project delays and some reduced scope across 2023. But we did see an improved win rate in the second half of the year, both in CT&T, media, and across the business. And I'd say as we come into this year, there's a relatively flat pipeline overall, but deal sizes within that pipeline are up modestly. And I think coupled with that improved win rate from the second half of the year gives us some cause for optimism that we can stem the declines that we saw last year. On the bright side, just to round out the portfolio of the Americas, our creative business saw growth in 2023 with some incremental clients and revenue from existing clients. Our Canadian and Latin America regions were both positive and have similar outlooks for 2024. はい、以上。ちょっと長くなりましたが。 Thank you. And sorry for that rather long answer, but that concludes the ans wer. Thank you very much. Thank you very much. So for the next question, Mr. Nagao from Bank of America Securities, please unmute and introduce yourself. はい、ご質問ありがとうございます。 Thank you for taking my question. I'm Nagao from BofA Securities. First question, I have three questions. First question is about Japan business. In fiscal 2024, what sectors do you have higher expectations? Which industry sectors? The second question, this year in Americas, what is the current status of the pipeline for media pitch? In the past, it was mentioned that the defensive portion is lower. You are well-positioned to acquire clients. In the past presentations, could you provide us with an update on the Americas? And my final question, the third question, TAG will be fully consolidated this year. What will be the positive contribution from full consolidation of TAG this year, including EMEA? It was mentioned that the view is conservative, although you expect a positive growth. Overall tone was that of a conservative one, according to Mr. Soga. But because of this new full consolidation, I wonder if you could be rather more positive. And what is the impact that you see from TAG becoming fully consolidated? Thank you, Mr. Nagao. We received three questions. First, which industry sectors do we have stronger expectations in Japan? Mr. Soga will address that question. The second question is about the Americas and media pipeline. Last year, the portion of defensive was lower, as he recalls from the past presentation. The update was requested. Michael will address that question. The third, as for TAG, Igarashi myself will address that question. ありがとうございます。それでは。 Thank you for your question. I would like to respond to your question concerning Japan business. We have expectations, strong expectations for several industry sectors, food and beverages sector in particular. We have seen growth in the fourth quarter onward, and FMCG will continue to remain strong. In fiscal 2023, there was a declining trend, a small declining trend in communications, human resources, and automotive and public sectors. We expect recovery in these sectors this year. Michael, please. Yeah, so on the media pipeline question, our total pipeline is GBP 3.7 billion, which is in line with averages. That is 90% offensive, which puts us in a strong position. Speaking relatively, in 2023, that was as low as 70% in terms of the offensive position. It's a much more encouraging position than it was last year. We do hear from pitch consultants and industry contacts that we do expect pipeline to increase in Q2, but we come into the year in a reasonable position, flat at JPY 3.7 billion. はい、続きましてタグ社。 Next, regarding TAG. Last year, acquisition was completed. In the second half, TAG began to take part in pitch, and especially in Americas, in concrete fashion with clients. Regarding pitch, we have individually considered the situation and implemented actions. As a result, thanks to that, in Americas, we have been increasingly collaborating with TAG. T-Mobile, designation of Dentsu as a lead agency, was as a result of collaboration with TAG. With other clients, we are beginning to see more and more successful results. Currently, centering around the Americas, we would like to continue to develop clients where we are more advanced than in other regions in terms of collaboration with TAG. As for EMEA and APAC, in comparison to our expectation, the progress seems to be more moderate. However, in Americas, we have actual successful examples, and we are analyzing these successful examples to focus on more specifically our target clients. Towards the second half of the year, we expect to see stronger progress. To a certain degree, we expect contribution from TAG to our growth, but more. The solutions will be enhanced, and we believe that we will be able to establish such a process in this year. We now have these strong capabilities within our group, and we would like to translate those into concrete numbers. はい、大変よくわかりました。ありがとうございました。 Thank you very much for those answers. As a reminder, if you would like to ask a question, please press the raise your hand function on Zoom, or press star nine on the telephone line. Thank you. For the next question, Ms. Fiona Orford-Williams from Edison Group, please unmute and introduce yourself. Thank you. Thank you very much. It's Fiona Orford-Williams from Edison. First of all, I think I've got now the bridge on the operating margin from the 2016 adjusted for the DAC cluster in 2023 to 2015. You also talked about an IT project that's been delayed in Japan, which had actually benefited the margin in Japan in Q4. Can you just tell us a little bit more about what was going on there, and presumably that that is built into that 15.1% guidance for 2024? Second question is about the accelerator clients. I mean, obviously, you've been having good success there with the effectiveness. Do you expect those effects to continue, and is there scope to expand the number of accelerator clients that you have? And the third quick one is about the scope of the business review that you're carrying out. Obviously, you've got specific things that you're tackling in APAC at the moment, but you're talking about a larger business review. Can you just clarify the scope of that? Thank you. はい、フィオナさん、ご質問ありがとうございました。 Fiona, thank you very much for the question. First question was on margin for 2023. Why was it high? For 2024, 15.1, regarding that margin in comparison to 2023, factoring in the IT investment that shall take place in Japan, how does that relate to the target? That will be taken by Soga-san. Second question, accelerator clients. Will we continue to inject efforts? First, I myself, Igarashi, will comment. And regarding the Americas, I will ask Michael to add some comments. Third question, business review. I will take that question. First, Soga-san, please go ahead. This is Soga speaking. Fiona, thank you very much for the question. One of 2023 impact, DAC impact. As I explained, in Q3, we reported the impact, and in Q4, there was no additional booked impact. In Q3, the full year margin guidance was announced, and thereafter, as I explained at the outset for the group, we did a tightening of cost control. As a result, Japan margin in Q4 was above guidance, and that led to the group-wide margin improvement. Part of that is due to what you have just mentioned rightly. We were planning to do the IT project last year, and we postponed that to 2025. That was not a decision made for the sake of improvement of margin for 2023. It was just a change of the scheduling of the project to 2024. In the 15.1% guidance, of course, that budget is factored in. I think I responded to your question. Thank you very much. Second question is accelerator clients. Among global clients, to some of the top clients, clients with whom we can accelerate our relationship, and we choose those clients after thorough analysis. What are the challenges these clients face? Where are the domains where Dentsu can offer solutions to those clients? Is our contribution going to lead to the resolution of those challenges felt by the clients, and is that going to lead to further growth of Dentsu Group? We do such analysis, and by self-assessing our own capability, we try to select and expand the relationship. Yes, as you have rightly pointed out, Fiona, this business has been quite successful. If we compare the deal size, 75%, the transaction volume is expanding by 75%. Regarding pitches, winning rate, it has gone up. The win rate is 30% higher than clients in general. The continuity of relationship is 40% higher for accelerated clients against the total clientele. This project in each market is something that we value in each market. I think we are in the stage of trying to expand this project in various markets, especially in North America. The updated situation in the Americas, Michael, would you like to comment? Yes. Thank you, Igarashi-san. Yes, we will be expanding the accelerator client program in the Americas. As Igarashi-san mentioned, it shows significant outperformance versus the rest of the portfolio. And really what drives this is the sophistication of our clients and their need for solutions that cross multiple capabilities, right? So they're not so much just asking us for media or creative services, but they want to drive personalization at scale, as an example. And that includes data and identity capabilities, analytical modeling capabilities, and then content deployment and activation capabilities. And so you have to bring all of those things together in an integrated solution, and that creates that cycle of growth and retention with those clients. And so that is a really strong trend in our industry right now, and we're going to continue to expand and take advantage of that as much as possible. はい、最後のご質問で。 Thank you. Your last question is business review, which is being done not just for APAC, but for other regions and other areas. But in terms of priority, APAC is of very high priority. That's why we mentioned that in our presentation. But we are engaged in review and reinforcement of the business framework for the global market, which are the markets where we should prioritize, who are the clients we should prioritize, what are the services or priority services that we should be offering to those clients. We are reviewing that business process to improve the efficiency of investment. Of course, the major underlying necessity is to respond to the clients' needs. So first and foremost, we need to judge whether we can answer the challenges faced by the clients. Our business transformation is first and foremost dependent on whether we can resolve the challenges faced by clients, and that is the very cornerstone of the review of business, and that should lead to improvement of return. That concludes my response. Thank you. Thank you very much. So for the next question, Mr. Nagao of Bank of America Securities, please go ahead with your additional questions. Thank you. Thank you very much for taking my question for the second time. Three short questions, if I may. First, this year is going to be the year of the Olympics. And do you expect positive in Japan? What are your expectations? And secondly, this is a common question. The United States is an election year. Is there going to be an increase in business that you can expect? And the third question, in Japan, subsidiaries are also publicly listed companies, and you are tolerating that situation. What is your view? Do you believe that there is a room for reorganization strategically? How do you plan to build Japan business? Or do you see no necessity of a restructuring? What is the view of Mr. Igarashi? Thank you, Mr. Nagao, for those questions. First, is the Olympics this year plus for Japan? Mr. Sano, please address that question. Second, election year in the United States, and is this a positive for our business? Michael, please respond. And the third question, I will respond. Sano-san, please. I would like to address your first question. This is Sano speaking. As you rightly mentioned, the Olympics is a very exciting event, and we have expectations. In 2023, including WBC, we had international major sporting events. This year, it is not just the Olympics, but Olympics is a huge event. There are strong expectations of the peoples, and we expect that to have a positive impact. Thank you for your question. Next, Michael, please. Yes, thank you. Look, in the U.S. elections, do not normally have a material impact on our results. So in our current forecast, we have that weighted neutral as a factor, neither positive nor negative. That's the simple answer to that. はい、ありがとうございます。それでは、日本事業の子会社。 Thank you. Turning to the subsidiaries in Japan business, overall, we have 160 subsidiaries, and the review of the portfolio is necessary. That is our belief. Based on your question, I believe your question was about the publicly listed subsidiaries. The interest of the minority shareholder is always kept in our mind as we participate in the management of the subsidiaries, and we make sure to create values by collaborating with our subsidiaries. In recent years, in particular, the former ISID, the current Dentsu Soken, had a name change. And starting with that, we are strengthening our business partnership, which are yielding results. And in CT&T, in particular, listed subsidiaries are playing very important roles. Based on this, how are we going to strengthen collaboration further? And are outcomes in line with the degree of collaboration? And is the capital structure appropriate? We always have to consider this, and we are indeed considering these. Appropriate review is always being carried out as seen fit. Thank you for your questions. Thank you. Thank you very much. So for the next question, Mr. Rajesh Panjwani from J.P. Morgan Asset Management, please unmute and introduce yourself. Hi, this is Rajesh Panjwani from J.P. Morgan Asset Management. Before I ask my questions, just a quick comment. It's good to see that the company is focusing more on internal investments rather than M&A. I hope this, combined with the new finance committee, leads to increased shareholder returns in the form of buybacks. Coming to questions, my first question is, in your balance sheet, there are around JPY 80 billion assets held for sale, which has gone up from last year. Can you talk a bit about what those assets are? Second, right now, there's a wave of TSE reforms, and there's a lot of focus in those reforms on return on equity and return on invested capital. In the next midterm plan, will the company focus on ROE, ROIC targets as well, in addition to revenue growth, EBIT margins, etc.? Thank you very much. はい、パンジャイさん、コメントも含めて。 Thank you, Mr. Panjwani, and thank you very much for the comment and your question. First of all, JPY 80 billion of assets for sale. Details of those assets. I will ask Soga-san to respond. The second question, TSE reform. In the next midterm management plan, not just revenue but ROE, are we thinking of setting ROE and other KPIs? I will take that question. This is Soga speaking. Thank you for the question. JPY 80 billion asset detail. I don't have that at hand, so I hope that you can look through the securities report. There are commercial properties, real estate properties, and policy holdings, strategic holdings, which is on the agenda quite frequently. But our basic policy is to sell off our non-core assets and improve cash liquidity and invest that for growth. We are one of the Japanese companies that are aggressively taking these measures. You recall that we have been significantly reducing our policy holdings, and against our net assets, it's below 10%. We are continuously selling that portfolio. Real estate properties, non-core real estate, including the headquarters building, those properties have been sold. I do not have the details of the JPY 80 billion, so I cannot directly respond. But at one-on-one IR meeting, I may be able to confirm, or you may be able to confirm through the securities report. Thank you. Thank you. On the second question, we are currently studying what we should write in the NTMP, and we want to take some time before we share that with you in the second half of this year. The big issue is how we can maximize organic growth in order to increase our corporate value. Establishment of finance committee is part of that because we think financial discipline is necessary and essential. So we will look at various aspects as we finalize the next midterm management plan. Mr. Panjwani, your question referred to new KPIs, whether new KPIs would be included. We will study that matter. At the occasion of the announcement of the midterm management plan, we hope that we can share those points with you, and we continue to solicit your continued attention. Thank you. With that, I would like to conclude today's earnings call. Thank you very much for participating today. You may now disconnect. Thank you.