The time has come to start the Hitachi, Ltd. web conference on the progress of the 2021 Mid-term Management Plan. I would like to introduce the speakers on our side. Toshiaki Higashihara, President and CEO. Yoshihiko Kawamura, Senior Vice President and Executive Officer and CFO. Tomomi Kato, General Manager of the Financial Strategy Division. I would like to ask. Mr. Higashihara will be presenting the progress made on the 2021 Mid-term Management Plan first. We will change the screens. Higashihara-san, please. Hello, everyone. My name is Higashihara. Thank you very much for coming to this web conference, which is a presentation of progress made for the 2021 Mid-term Management Plan. I'd like to first of all start off with talking about the four main themes or messages for today. First is the 2021 Mid-term Management Plan progress and achievements. Second is how to achieve growth through digital technologies. Third, contribution to the environment through business. Lastly, future capital allocation for growth as well as shareholder return. Now, Hitachi will continue to grow sustainably, and secure earnings by promoting our Social Innovation Business. In order to improve the quality of life in people and increase the value of the customer companies, we will focus on the three domains of environment resilience and safety and security. In these three business domains, Hitachi will use Lumada to solve social issues and corporate management issues by combining OT and IT products in a package to provide the solutions to our customers. Today, I shall cover the progress made in the Mid-term Management Plan of the 2021, and talk about our next stage of growth. Let's review what we have achieved so far. Under the 2021 Mid-term Management Plan, we have been focused on strengthening our digital capabilities to become a social innovation business leader globally. In the digital domain, Hitachi will expand the global digital platform through the acquisition of GlobalLogic with Lumada at the core. To expand Hitachi's strength in OT, IT, and products globally, we have acquired and strengthened OT assets in the areas of industry, healthcare, energy, and EV. In our operation foundation, we are utilizing the power of digital for higher efficiencies and standardization. In addition, by utilizing the Hitachi ABB Power Grids' global operating platforms across Hitachi, we will establish a stronger global foundation. I would like to talk about the progress made. We believe that we have been able to control the impact of COVID-19 in terms of providing support to our customers. We have expanded working from home, and cash management has also been strengthened. By so doing, we have been able to increase JPY 300 billion in terms of operating cash flow. Digital strengthening has been pursued. Lumada revenues have increased. We have acquired GlobalLogic, and that is a business unit. The strategy will be further strengthened going forward. In terms of our operation portfolio, the Hitachi ABB Power Grids integration, and with the Hitachi Astemo, overseas sales will be growing to 57%. Now, this is the results of three years, and you can see that COVID-19 impact has been incurred for three months in fiscal year 2019, 12 months in fiscal 2020, and six months in fiscal 2021, according to our plan. I think we have done a good job in terms of controlling the impact of COVID-19. We will aim to achieve adjusted operating margin and ROIC of 10%+ in fiscal year 2022. Next, I'd like to talk about the impact of the Hitachi ABB Power Grids integration. In July last year, we integrated Hitachi ABB Power Grids, which has the world's top products and technologies. In terms of business, we are expanding our digital business globally through cross-selling by leveraging Hitachi ABB Power Grids' customization, implementing Hitachi ABB's digital assets such as EAM and Lumada in collaboration with Vantara. In order to strengthen the environmental business, we will strengthen the global development of digital grids and HVDC, which will enable the efficient transmission and distribution of the renewable energy. In terms of operations, we will promote the use of Hitachi ABB's global operations throughout Hitachi. We expect to invest JPY 30 billion in building a common ERP system, which will reduce costs by JPY 100 billion, having an impact eventually of JPY 70 billion. By utilizing the global shared services, by investing JPY 50 billion, a cost reduction of JPY 150 billion will be achieved with an impact of JPY 100 billion. In this way, the ABB's global shared service will be utilized so that company-wide cost reduction can be achieved. Next, I would like to talk about the synergies with GlobalLogic. The combination of Hitachi and GlobalLogic will accelerate the digital transformation of public services and social infrastructure for Hitachi's customers. For GlobalLogic's customers, Hitachi will combine its strength in OT by IT by products to provide services products encompassing mission-critical areas. In terms of the capabilities, social infrastructure services as well as cloud services will be covered together, and co-creation will be promoted. In terms of software engineering, GlobalLogic's development from embedded software to cloud applications, combined with Hitachi's mission-critical system development capabilities, will strengthen our capabilities to provide services globally. This is how we're going to evolve Lumada. Through co-creation and collaborative creation with customers, Lumada offers solutions to social issues and customers' management issues by applying its domain knowledge and digital technology. Hitachi can leverage its real-time and mission-critical capabilities to connect these service space and physical space to provide problem-solving applications. By combining the OT assets acquired globally so far and strengthening our software engineering abilities of GlobalLogic that we are acquiring this time, we can deliver value in terms of the environment, resilience, safety, and security to our customers. Applications embedded with management and operational know-how are turned into containers or packages and installed on the cloud. Through Lumada's platform, applications most suitable for the issue at hand that may differ from one customer or region to another can be swiftly deployed. In the domains where the environment, resilience, security, and safety are relevant, digitally enabled business growth can be brought about. Let me give you the details on that. In the area of the environment, Hitachi's proposition of OT times IT times products support society that is increasingly electrified. For carbon neutrality, we will expand our business centering around digital grids, HVDC, and packages that support green mobility and EVs. In the realm of resilience, Hitachi will support with its digital offerings, sustainable public services, and corporate activities. We are looking to further augment our business for public sector and financial services, industrial digital solutions with robotics at the core, as well as logistics supply chains that connect manufacturing, warehouse, storage, and delivery. On safety and security, Hitachi offers diagnostics, therapy, and digital expertise that enable the most optimal care for the individual. Our bio in vitro diagnostics, particle beam cancer therapy, pharmaceutical care, and home-based care will help bring about what is most optimal for the individual. In all three domains, the environment, resilience, safety, and security, we will secure growth in a global business by understanding the needs of each region. In Europe, our focus will be on the environment, including electrification, energy, circular economy. In Asia, we will promote safety and security in smart cities and PBT. In North America, our efforts will be in the area of resilience for manufacturing and logistics. Here in Japan, initiatives for digital security will be pursued. In all three areas, growth will be pursued and captured. Global frontline capabilities of Hitachi Power Grid and GlobalLogic that we have acquired or are acquiring thus far will be brought to bear. Domain knowledge in each of the business areas we cover, incorporated in the applications and turned into containers or packages that will enable us to scale up our business. By offering environmental value to companies with our partners through these businesses and corporate activities of ours, we intend to contribute to realizing a decarbonized society and a circular economy. To contribute to the environment through our business, Hitachi's contribution will be to push for electrification to help our society realize decarbonization. Our energy, railway, and heat system businesses will grow as we did realize the circular economy. For example, we launched a lifecycle management service business for EV batteries, the use of which are expected to increase dramatically to assist in expanding their recycling and reuse. As an internal initiative, in view of the goal to achieve carbon neutrality by fiscal year 2030 in our facilities that we announced last fiscal year, we obtained a science-based target, SBT certification. By expanding this initiative to our partners, we will aim at reducing CO2 emissions for the whole of our value chain. Hitachi focuses on ESG in its management. We will continue to do so. We are to grow sustainably alongside a society we operate in and fulfill the responsibility as a corporation to create sources of growth. We will accelerate efforts on Hitachi Environmental Innovation 2050, including our goal to attain carbon neutrality by FY 2030. We have become a principal partner for COP26 to be held in November this year. As such, we will continue to be committed in making contributions for the environment. In social areas, we are working to enhance the utilization of global talents and employee engagement. Diversity and inclusion will be boosted with our target of increasing the ratio of female and non-Japanese executives to 30%. Regarding measures for human rights, which have become a social issue, we will strengthen audits on partners and build a human rights risk management framework. Hitachi ABB Power Grids has a track record in implementing initiatives for labor safety, so we will leverage that. Importance is placed on the independence and diversity of the members of the board. Currently, 10 out of 13 directors are independent outside directors, of which six are non-Japanese from overseas. Further, contribution to the environment is now considered as part of the evaluation for the directors' compensation. With these measures in place, we will actively strengthen governance. Next, I will explain about the capital allocation going forward. The focus will be on cash flow from operating activities and ROIC to achieve growth and profits. Investment in growth will continue in the areas necessary for businesses in the environment, resilience, security, and safety. With respect to shareholder returns, stable dividend payment will be made in line with the growth of our business. Share buyback will be considered in view of the status of the growth of our business, the asset sale, and stock price. In terms of capital allocation moving forward, while continuing to make certain levels of investment for growth, we will look to increase cash flow from operating activities through the growth of our business, continue to divest assets, and refrain from taking out large borrowings so that we can reinforce shareholder return. Hitachi will continue to work to achieve sustainable growth by focusing on social innovation business, offering digitally enabled solutions to the issues of society and corporate management in the areas of environment, resilience, security, and safety. Thank you for your attention. Thank you very much. We would now like to proceed to the Q&A session. Those of you who have questions, please utilize the Raise Hand button on the Zoom screen. We will delegate the person to be asking the question first. Please state your name and affiliation before asking your question. We will refer to your name according to the name on the system. If the question is no longer necessary, please make sure you release the Raise Hand button. We will not be showing the video of the person asking the question. We will be, first of all, taking questions from the Japanese channel, the institutional investors analysts, and then the English channel, to follow. First of all, the question can be raised by the media on the Japanese channel first. Hirakawa-san, please. Please unmute and ask your question. Question. I hope you can hear me. I have three questions. First question is the portfolio realignment and everything business can now be embarked upon fully. IT/OT are areas where Siemens already have a significant presence. How will Hitachi compete with your peers globally, and what are the challenges as well as your strength? Second question is regarding GlobalLogic acquisition. In terms of revenues as well as earnings, it's not very significant, but how will you bring to bear synergies with individual sectors in Hitachi? What kind of synergies, what is the schedule timeline, as well as what is necessary? Number three, regarding Lumada profit margin, what is it? What has it been in the recent past and the profit margins going forward? Thank you. I would like to respond to your question. Regarding portfolio realignment, we are making progress. OT by IT by product, this is our strength. We have been able to promote this significantly. With co-creation with the customers, we are identifying pain points to realize solutions using Lumada. This has remained unchanged from the past. On the other hand, in terms of consultants and other. Companies are doing a consultation or package, and partners are outsourced to provide the rest. On the part of Hitachi, from the challenge as well as solutions as well as maintenance, we have a seamless service provided to our customers. This is our strength. In terms of industry, the supply chain integration will lead to better efficiency. In addition to that, at the management level of the company to the front line, we are able to link the whole supply chain. It's from end to end, inclusive of management of the customers, where we can work with the customers to provide the solutions through co-creation. This is an approach unique to Hitachi. In terms of GlobalLogic going forward, first and foremost, the company is growing very significantly, and I would hope that this trajectory of growth there will continue in 2050. They are poised to achieve JPY 300 billion or so. We hope that this will continue. Profit margin is around 25%. Obviously, we want to continue this. With Hitachi, I talked about container package. This is the strength. Software can become assets. This is our strength. On the part of Hitachi, we can deploy that globally. We can provide such a mechanism. Furthermore, in terms of software development capabilities, in India, we have a development team, we have GlobalLogic. This development team will be more integrated, that efficiency in terms of development can be enhanced. Therefore, the organic growth of GlobalLogic is expected. Development capabilities to enhance the container or package will be brought to them for global deployment in terms of background. The embedded solution can be covered to the cloud solution. We can do this by unleashing the power of GlobalLogic in the area of railway systems, inclusive of maintenance. The software will be incorporated into the chip as well. Development efficiency will be enhanced. This is the type of growth we hope to achieve. In terms of Lumada, on the other hand, we are making investment for development. For the core, we have double-digit growth already, almost. Going forward, we hope to achieve close to 20% in the double digits. I thought I answered your three questions. I hope that will suffice. Thank you. Nemoto-san, please unmute and start your questions. President Higashihara, I would like to ask you about the overall consolidation of the group. You talked about the acquisition of Hitachi Metals. You are acquiring overseas, for example, GlobalLogic, so you have been bold in restructuring the group. Hitachi Construction Machinery still is part of the group. What is your assessment of the progress made in reorganizing the group? What kind of company has Hitachi become as a result of this reorganization, and what's your thinking going forward? Thank you for the question. Let me give you the basic understanding about reorganization. There were lots of listed subsidiaries when I first became CEO. What I thought was that Hitachi needed to be globally competitive. How can we achieve that? We have to make listed subsidiaries globally competitive, otherwise they will not be able to survive. It's a matter of time before they start declining, I thought. The question was, how can we become globally competitive? Hitachi is shifting vigorously toward digitization, and similarly to that, if we are to grow in the same direction, we can manage all the subsidiaries on the same balance sheet. For growth, if subsidiaries can grow in a different direction other than digitization, we should remove them from consolidation. That was my basic thinking. There's a listed subsidiary of Hitachi Construction Machinery that's still left within the group, but it's an individual topic that we need to deal with. Based on the basic understanding that I have just outlined, I understand the top management is thinking about the future of Hitachi Construction Machinery. At this moment, I would like to refrain from making individual comments or specific comments about the subsidiary. We have to make a judgment based on the direction of the future investment that's necessary for a group. Thank you. Tamai-san, please. Please unmute and ask your question. Thank you. Question. Regarding GlobalLogic, the acquisition thereof. You will have more pieces to deploy. From your point of view, are there pieces missing still? If that is the case, which are the areas you would like to strengthen? That's my first question. Second question is relating to your global aspirations. If you stay domestic, it is likely to decline. On the part of Hitachi Group, it is less than 60% in terms of overseas business ratio. Ultimately, what is your ideal best ratio for the overseas business? That's all. To your first question. What are the other investments necessary other than GlobalLogic? Let me address that. As I mentioned in the capital allocation, one-third is for growth investment. This isn't we're not going to not do growth investment. I mentioned the importance of the environment resilience, security and safety, and medical. In this area, personalized medicine, precision medicine will become increasingly important going forward. In this area, I believe that further investment will be warranted. Beyond that, lifecycle services should be expanded, and investments will be necessary in this field as well. We will deal with these matters one by one, case by case. That's 57% for 2021, in terms of overseas business ratio. I think it is likely to increase 60%, 70% or even 80% going forward. This is relating to the population bonus and the demographics, and increasingly, Japanese companies will be shifting their business overseas. That's all. Thank you. Thank you. We are receiving many questions, but at this moment, we would like to move on to the group of institutional investors and securities analysts who are on the Japanese channel. Institutional investors, analysts on the Japanese channel, if you have questions, please ask them now. Ezawa-san, please unmute and state your questions, please. Thank you. There is just one question I wish to ask about shareholder return. page 14, you talked about capital allocation. Looking at this, in the next MMP, shareholder return will be strengthened quite substantially, if we look at the dark green graph. In 2021 MMP, shareholder return seems small, but even so, when it was announced, it was double what it used to be before. 2021 MMP shareholder return at this moment remains unmet, and you're going to grow this further substantially. What's going to be the scope and the size of shareholder return you think is most appropriate? If you could once again share your thought on this. On the graph, it appears small. 2021 MMP, this year is included as part of this 2021 plan. Naturally, in terms of shareholder return, we look at it in terms of total shareholder return. The graph may not show it correctly, but repayment of debts and shareholder return in terms of TSR. FY 2021 and onward, this will start in earnest. That understanding is correct. The vision for the next three years is outlined here. Starting from FY 2021, shareholder return, debt repayment, this will start. That's damage. This is set to start from FY 2021. This year will be the last year for 2021 MMP, and I'm wishfully thinking that there will be hundreds of billions shareholder return to be made. According to the plan for dividend payment, the shareholder return is not going to be all that large after all. After a year, perhaps the goal may remain unmet. The number on the left is going to be small, and yet, in the next MMP, if it's going to be grown by double, effectively it could be a quadruple increase, it appears. What's going to happen? Perhaps the graph may not be depicting the reality very correctly. As you said, starting from this year, what is described here: business growth, asset divestiture, and stock price, depending on these, we will decide on shareholder return, including share buyback. In one of the meetings with the investors we had, I said the same, and it will start in earnest this year, although the graphs may not depict it very correctly. Understood. Thank you. Mrs. Mizan, please. Please unmute and ask your question. Thank you for this opportunity. I have three questions. It's a follow-up to the previous question. Regarding page 14, I want to make some confirmation. On the right-hand side, in terms of, it's about JPY 4 trillion-JPY 4.5 trillion, that is not the case. In three or four years, the accumulated number is reflected here. Is that a correct understanding? It's not the actual amount that you're referring to. Is that the case? Right-hand side, though it does not have the number or the amount, it is not fixed yet. In terms of overall balance, in terms of the debt, it's not going to be significant. Compared to JPY 4 trillion, it's likely to be smaller. It's not fixed yet. That's why it doesn't have the amount included. What we want to say is that, growth investment, as well as capital expenditures, as well as repayments of debt are one-third each in terms of allocation. The intention is reflected here. That's three years accumulated, it seems to be four years according to what you've just said. You have been asking us to focus on EPS growth. Every year We've accumulated here, but, or rather, it's not going to be manifest in three year, third year, but this is going to be on a yearly basis. In terms of buyback, you are going to strengthen shareholder return. Is that the right message? Yes, that's right. When I discussed this with you earlier, we have been able to divest many listed companies, therefore, the outflow to minority shareholders have been reduced. You can see that in the net income increase. I mentioned this already to you. In case of buyback, EPS growth rate is how our business should be evaluated. I think that's best. Therefore the amount in terms of net income as well as EPS growth should be the main focus to evaluate our business. Second question. Page six. You have provided here the 10% for 2022 in terms of target. From the new fiscal year to working share of the margin, a 2.2% improvement, it seems to be a very high bar to surmount. What is your blueprint to achieve this? In my head, what I'm visualizing is that the five sector and the Astemo should be our main focus. If you look at the cost structure of these sectors in terms of gross margin and SG&A, shows that gross margin should be around 30%. SG&A should be below 20%. That's the basic framework for each sector, for the five sectors in the Astemo. If we add everything together, we have been able to visualize this structure already. Fiscal 2022, we should have a double-digit profit. Based on this conviction, I'm saying that fiscal 2022, we should be able to achieve 10% in terms of adjusted operating income ratio and ROIC. Second, regarding Lumada. I would like to ask the following question. From the past, you said that by providing solutions, you're providing added value in terms of solutions. It's not based on cost of goods. What is your evaluation now? Do you think that you are able to provide value-added Lumada solutions? Even with the development in goods, it seems that it is rather low still. How far have you come on your journey in terms of the ideal Lumada structure? For 2021, in this period, we made a significant investment in Lumada, so that is having a negative impact. It isn't as if it is all reflected in profit. In terms of core and the other applications in energy and mobility or scale by digital and core should be the segmentation for core, significant investments have been made, therefore, we should be achieving near 20% in terms of operating profit margin, we haven't yet reached that level. The investments have run its course now. In the next three years, in the double-digits, I think we'll come closer to 20% for Core as well. For scale by digital, GlobalLogic will be joining us now, and as I mentioned earlier, the container is going to be important. The combination of domain knowledge and applications. Preventive maintenance could be applied in the U.S. Truck maintenance is one application. We hope that this can be applied globally, and we'll be able to reproduce this significantly elsewhere. Once we are able to establish this container, or combination of domain knowledge and application, I think that we will have a better opportunity to globally expand this business. In the next three years, Lumada growth will see increase in revenues, but also improvement in profit margins. That is what we will aim to achieve. Understood. Thank you. Thank you. Next, Yasui-san. Yasui-san, please unmute and start your questions. Thank you. There are two questions I wish to ask. The first question is about the financials. Frankly speaking, you do not necessarily have discipline, although it may appear so. Financial targets as well, D/E ratio of 0.5, you say that that's part of the financial discipline, yet you're having this JPY 1 trillion acquisition, ROIC 10% you say, but for acquisition of GlobalLogic, the multiples are very high because you're spending JPY 1 trillion. 10% return means, in terms of free cash flow, you are expecting JPY 100 billion, and that may well be the case in the future, but there could be a deviation. Inclusive of business acquisition in the future, we do know that there will be increased revenue. You appear to have fiscal discipline, and yet you don't. For example, after acquisition of GlobalLogic, are you focusing on the return? I don't think you are focusing on return, prioritizing return. It's hard to see it that way, actually. I do understand the principles, but your reality is not catching up with the principles that you set for yourselves. When it comes to investment, what is the target return for Hitachi? What is the indicator used to measure that? If you could please explain. That's my first question. Answer on that, Kawamura-san manages investment and loan division, so I would like to turn to Kawamura-san. Kawamura speaking. Allow me to answer. Financial discipline that you pointed to. The thinking behind financial discipline could be something that is short term at the moment, and financial discipline over a longer period of time, one to two years. We're running a business, so funding needs change all the time. Whatever is lacking from operating cash flow, we will have to take out a debt for acquisition. Over the short term, various ratios could well deteriorate. D/E ratio of 0.5. For the acquisition of ABB Power Grids, we have to take out a debt, so temporarily it's up to 0.5 over the short term, but one to two years from now, it's going to decline to 0.4, 0.3. Of course, operating cash flow as well as sale of assets will be used as source of repayment. It's not that our financial discipline is lax, it appears so over the short term. Over the medium to long term, we are making sure to ensure financial discipline. The second point about return on investment. Given the cash flow today, how much return are we going to aim at? Not that we have a specific number at this moment, but in terms of dividend for FY 2021, JPY 100 billion in the first half and second half. We do have financial discipline for that. Funding is in line with that. Not that we lack financial discipline and yet engaging in acquisitions and having shareholder return, that is not the case. I hope you'll understand. Perhaps a follow-up question. You're running a business. I'm sure you have lots of business opportunities, investment opportunities, and they may arise unexpectedly. In that case, what is it that you're focusing on? It's hard to see. Is it ROIC that you're focusing on in terms of financial discipline, or D/E ratio, return? What is it that Hitachi is focusing on in these acquisitions? It is a question about what to use as a measure. We do not use just a single measure or indicator. We look at the ROIC, ROE, we look at flow income. We take an overall look at all of these to see whether the deal is feasible. It's not that we use just a single indicator. We take a comprehensive view of all the relevant indicators for a decision. For the business plan, we take a very close look as we acquire. In the first few years, there may be losses, but three to five years following acquisition, return becomes positive, and if a cumulative loss in five years' time, it should be eliminated. That is the kind of narrative that we embrace as we decide on an acquisition or investment. Thank you very much for the detailed answer. Apologies for asking about the details in my questions. Please unmute and ask your question. I just have one question. Today, you have discussed Lumada. The strength of Lumada is that you can connect the management and the frontline. In this current Mid-term Management Plan period, the Lumada revenues are increasing from Higashihara-san point of view, by connecting management and frontline. What is the most compelling example of the power of Lumada? Can you introduce that to us? By the same token, with GlobalLogic now being included, what kind of a solution will mean that the acquisition would be a success? I could give many examples, but in terms of the maintenance, this is a standard solution for Lumada in the U.S. Penske, the truck leasing company, 240,000 trucks are handled by this company. In this fleet of trucks, the current state can be reflected in data. Big data can be analyzed, we can estimate which parts will fail when. This is being demonstrated by Lumada. We know which parts are going to fail, so truck drivers can receive the instructions and go into the workshop, and the parts can be delivered to there, so that minimum downtime will enable the replacement of the parts. Lumada, big data analysis and AI can be very effective in this way. It's all a matter of placing it into containers, combining domain knowledge and applications. GlobalLogic, what will be enabled is your question as well. Cloud-to-chip, chip-to-cloud, this is being talked about very frequently in the [audio distortion]. There is cloud, there is also edge in the factories, and device. There are three layers that we have to consider. Increasingly, it is now embedded in the device. With 5G and 6G, the number of terminal devices will increase and speed will be enhanced. The transmission between chips will be increasingly important. Therefore, in terms of management decision-making on the cloud, decision-making will be required, but it has to be linked to the frontline as well. From cloud-to-chip, chip-to-cloud. The information on the frontline should be provided to the management, and management decisions should be conveyed to the frontline on a real-time basis for mission-critical systems. This will be available in 2025, according to my view. In anticipation of this, we have acquired GlobalLogic. I hope I have answered your question. For 2025, I don't know if it's going to be called the mid-term management plan for 2025, but in terms of Lumada chip-to-cloud, how it is going to be embedded in Lumada? The increasing resolutions will be very important in terms of qualitative evolution. Well, our expectations and the actual state at the time of customers as the frontline, it may not be in sync in terms of timeline. In 2025, there's 1.26 trillion Lumada now, I think it's going to be 2 trillion+ by then. Profit margin should be around 20%. I think that is a better indicator to focus on. Thank you. Thank you. Moving to the next set of questions. We're going to take questions from those on the English channel. Those of you with questions, please press the hand-raising button. Any questions from the English channel? It seems there's none, and we still have some time left. We're going to get back to those of you on the Japanese channel. Members of the press, institutional investors, securities analysts, anyone's welcome. If you have a question, please raise the hand raise button. Senbongi-san, please unmute and start your questions. Thank you. Question. There are two main questions I would like to ask. The first question is somewhat similar to the earlier questions, but, the only remaining listed subsidiary is the Hitachi Construction Machinery, and Kawamura-san, in an earlier session, said that there's no plan for large acquisitions for the time being. I believe that you have done most of the portfolio replacement. Higashihara-san, what is the rate of completion given your original plan? That's my first question. The second question is as follows, ABB shared service to be utilized. Corporate functions are consolidated into ABB's shared service, which is most reasonable. There are areas where that is possible, there are others where it's not possible. Cost reduction will come about, but what are the other impacts or effects for Hitachi? With respect to listed subsidiaries, I outlined the basic thinking. On the same balance sheet, can we accommodate them? That's the criteria. If Hitachi Metals divested as well, the only remaining one will be Hitachi Construction Machinery. Based on the basic thinking that I outlined, we will discuss with Construction Machinery as to what to do. The question is, can they be globally competitive? According to my thinking, I believe that 95% of asset replacement has been complete. What is important going forward is five sectors, plus Astemo included. We've been focusing on this since two years ago. The environment, resilience, security, and safety. In these areas, how can we focus in these areas for growth? That's going to be our imperative prerogative. ABB shared service. Japan's accounting division, for example, reimbursement of travel expenses or calculation of salaries, payroll calculation, to give you simple examples. Of course, these practices differ from one country to another. Globally, by country, by region, if we can commonize these services, it's a good thing. ABB Power Grid with respect to procurement functions, accounting treatments, utilization of HR, they have global standards for each of the regions. Rather than consolidating them here in Japan, by region, by culture, there are differences, and ABB is able to consider those differences in providing shared services, so it's better to consolidate into their service. Whether or not there's a perfect match, we have to look at. To the extent possible, we would like to consolidate into their shared services and see how it goes. If further consolidation is necessary, we will look at the cost and the effect to decide on what to do in the next stage. Did I answer your question? Thank you. Yes. Naka-san, please. Please unmute and ask your question. Question. Can you hear me? I have one question regarding the direction for your company going forward. Resilience, environment, and safety and security are the areas where we want to bring to bear your value, and comprehensive power of your company is the source of competitiveness for you. On the other hand, in the past, Japanese companies and comprehensiveness and focus on synergies, so all the different businesses tended to be weak. Maybe that's not the case for your company, but that was the case for Japanese companies overall. Electronics and other whole operating holding companies are the direction pursued by other companies. I don't think that is the case for you. In order to bring to bear your comprehensive power and also strengthen the individual business, how are you going to strike the right balance between the two? That's a very important question. Thank you very much for raising that answer. We are focused on the environment, resilience, safety, and security. We have five sectors: energy, mobility, industry, Smart Life, and IT. Those have been our sectors. In terms of environment, the area of mobility as well as energy, and as knows, automotive system business are transcending the sectors, and that's what we have to do. Alistair Dormer is going to be in charge of environment. Smart Life will be led by Kojima-san. We are going to strengthen our comprehensive power. However, we are not just going to be focused on comprehensive power, because that will mean each product to differentiate and to be globally competitive can be undermined. We did not do a good job in terms of strengthening individual products because we are too much focused on overall performance. We will provide value, and also manage products should be separate. If we have products that are not competitive, and it will be redundant, and therefore we have to make effort to be competitive internally for products we sold to improve them. Is it going to be a pure holding company or a business operating company? If we have a pure holding company, and if we have the businesses independent under the holding company, that is something that we have considered. Comprehensive power is very important for our environment. It is going to transcend the different sectors to pursue business. Therefore, the business operating company or integrated approach will be more preferable. If we have a pure holding company, that's the kind of structure, it's not what we are talking about. I hope I've been able to address your question. Thank you. Next, Koide-san. Please unmute. Answer to your questions. Thank you. What you said to business transformation, you outlined your basic thinking, and today you have announced the divesture of Hitachi Metals. Let me ask you what the reason was behind that. Why did you decide on divesture? Answer. Hitachi Metals, in terms of its business, is in a very bad shape. Last fiscal year, in fiscal year 2020, they generated losses. Globally, Hitachi Metals has a very good business, but for it to become globally competitive, a large investment will have to be made so that it can be globally competitive. If we try to do that on the same balance sheet, Hitachi's investment may not become effective without a good match with what we're trying to do versus what Hitachi Metals needs to do. It's going to be unfortunate for the shareholders. We thought that we should divest Hitachi Metals. Bain Capital is interested, inclusive of investment. They're willing to restructure Hitachi Metals to make it more competitive, they have said, and that is why we decided to sell Hitachi Metals to Bain Capital. Did I answer your question? Yes. Thank you. Regarding Hitachi Metals, my second question to Kawamura-san. In July last year, when Q1 results were announced, one of the questions was what to do with Hitachi Metals. You said that you are awaiting the results of the investigation committee with respect to Hitachi Metals. According to the material that you are releasing today, since July last year, you've been discussing what to do with Hitachi Metals, I believe that you have been sounding potential buyers, the results of the research committee or investigation committee came out in January this year. Upon closer look, I understand that there was fraud or misconduct, and you're selling this today. In terms of the stock price, is there not any problem with this deal? Let me answer your question. This is a M&A transaction. What happens on the ground is, even without releasing specifics, investment banks and private equity funds do approach us quite frequently. That's what you're talking about. Into a new year, based on the third-party investigation committee results, we have decided on divestiture. Investment bankers, private equity funds do come to us all the time, but that is different from what the third-party investigation committee has done. Having said so, in early November, there was contact made from a potential buyer, we hear. Three months prior to the results of the investigation committee, an approach was made, and it seems that if that's true, it's inconsistent with what you said. Well, the meaning of the word, sounding out, when was it started? Well, of course, when a proposal is made with an approach, we will say this and that, yes or no. Sounding out, does that mean a specific tender or a specific term sheet? We have not asked for that. What I said is not very inconsistent with what actually happened, from what I understand. Well, it's not meaningful to engage in a discussion about the language, but I thought that it would be problematic to accommodate approaches by these investment bankers while investigation is ongoing. What do you think would be a problem? Of course, if those are done in parallel, that could impact the sales price. Having a negotiation with a potential buyer while the quality problems continue, that could reduce the sales price, causing problems for our shareholders. Of course, that's separated. We don't want the stock price to be affected. Contacts made by potential buyers and what happens within Hitachi Metals in terms of decision-making and what happens within Hitachi in terms of decision-making, they're all separated completely. Well, thank you. That is understood. I have a question of Higashihara-san. This is misconduct that happened in a group company. Since the 1980s, with the involvement of the management, misconduct has continued at Hitachi Metals, as it was revealed. Well, Kawamura-san talked about the impact on stock price and so forth. In order to respond to this misconduct or problem, Hitachi Metals, is your understanding that Hitachi did nothing wrong in terms of handling this? To answer that, as Kawamura-san just explained, as far as this deal goes, I don't think there was any problem. Compliance-wise, it's a problem, a large problem. As is noted in the ESG section of our report, compliance risk and crisis risk and business risk, these have to be prioritized foremost. Compliance risk is high on the agenda. Within Hitachi Group, this is something that we have to address very squarely. That is the lesson learned from Hitachi Metals' case. Well, thank you very much for the answer. Sorry for deviating from MMP. Thank you very much. We still have other people raising their hands, but since the time has come, we would like to now bring this meeting to a close. Thank you very much for attending, despite your busy schedule.