[Non-English content] It is time to start. We are going to start with the presentation by Hitachi, Ltd. on the acquisition of GlobalLogic, a leading U.S.-based digital engineering services company. Thank you very much for attending this meeting despite it being such a short notice. The presentation materials that will be used today are posted on our IR site and the news release site. Well, let me introduce the speakers. From Hitachi, Ltd., Mr. Toshiaki Higashihara, President and CEO. Mr. Toshiaki Tokunaga, Senior Vice President and Executive Officer, CEO of Services and Platforms Business Unit. Mr. Yoshihiko Kawamura, Senior Vice President and Executive Officer, CFO. Mr. Tokunaga will become Executive Vice President and Executive Officer from tomorrow, 1st of April. Today, Mr. Higashihara will give the opening remarks, then Mr. Tokunaga and Mr. Kawamura will make a presentation, then we will take time for questions and answers. We plan to hold the meeting for about one hour. Now, we'd like to start with opening remarks by Mr. Higashihara. [Non-English content] Good afternoon, ladies and gentlemen. Thank you very much for taking time out of your busy schedules, to join us at this web conference on Hitachi's acquisition of GlobalLogic, a leading U.S.-based digital engineering services company. At today's board of directors meeting, a company based in Silicon Valley, the U.S., there's a company called GlobalLogic, and we have decided to acquire that company. We would like to evolve Lumada, and accelerate the global expansion of Lumada. That is the objective. In other words, we would like Lumada to be a world-class Lumada, and for that, we're having this acquisition. 2016 and onward, Hitachi's business has centered around Lumada, which we have promoted through co-creation with our customers. We connect data to data and elevate corporate value. That's the nature of Lumada's activities. In terms of the technology trends, digitization is moving at a breakneck speed. Devices within automobiles, devices within plants, software is embedded in every piece of the device. That's the kind of era we're in. Cloud, edge, devices, these are connected on a real-time basis by Lumada so that it can offer new value. That's the kind of business that we would like to promote going forward. The company we are acquiring, GlobalLogic, healthcare, automobile industry, in these sectors, they have the expertise to develop engineering services. The phrase is chip-to-cloud. They have strength in developing software that connects the chip to the cloud. And by incorporating this business, Hitachi's Lumada business will expand further so that we will be able to offer new value to global customers. That's our belief. As to the details of the deal, the acquisition, Tokunaga will explain in a moment. Thank you. [Non-English content] Thank you very much. On the acquisition of GlobalLogic, Mr. Tokunaga, and we have a partial explanation by Mr. Kawamura. We have to shift the screen. Please wait for a moment. [Non-English content] Tokunaga, the floor is yours. [Non-English content] Yes. My name is Tokunaga. On the topic of Lumada's global expansion, I would like to discuss the background and the objective of this acquisition, and the outline of the target company for this deal, GlobalLogic. Lastly, the time schedule going forward briefly. Next slide, please. First on this slide, what is described is Hitachi's vision through Lumada. Hitachi's vision is to contribute to society through social innovation, and by so doing, to achieve sustainable growth and become a global leading company. That is what we aim at. That's our vision. More specifically, on top of offering Hitachi's unique combination or fusion of IT, OT, and products, we collaboratively create with our customers, have alliance with our customers, to leverage Lumada and offer value to society. Lumada enables us to create value for society, such as the environment, resilience, safety, and security, and by expanding our social innovation business, it provides the solutions to social issues and improve people's QOL, quality of life. On this slide, the direction of the business and Lumada's role in it is described. Lumada is data-driven. Through full utilization of data, it serves as an engine to help society and customers realize digital transformation. With a collaborative creation with our customers, and through Hitachi's unique combination of IT, OT, and products, Lumada functions as a business platform to grow our social innovation business. Next, please. What specifically are we going to do as business utilizing Lumada? That is summarized on this slide three. Hitachi will offer solutions to social issues and corporate management challenges by leveraging mission-critical IoT that connects the data in the cyber and the physical spaces on a real-time basis. This is to be expanded globally so that it can spur the growth of the social innovation business. To connect the cyber and the physical space on a real-time basis, it's essential to have capabilities that cover embedded software, as well as edge-to-cloud. Now, the acquisition of GlobalLogic, we believe, will give us the ability to dramatically expand this data-driven business worldwide from edge-to-cloud and chip-to-cloud. Next, please. Next. At this moment, I would like to provide a brief summary of GlobalLogic's strength. GlobalLogic boasts sophisticated experience design skills and supports customers' DX chip-to-cloud for digital transformation on a shift to cloud basis. It is a leading company in the market for digital engineering services with a strong growth in both its profit profile in terms of EBITDA margin, 23%, and has had a powerful track record of CAGR or revenue, growing by 19.3% year on year. So, it is a leading company in the market for digital engineering services. The company also has a track record in co-creating with customers, and they have eight design studios to do so with customers from a broad range of industries and sectors. It also has 30 delivery centers to offer chip to cloud digital engineering services and to support agile development around the world. Further, the number of clients they have supported in terms of DX or digital transformation exceeds 400, many being in the telecommunications, healthcare, automobile industry, and financial services, amongst others. This business, therefore, is indeed the growth engine for Hitachi, and the acquisition of GlobalLogic will allow us to accelerate the growth very rapidly. The next slide, please. On this page, I discuss the conventional IT sector business and the GlobalLogic business, the positive cycle that it can create by combining the two. As you know, in Hitachi's IT sector, which is described on the lower left quadrant of the diagram, acquisition of GL will give us an opportunity to expand our portfolio. So far in the IT sector, we have been driving our business mainly in core systems by leveraging mission-critical business applications as our weapon. As a result, this business now has a revenue to operating income ratio of over 10%. But with this deal to acquire GlobalLogic, we will be able to evolve and expand into a collaborative creation type of business that is agile and is cloud based, which is on the right top quadrant in the diagram. This will enable us to capture a high rate of growth inside our company. Through collaboration with GlobalLogic, to the customers who expand into these new areas, our mission-critical solutions can be offered as well, as we have been doing through the IT sector conventionally, which in turn will create a positive cycle for our business. Next page. Hitachi so far has been developing collaborative creation hubs in many places in the world. One example is the Lumada Innovation Hub Tokyo, which was recently announced. On top of that, the GlobalLogic's worldwide design studios, regional offices, and engineering centers can be utilized to accelerate the global deployment of Lumada, which I have just explained earlier. Also Hitachi Vantara, GlobalLogic, in total encompasses human resources of 30,000 people. They will be able to promote collaborative creation with customers all over the world and support solution of challenges and digital transformation. Next page. As I have explained, with the acquisition of GlobalLogic, Hitachi will make full utilization of their collaborative creation and chip-to-cloud skills to connect IT, OT, and product by software or digital to develop into a social innovation company. Next page. Now, let me give the profile of GlobalLogic. As you can see, revenue forecast for FY 2020 is about $921 million, which is nearly 20% year-on-year growth. Adjusted EBITDA ratio forecast for FY 2020 is 23.7%, which is a very high profit margin. Head office is located in San Jose, California, United States. It is close to Hitachi Vantara. The name of the representative is Shashank Samant, who is the President and CEO. Description of business is indicated on this page. The company was established in September year 2000. Next page. Now from here, the outline of acquisition will be explained by Mr. Kawamura. [Non-English content] Thank you. I'm Kawamura, CFO. I will explain pages 10 and 11. First, page 10. The structure of the acquisition is not from Tokyo, but a digital holding company, Hitachi Global Digital Holdings in the U.S. will be making the acquisition. Total acquisition will be made by cash. There may be discussions about enterprise value, according to our calculation, enterprise value is $9.5 billion. The growth of the company itself, as explained by Mr. Tokunaga, a nearly 20% growth expected, and by joining Hitachi Group, there may be further synergy enjoyed, which is the basis for this calculation. We believe this is an appropriate valuation. Next page 11. The financing for the acquisition. This is nearly about JPY 1 trillion. We are going to use cash on hand of about JPY 200 billion, and JPY 800 billion will be based on bank borrowings and issuance of corporate bonds. After one year, of course, there will be a burden on the balance sheet. But throughout the year, our balance sheet dynamic transition is taking place. We are changing our assets. Through changes on assets, there will be more cash inflow. There will be some operating now activities cash flow. After one year, we believe the stress on the balance sheet will be relaxed. According to our calculation, the ultimate debt will be about JPY 300 billion. The remaining JPY 700 billion will be by changing the assets and through cash. There will be a one-time burden, but we will be able to return to the original situation after one year. The impact on consolidated P&L, total assets, JPY 1,150 billion, goodwill JPY 710 billion. Intangible assets, JPY 390 billion. Amortization is JPY 390 billion PPA. On annual basis, JPY 32 billion is our calculation. So, as within the information business under Mr. Tokunaga, we will be able to absorb this level. Two-digit operating profit margin will be achieved. As a financial discipline after one year, with changes in assets and accumulation of operating cash, as you can see, in a few years, debt equity ratio less than 0.5% and debt EBITDA multiple less than 2%. We plan to achieve the level similar to the current level. That is all from me. [Non-English content] Now, it is Tokunaga again speaking. Lastly, let me talk about the future timeline. Today, March 31st, 2021, signing of a definitive agreement. On July 2021, we plan to close the acquisition by Hitachi Global Digital Holdings as a wholly owned subsidiary. This concludes our presentation. Tokunaga-san, Kawamura-san, thank you very much. [Non-English content] At this moment, we would like to have questions and answers. Those of you with questions, please press the raise hand button on the Zoom screen. Of those who are raising hands, we will call upon your name. Once your name is called, please unmute, state your name and affiliation before asking your questions. We will be using your name on the system. If you no longer wish to ask your questions, please remove your questions at your end. The video of the questioner is not going to be shown today. The order of taking questions, members of the press on the Japanese channel, and then next, institutional investors and analysts, and then those on the English channel. This will be the order as we take questions. We would like to invite questions from the members of the Japanese press. I see a hand being raised. Please unmute yourself and state your question. [Non-English content] Hello, can you hear me? Yes. Question. I have three questions. This time, looking at the equity prices, seems that the price is rather rich, overvalued. I wonder what kind of discussions you had internally. Were people cautious? On what basis did you make the decision to go ahead with the acquisition? And w hat are the risks that you are looking at? What are the possible risks? That's my second question. Question number three, in the press release, you have a profit target up until 2028, $1 billion. Given the current level of performance, you will have to ramp all your profit up very quickly. What is going to be the path toward that? Those are my questions. Thank you. [Non-English content] Toshiaki Higashihara speaking. First, what kind of internal discussions did we have about this deal, and what are the potential risks? I would like to provide our view. Of course, this deal is on the order of JPY 1 trillion, and so we had to be careful and cautious. We took time to look at the details of the deal. How to evaluate the corporate value, of course, was a question. We involved our experts and we repeated many sessions to look at the corporate value, and it's now at $9.5 billion, which we agree on. By acquiring this business organically, revenue as well as profit should be increased. We need to watch that if the company can deliver in that regard. When the company collaborates with the IT sector, what's going to be the impact or the effect? We looked at all those possibilities. Once that is done, Hitachi's industrial sector business, there are other businesses, or business in the automotive sector. If GlobalLogic collaborates with Hitachi's automotive business, what could be the potential impact? We had quite a bit of discussions internally, and the conclusion was that we are able to grow our business more by acquiring this company. Corporate value, what kind of reforms are we going to pursue? Those were the main points of our discussions. This is a company-wide reform that we're going to embark on with this deal. So, as CEO, I'm going to exert leadership and control what's happening inside. With respect to risks, at this moment, this area is set to grow. What's going to happen? If you think about it, there are many potential risks. We have to regularly monitor the market. If something untoward happens, we have to look for an exit plan. Of course, we have studied various exit plans. While looking at the risks, we have to monitor the market closely and make a judgment on a regular basis. That's our thinking. With respect to profitability for FY 2020, Tokunaga-san will answer. [Non-English content] Yes, Tokunaga speaking. Answer. As you can see on the news release, we're going to aim at achieving $1 billion by year 2028. The latest performance suggests that GlobalLogic has been growing its business by over 20% in recent times. On top of that, what Hitachi has developed, Lumada-related assets, and Hitachi's R&D expertise, by utilizing Hitachi's technology, I believe that this number can be met sufficiently. Through internal discussions, we formulated this plan and is including it in the press release today. That's all. Thank you. [Non-English content] Could I have the next question, please? Please unmute yourself and raise your question, Sawamura-san. [Non-English content] I am Sawamura from TV Tokyo. There was a question about risks earlier. We are now facing a friction between the U.S. and China. Under such a situation, what are your views about this acquisition and relationship with your DX strategy? [Non-English content] Thank you for your question. First, as an assumption, the GlobalLogic company don't have any footprint in China. The U.S.-China tension. Their business is not a business that would be greatly influenced by the current tension between U.S. and China. And as Mr. Higashihara mentioned at the outset, Lumada's global expansion of a business, to promote such a global expansion, GlobalLogic asset and their resources utilization is the best method for us. As a result of discussion, we reached that conclusion, and we made the decision for this acquisition. [Non-English content] Question, there's no impact or risk caused by the China-U.S. tension? Is that assumption your acquisition? [Non-English content] Yes, that is right. [Non-English content] Next. I see another hand being raised. Please unmute yourself. State your name and affiliation before asking your question. [Non-English content] Can you hear me? I have two questions to ask. First, this company, GlobalLogic, you have explained about the company. Frankly, what kind of specific business does it conduct for its customers? What kind of solutions do they provide? What are their strength? If you could also cite concrete examples to explain that. That's question number one. Upon that, while you said that this deal will accelerate Lumada's global expansion, Hitachi's IT sector business including Lumada's business. What are the challenges in that business? And by acquiring GlobalLogic, how do you think you will be able to alleviate the challenges that you're facing within your IT sector business? If you could plainly explain that. [Non-English content] Answer. Thank you for your questions. Your question number one, what are the strengths of GlobalLogic? In which areas are they strong in? In the presentation, I think it was explained briefly, there are two main strengths. One, collaborative creation activities with customers. They have been focusing on that in their business. Lumada focuses on co-creation with customers, to offer solutions for challenges. It's exactly the same as Lumada. Second, what is wonderful about GlobalLogic is based on their co-creation activities, the challenges and issues that are identified are solved by digital and software capabilities, in the right area, using the right technology. That is referred to as that chip-to-cloud in my presentation. So, in providing solutions to issues, there are issues that can be solved on the cloud. There are other issues where you need to go to the edge to create software to acquire appropriate set of data, and upon doing so, analyze the data and provide solutions from the cloud. From the edge to the cloud, we need to have this comprehensive flow that we need to cover. GlobalLogic has been doing that business together with their customers. As an example, the automotive industry or industrial machinery industry, healthcare devices industry, they go deep into the client's business to offer such solutions and services. Their customer retention rate, the repeat rate, is above 90%. Your second question regarding how are we to promote Lumada's global expansion in view of the challenges that we've had in Hitachi's IT sector. First, with respect to challenges in the IT sector that we run, so far, centering around the domestic market, we've had a track record in mission-critical systems. We want to sort of spread our wings into the global markets, and together with global customers, we want to pursue co-creations, and that capability has been lacking, and that is something that we need to point out. By acquiring GlobalLogic this time, what Hitachi has been doing in Japan's market, so collaboratively creating with customers and by leveraging GlobalLogic's strength with software and through digital technology, we will be able to solve the issues identified through co-creation. With Lumada and GlobalLogic, we can evolve into a company that provides the solutions. That's the direction that we're aiming at. [Non-English content] Question. On your first point, Lumada, of course, does what you described. I'm aware of that. What Lumada has not been able to do, well that you said that you have not been able to cover overseas markets, I do understand that. In terms of specific solutions, what are the solutions that Lumada has not been able to offer, and are you saying that GlobalLogic is able to offer the solutions? Are there such cases? {Non-English content] Answer. As I said earlier, the strength of GlobalLogic is from chip-to-cloud, they have capabilities. On the other hand, our Lumada, so far, mainly has been doing on the cloud. On Lumada's solution hub, we would offer solutions so that customers' issues can be solved. That's been our focus. But with GlobalLogic's technology on the device side, or by utilizing their capability on the ground by connecting cyber and physical, we will be able to solve customers' issues, and that will strengthen Lumada, we believe. [Non-English content] That's just one more point, I have a question of Mr. Higashihara. Question, IT-related business acquisition. You've been quite willing to embark on such potential M&A in the medium term business plan, but now we have decided on a deal, what's your ambition? [Non-English content] Answer. There are two assets that led us to decide on this deal. In industrial area, distribution, in healthcare, in each of the sectors, GlobalLogic has a lot of expertise and experience in these sectors, so that's one point. Cloud, edge, chip, and devices, we talked about earlier. What's going to happen going forward is control on the ground, on the factory floor, will be controlled by management information offered by the cloud. So the information on the factory floor will be utilized as management information, and management decisions will, on a real-time basis, change what happens on the shop floor or on the ground. From the chip-to-cloud, the capability to connect the whole process. Because of GlobalLogic's competitiveness, because of these two reasons, we thought that GlobalLogic is wonderful, and thought that by acquiring it, we will be able to create synergies with Hitachi. Thank you. [Non-English content] I see a lot of hands raised, but this will be our last question from the media. I'd like now to move on to the questions from the investors. I'd like to invite the investors to ask a question. Could you please unmute yourself? [Non-English content] Thank you. Can you hear me? My question is about finance. Earlier, Mr. Kawamura said JPY 300 billion or maybe JPY 200 billion is remaining, the remaining, that is the debt, and the remaining is operating cash flow and the business portfolio reform by spinning out businesses. I believe you expect this to be reduced. Your operating cash flow in the last few years is about JPY 600 billion to JPY 800 billion. There's also investments. In terms of free cash flow, about JPY 200 billion positive seems to be the trend. The remaining JPY 500 billion will be by spinning off your assets, your businesses. I think this would be interpretation, but what are your views on this? [Non-English content] Answer. This is Kawamura speaking. Yes, as you have mentioned, as I referred to before, in the last several years, we are very cautious in managing our balance sheet, so we are promoting dynamic change of our assets. In addition to accumulating operating cash flow by changing our assets, shifting our assets, we plan to cover a part of the funding. I cannot discuss the details because this is still a work in progress. But from a macro perspective, about JPY 2 trillion are the assets that will be put out, and JPY 1 trillion is the new asset. Balance sheet will shrink actually. Currently, total assets about JPY 11 trillion, but will reduce about JPY 10 trillion. That is for a transition of our balance sheet. By selling assets, we will get some cash. As you have mentioned, JPY 200 billion cash in hand liquidity, this and with funding. For that portion remaining is about JPY 300 billion, denominated in dollars. [Non-English content] Next question. The IoT cyber-physical system world, I think from about five or six years ago, this has been broadly discussed about, but about the future, the 2020s IoT cyber-physical and in competing with other companies, what are the areas of businesses that you expect there will be more opportunities? [Non-English content] Answer. Thank you for your question. I have referred to that a little during my presentation. Hitachi, to solve social issues and solve management issues, in the future, environment resilience and safety and security values are values that we are providing, and we are promoting the business to that direction from a different perspective. The customers of a society's challenges are becoming very complicated. To resolve such complicated issues, instead of individual skills, IT, OT products should be integrated, and in case of IT, from chip to cloud. This skill is very important to be held by one company to be able to start providing solutions to challenges. GlobalLogic, the acquired company, its capability should be used in full, and this should be a factor for competitive advantage of Hitachi to promote our business. That is all. Thank you. [Non-English content] Thank you very much. [Non-English content] Next, institutional investors and analysts on the Japanese channel, we would like to take questions from you. Those of you with questions, please press the Raise Hand button. I see a hand being raised. Please unmute yourself and start your questions. [Non-English content] Hello. I have two questions. My question number one is, GlobalLogic's business is in the digital engineering services area. What is the size of the market, its growth rate, and within the market, who are the competitors of this company? What does GlobalLogic have as strength, differentiating factors vis-à-vis its peers? Given the competitive landscape, what are their strengths? That's my first question. My second question is as follows. This may overlap with an earlier question. But I wanted you to elaborate on this. Higashihara San talked about internal discussions that Hitachi had. What are the synergies with Hitachi's existing business? Automotive was cited as an example. In Hitachi's Automotive business, what are the impacts or effects you will be able to see as a result of acquisition? Those are two of my questions that I would like to ask at this moment. [Non-English content] Thank you for your question. To address your first question, this digital market that GlobalLogic is in, what is the size of the market? Actually, it's very difficult to answer that question. In the news release, as reference information, we have included some numbers. In fiscal year 2022, 65% of the global GDP will be from products and services from digitally transformed companies. In other words, that is the size of the market. It's very difficult to quantify this and point a finger to a specific number, but $1.1 trillion by 2025, the market could grow to this level. That's our understanding. It's a huge market, actually. On top of that, well what are the strengths of GlobalLogic as it operates in this market? There are various ways to assess their strength. There are various viewpoint, and also it's difficult to define who the competitors are. What we see is their strength in co-creation. They are quite powerful in that. On a global basis, they have many design centers for co-creation activities. Through such co-creation activities, customer retention, customer repeat ratio is above 90%. Compared to their peers, their competitors in the industry, they are quite strong. When it comes to specific customers, of course, there are contracts that they have with customers, I would like to refrain from giving you further detail on this. [Non-English content] Question, who are the rivals? Who are the competitors of GlobalLogic? [Non-English content] Answer. For competition, I think it differs depending on the size. Large players include Cognizant. These companies operate in a similar area, and in terms of the company of similar size, Thoughtworks is another. At any rate, Hitachi would like to acquire GlobalLogic so that GlobalLogic's business can be elevated even higher and compete better in the market. Thank you. You talked about automotive industry. With respect to the automotive industry, we can say something general, but automotive manufacturers have their own clients, and if information flows or leaks, it's going to be troublesome. We have to have control over that. But as you know, GlobalLogic can handle over-the-air data, updating data within the automobile gained from over the air. Embedded software that controls the comfort level of the driver. They have experience of developing that, which can be leveraged. We have to be careful because this involves many customers. In terms of intellectual property, whether or not we can utilize these technologies, so we don't know. Are we going to use it for Astemo's product development, it may be difficult because of IP. Thank you. [Non-English content] Thank you. We'll let you have the next question, please. Please unmute yourself and raise a question. Question? Thank you. [Non-English content] Can you hear me? I have two questions. The first question is about GlobalLogic's performance. According to the press release, Adjusted EBITDA, 8% or 8.2% as of end of March 2020. There is a gap between the adjusted profit rate and adjusted EBITDA level. I'm not familiar with this company, but is that a timing of going down or the operating profit margin is not that high? In past cases of ABB or Astemo, through the process of integration in the first year, there were integration costs. This time, I have impression that that will not be so large. Integration cost before contributing to profit, will that be necessary? This is my first question. Number two, my question is to Mr. Higashihara. As for returning to shareholders, if possible, during the present medium-term plan level, you mentioned about considering a share buyback, but with this large acquisition, Kawamura-san also talked about cash. Taking this into consideration, are you considering such a buyback during this medium-term plan? [Non-English content] Answer. Thank you for your question. As for operating profit margin, let me answer. As you have mentioned, in the news release, it says that adjusted operating margin level is different from the adjusted EBITDA. As a conclusion, that is a one-time event. GlobalLogic recently made an acquisition, and this amortization is a reason for this difference. So actually, the EBITDA and operating margin, similar level can be achieved. This is Kawamura speaking. As for integration cost, for example, this year, ABB Power Grids was spinned off and brought in, so there are IT expenses and also business transition costs. This company is a 100% acquisition, so basically there is no large integration cost. There are some detailed IT tunings, but that is not a large amount that may affect our finance. This is Higashihara speaking. I think I have talked with you about it before at the CEO meeting, that going forward, Hitachi will now be selling assets or adding other assets. The net profit attributed to the owners of a parent is to be noted, also including dividend payout ratio. EPS growth rate is something that I want you to look at. After such an acquisition, financing-wise, as Mr. Kawamura mentioned, we have made the calculations about that amount. Including share buyback and return to shareholders, we will keep thinking about it. That is all. Thank you. A question to Mr. Tokunaga for confirmation. [Non-English content] When this is consolidated, there will be no more one-time amortization burden. So, next year, for example, the current EBITDA margin and the profit margin will be of a similar level. You have made acquisition in the past, but what is that situation going forward? [Non-English content] Answer. Yes, thank you for your question. Just as you have mentioned, after integration, EBITDA and operating profit margin will be at a similar level. Thank you very much. [Non-English content] Thank you. Let's continue. I see another hand being raised. Please unmute yourself and state your questions. [Non-English content] Thank you. I have two questions. Question number one. GlobalLogic that you are acquiring this time, what is the breakdown of the attributes of the personnel? You have 20,000 people with revenue of JPY 100 billion. Lots of people, perhaps more so overseas. The company has 400 clients, which is rather small. What are the attributes, characteristics of the clients that they have, if I may ask that? That's question number one. [Non-English content] Well, thank you for the question. To answer your question, personnel, yes. GlobalLogic has 20,000 employees. The detailed distribution or positions that they occupy, they're not disclosed. India and East Europe, these are the two areas with largest concentrations of their personnel. Distributed agile development, that's what they engage in. [Non-English content] In other words, they have quite a bit of offshore development, as you rightly suggested. Who are these people? With what kind of skills, you've asked. Senior engineers, they account for quite a large proportion. More than 50% of the personnel are senior engineers or high-level engineers, from what we understand. That's all. [Non-English content] Question. What about the attributes of the customers? Some kind of segmentation of customers, if they are in any way characteristic? [Non-English content] Answer. With respect to customers, we explained this somewhat in the presentation material in terms of the number of Slide number four on page five. At the very bottom, there's a box. Communication, financial, media, industry, automotive. They cover quite a broad range of industries. Where they have large customers are communications, automotive, healthcare. In these sectors, GlobalLogic has larger clients. On the other hand, the background as to why we're acquiring this company, that's because of their competitiveness and chip-to-cloud skills that they have. These strengths are not, of course, restricted in these sectors alone. I think they have enough technology to be utilized for IoT. [Non-English content] Thank you. My second question. You talked about the points you considered. Synergies was the second reason as to why you decided on this acquisition. With this acquisition, your IT sector or Lumada business, how will its growth and profitability change as a result of this acquisition? I have been having difficulty envisioning how it will change. What's the timeline as well? According to your explanation, chip-to-cloud, that was the technology that you wanted to have and supplement yourself. Was that the larger reason, or did you want to capture resources from overseas? Well, you've been talking about Lumada's personnel being expanded to 10,000. What specific capabilities are you trying to supplement with this acquisition? For the future expansion of Lumada, what is it that Lumada is still lacking in? [Non-English content] Thank you for your question. With this acquisition, which areas do we think we can strengthen, and what could be the seed of synergies created? And as you rightly pointed out in your questions, in order to globally expand Lumada, we will be able to acquire capabilities for that right away with this acquisition. So, compared to the conventional IT sector, how is it going to be different? Perhaps I need to add my comments on that. As I said in my presentation, Japan's IT sector has strength in mission-critical systems. Oftentimes, the projects are commissioned by customers for development. That's been the mainstream here in Japan. As I said earlier, corporate management issues are becoming more complex, social issues as well. In order to solve them through co-creation activities with our clients, we have to identify issues, and those issues will have to be tackled with software and technology. The solution approach should be agile. You have to take an agile approach in solving these issues. That is exactly the kind of capability that GlobalLogic has. With their capability, the coverage of IT sector in terms of geography and business areas, we will be able to expand with this acquisition. It's not just the IT sector. At GlobalLogic, IT sector business has been transformed, and other sectors will be able to leverage that. Of course, that will naturally lead to the strengthening of Lumada. So, on a global basis, we can co-create and agile software development. These capabilities are critical skills to combine OT and IT for us. Connection between OT and IT, that will be realized with GlobalLogic. In terms of synergies, two to three years from now, we would like to have tangible synergies. That's our plan at this moment. Thank you. [Non-English content] Thank you for the answers. [Non-English content] Thank you very much. Next. We'll likely see the next question. Please unmute yourself. No, I forgot to put off my "raise hand" button. Please move to the next questioner. The next question. We would like to receive questions from the English channel. If you have any questions, please push the raise hand button. Yes, Mr. Somerville, please. Please unmute yourself. Good evening, gentlemen. Thank you very much for your time. This is Simon Somerville from Marathon Asset Management. I've got two related questions. I think looking at the slideshow, the slide deck, that GlobalLogic has no presence or no footprint in Japan. Question one is, who is doing this in Japan at the moment? If no one's doing it, what potential business do you see in Japan, as you roll out GlobalLogic on top of Lumada? The second slightly related question is there any risk to existing clients at GlobalLogic by Hitachi buying GlobalLogic, i.e., is there any conflict of clients with Hitachi and clients of GlobalLogic? Thank you very much. [Non-English content] Thank you for your question. As for your first question, the footprint in Japan of GlobalLogic. Yes, as you have mentioned, they don't have any footprint in Japan. In other words, for GlobalLogic, that is a part which they can grow by working together with Hitachi. That was one of their motivations. Going forward, GlobalLogic and Hitachi together in the digital domain, it's possible to expand in this area of digital. That is an important factor of the growth story of GlobalLogic. Now, in Japan, who is doing that area in Japan, in Hitachi, just like GlobalLogic, have co-creation with the customers and develop application. We have a team doing that work in Hitachi. We have that people, so centered on the core IT sector systems, business scale, or some advanced areas expansion is possible. As I mentioned the previous questions, the chip side of chip-to-cloud, software capability of a chip side is something that GlobalLogic has, which we still don't have at Hitachi. If that is the case, let us make use of that capability to expand the business in the Japanese market. Your second question about conflict. By Hitachi acquiring GlobalLogic, Hitachi's business and customers doing the same business as Hitachi is doing, we have already screened that possibility, and as was explained by Mr. Higashihara, in the automotive area, in some customers of automotive area, there could be some influence, but the amount is not very large. The addition, more than 90% is a repeat ratio, so they're very deeply penetrated among their customers. There's not such a big possibility of influencing the business. But as I have mentioned, if such an issue surfaces, if it happens, the scale will not be that large. That is all. Thank you. Thank you very much. [Non-English content] Thank you for the questions. Now, it's past the time to close the meeting, but there seems to be some questions raised on the Japanese channel. I see a hand, please unmute yourself and state your questions. [Non-English content] Well, thank you. Question. This may overlap with what was asked earlier. I have three questions. My first question is, GlobalLogic is a leading company in digital engineering services. What is the numeric rationale? What is the number of clients in terms of share? What are the data that would justify you saying that it's a leading company? With this acquisition, Lumada's overseas revenue ratio, how will that change? What's your forecast in FY 2021, if you have any? My last question. Lumada's sales target in FY 2021 is JPY 1.6 trillion. Your current forecast stands at JPY 1.4 trillion, so JPY 0.2 trillion deficiency. With GlobalLogic's acquisition, you will be able to add another JPY 100 billion, but what is your likelihood of attaining the target? Synergies will come in fiscal 2022 and onward, but what's your take? In the IT sector, I think your profitability is over 10%. What's going to be the impact on that? Do you think that you will be able to grow the IT sector even more, or will it dip? What's your take? [Non-English content] Thank you for your questions. Answer, to address your first question, GlobalLogic being a market leader, are there any indicators attesting to that? For a market ranking, does not exist. It would be convenient if we had one, but there's none. So, there are two things that I'm aware of. The first one is the growth. In order to continue growing, you have to continue offering value to clients. You need the skills and the capabilities to continue doing so. The company has been realizing growth at a rate of 20% or more, and EBITDA margin is above 20% as well. The value that they offer to your clients is being recognized by their clients. The growth rate, EBITDA margin, looking at these numbers, you can see that they're performing at the top level of the market. That's the understanding that we have formed, looking at these numbers. Your second question, how will this acquisition impact Lumada's overseas business? As you rightly pointed out, organically, GlobalLogic's business will be added on. FY 2021 sales, in terms of that, and I think there's a partial description in the press release, and we think that it will exceed $1 billion. That will be added to Lumada's overseas revenue. Your third question, how will Lumada's sale evolve, and how will this contribute to the profitability of our IT sector business? I think this is related to your second question, naturally. Centering around GlobalLogic, organically as well, we will be able to drive Lumada's business, which will be added on, we would like to make the synergies with the IT sector tangible. With all of that, I think we can achieve JPY 1.6 trillion. Operating income, of course, there's the cost of amortization. Once that amortization is dealt with, we believe that this business will boost our profitability quite substantially. [Non-English content] Thank you. Question. In relation to the second point, IT sector, 50% overseas ratio, what about Lumada? Is it over 50%, and do you have an idea as to what the numbers will be with the GlobalLogic acquisition? [Non-English content] This is Kawamura speaking. Let me answer your question. As was mentioned, Lumada has a sales target, revenue target of JPY 1.6 trillion this year. Without regard to timeline, 70% is to come from domestic market, 30% from overseas. Out of JPY 1.6 trillion, JPY 1 trillion will come from Japan, the rest will come from overseas. That's the breakdown. [Non-English content] A question. With the acquisition, you will be able to grow overseas sales ratio exponentially? [Non-English content] Answer, yes, we believe so, and I think the split or the breakdown will be reversed at some point in the future, overseas becoming greater than domestic. [Non-English content] Analysts and investors included, do you have any questions from the Japanese channel? Yes. Please unmute yourself and make the question. If you have a question, please unmute yourself. We cannot hear your voice. [Non-English content] Okay, can you hear me? I have a question to Mr. Higashihara. The strengths of GlobalLogic's advantages were introduced. The amount of acquisition is quite large, and in making that decision, what was the major point that you're able to make a decision of making this acquisition at JPY 1 trillion? What was the major point in making your decision? [Non-English content] Thank you. This is Higashihara speaking. For example, if you imagine the future in 2025, what will be the cyber-physical system? What will be lacking in our case? What are the companies that would best fit under such a situation? The amount is large, but with the government digitalization, cyber-physical, cloud, edge, and device will be connected on real-time basis. This will increase more and more. The decision making at the management will be connected directly to the front on real-time basis. This is the major strength. GlobalLogic, well, among many companies, we made the decisions that GlobalLogic is the most appropriate. Number two, for example, there are companies specialize on financial industry or companies specialize on the industrial sector, but also healthcare, automotive industry, telecommunications. There are many sectors. They have experience and know-how, well-balanced in manner among these different sectors. That was the second reason why we made that decision. Thank you. [Non-English content] The next question. From your perspective, Mr. Higashihara, do you have impression that this was a good purchase, this was cheap, or do you think it was expensive? [Non-English content] Answer. As a corporate value, this was evaluated by many people, the $9.5 billion enterprise value, I think is appropriate. In general terms, EBITDA ratio in the industry, 30%-40% multiple EBITDA, I think is appropriate level in this industry. Going forward, what are we going to do? On a regular basis, the growth rate will be monitored or within Hitachi, synergy within Hitachi should be identified. Is it growing as expected, or is it growing faster than we had planned? I'm sure that this acquisition of JPY 1 trillion will be successful. Thank you. [Non-English content] My last question. You often talk about become a global leader. What are you targeting through this acquisition of JPY 1 trillion is the size of the digital market. So are you aiming to become number 1 in this market? What do you mean by saying a global leader? What is your image of your future as a leader? [Non-English content] Answer. My view of a global leader is that in terms of share, to be the top share company, that is a global leader. In a niche market, be number one in terms of technology. This is as a global leader. What I mean is that to be able to win global competition in the market, to become a top after winning the competition, to be able to communicate about a future vision, that is global leader. For example, in the next five years, the so-called mission-critical sectors, cyber-physical system, mission-critical will become very important. To send this message globally, to think that if you go to Hitachi Cloud edge, chip can be connected and be controlled on real-time basis, the service is available. To be looked at from that perspective, I think that is the role of a global leader. That is all. Thank you. [Non-English content] Thank you very much. Thank you. [Non-English content] There seems to be several more people who are raising their hand, but we have passed the time to close the meeting. This will be the last person. The last person, please unmute yourself, start your questions. [Non-English content] Can you hear me? [Non-English content] Yes, we can. Go ahead. [Non-English content] I have just one single question to ask. Question, this is a question for Mr. Higashihara. From a different viewpoint. Today you made an announcement about your acquisition of GlobalLogic, and on the same day, Mr. Shiotsuka, who's been leading the edge business, is retiring. Perhaps it may be a coincidence, these two events are taking place on the same day. What's your feeling? What's your impression, if I may ask? [Non-English content] Answer. Tokunaga-san will be the new EVP from tomorrow. Shiotsuka will continue as an advisor to me. He will continue to work with me. Tokunaga-Shiotsuka, that line will continue. Starting from April 1st, it's not that he's going to depart from the business. We had a BOD meeting today, March 31st and April 1st. Because of the timing of BOD, these events coincided. But under the leadership of Tokunaga-san, GlobalLogic will be promoted, but not that we wanted to send any other message. He's been the lead in this business, and with him as the leader, we're working on PMI and synergies. But this is unrelated to the personnel reshuffling that took place on the 31st of March or April 1st. Thank you. [Non-English content] So, this concludes our presentation of acquisition of GlobalLogic. Thank you very much for your attendance.