We'd like to start the Fiscal 2016 Hitachi Financial Results Briefing for the first quarter ended June 30, 2016. Speakers today are first, Mitsuaki Nishiyama, Senior Vice President and Executive Officer, CFO; General Manager of Financial Strategy Division, Mr.

Mitsuyoshi Toyoshima; Executive General Manager of Corporate Brand and Communications Division, Ken Mizoguchi. They are the speakers today.

First, for the overview of the financial results I'd like to ask Mr. Nishiyama to give a presentation.

Please take a look at the material entitled Outline of Consolidated Financial Results for the first quarter ended June 30, 2016. Please go to Page 5.

Slide 1-2, consolidated P&L. First quarter financial results, there are a number of reorganization of the business portfolio, and that impact has been reflected as well as foreign exchange, a stronger yen impact.

They have been reflected in our results.

If you look at the revenues at the top, JPY 2,130.4 billion. It's down by JPY 183.5 billion year-over-year.

It's down 8% from the previous year. Adjusted operating income is at JPY 91.4 billion, which is down by JPY 23.9 billion year-on-year.

Again, portfolio change, its impact is felt here as well as a stronger yen impact is being felt here in this number.

EBIT is JPY 112.4 billion. Compared to the year before, it's down by JPY 33.9 billion.

If you go to the bottom, net income attributable to Hitachi Limited stockholders, net income is JPY 56.4 billion. It's up by 3%, a small increase from the previous year, an increase of JPY 1.4 billion.

Going to the next page, macro revenue as well as operating income change and the factors affecting those changes. The left-hand side is revenues.

The lower pointing arrows at the far left, exchange impact was JPY 120 billion, which was a downward impact and the impact of reorganization of Hitachi Transport Systems was JPY 74 billion, and the impact of reorganization of air-conditioning business was JPY 61 billion.

Excluding these items, JPY 71.4 billion increases did exist. And if you look at the adjusted operating income waterfall, exchange loss impact was a negative impact of JPY 15 billion.

Furthermore, reorganization of Hitachi Transport Systems had an impact of JPY 3 billion negative, and the impact of reorganization of air-conditioning business was a negative JPY 7 billion, and others was JPY 1.1 billion.

Cost-related matters, JPY 1.1 billion, this number has a number of components inside. Let me just highlight some of the major ones.

Cost reduction, direct materials cost reduction as well as indirect expenses reduction such cost reductions, there was a total of JPY 36 billion, and restructuring effect was JPY 9 billion. Put together, JPY 45 billion of cost-reduction benefit was achieved but the downward declines of selling prices was JPY 25 billion.

So on a net basis, JPY 20 billion was the amount of cost-reduction savings.

From here on, business development investments as well as human resources labor cost increases for the frontline resources such advance investments have been covered by these savings from cost reductions.

Going to Page 7, Slide 1 point -- 1-4, revenues by market. The top one is Japan.

Compared to the year before, it's 94% year-over-year because of a stronger yen as well as reorganization of the business portfolio. If you exclude those impacts, it was 99% year-over-year.

Outside of Japan, line 2, they accounted for 51% of the total. If you exclude the foreign exchange impact, the ratio would come to 53%.

Year-over-year, it's 91%. Exchange as well as reorganization of the portfolio, if you exclude those impacts, then it's 103% year-over-year, but China in the middle as well as ASEAN, India and other areas.

If you look at those rows compared to the year before, China is 81%; ASEAN, India and other areas, 77% year-over-year. So there are declines in these areas.

Building systems as is high functional materials, China and Asia demand is declining in these places. So that has had an impact.

Even after -- even excluding foreign exchange impact, it's 97% for China and ASEAN and others, 99%. So there are still declines.

Europe is 125% year-over-year. Ansaldo's acquisition is being reflected in these numbers.

So there are increases in Europe.

Going to the next page. Now Page 8.

Below is the cash flow summary, and the last row is the free cash flow and the right-hand side for the first quarter on a consolidated basis was JPY 3.5 million (sic) [ JPY 3.5 billion ] and compared to the first quarter 2015 is JPY 28.5 billion, and therefore, it has improved accordingly.

In terms of the manufacturing services, free cash flow was JPY 113.2 billion for the first quarter. Year-over-year improvement of JPY 80 billion was achieved.

Next, total assets, please refer to Page 9, 1-6. Total assets was JPY 8,989.5 billion, and this is -- and the change was 928 -- negative JPY 928.3 billion.

The second line from the bottom, the total Hitachi Limited stockholders' equity ratio was 26.8%, 1.2-point increase over the previous year. And the D/E ratio has improved to 0.38x.

In terms of CCC, cash conversion cycle, was 61 days. Compared to the end of March, improvement of 10.6 days was achieved.

However, here, the Hitachi Transport System is also included. So the actual strength is 65 days.

And even with 65 days, this is a much improvement from the previous year.

Page 10 and 11, 1-7 and 1-8. I would like to highlight the major business segments.

Now in terms of the segments for Information & Telecommunication Systems, other than this segment, because we had a business of [indiscernible] reorganization and because of the impact of overseas subsidiaries after currency translation has an impact. Therefore, in most of the segments, there was a decline in earnings.

For Information & Telecommunication Systems, revenues was at the level of 96%, and adjusted operating income was increased by JPY 3.2 billion. This is the result of business structural reforms having an impact.

Next, for Social Infrastructure & Industrial Systems, revenues increased to 111% because of the Ansaldo acquisition. Adjusted operating income was minus JPY 6.2 billion year-over-year.

There was a deterioration about JPY 4 billion impact was from foreign exchange. And because of business development investment as well as building demand decreased in China having an impact, that is the reason why there was a deterioration of JPY 6.2 billion year-over-year in terms of the segment.

Regarding EBIT, on the other hand, the decline in the operating income year-over-year and the impact of appreciation of the yen and nonoperating basis, JPY 5 billion has been added, and the equity-method affiliates have deteriorated. And that is the reason why there was a decline in EBIT of JPY 14.7 billion.

Electronic Systems & Equipment. Kokusai Electric deteriorated.

Hitachi Koki electric deteriorated.

And in terms of Construction Machinery, foreign exchange impact was significant for China as well as Asia as well as North America.

For High Functional Materials & Components, electronics automotive demand declined, leading to a decrease in profit.

For High Functional Components, EBIT declined by JPY 38.9 billion. This is because the Hitachi Tool Engineering interest by -- was sold by Hitachi Metals, and there is an absence of gains in this year.

Next page is Automotive Systems. Foreign exchange has an impact significantly, a decline of JPY 3.5 billion.

Smart Life & Ecofriendly Systems revenue was -- has declined to 69% because of the reorganization of the air-conditioning business. And because of this, the decrease in profit is the result of reorganization as well.

And revenues was around 70% year-over-year. This is because of Hitachi Transport reorganization is included.

For corporate items and eliminations, EBIT was JPY 54 billion -- or increased by JPY 54 billion year-over-year, and this is because of the proceeds from the sales of Hitachi Transport.

Regarding foreign exchange impact was significant for most of the segments. And if we take away the foreign exchange impact as well as the reorganization impact, the actual deterioration was seen in terms of social infrastructure as well as Electronic Systems & Equipment.

Otherwise, for profit was at a similar level compared to the previous year.

Please now refer to Page 13, 2-1. This is the outlook for the fiscal year 2016.

The macroeconomic business environment for each of the regions are subject to opaqueness, and foreign exchange volatility is likely to continue going forward.

Against this backdrop for fiscal year 2016, we have maintained the previous forecast of 13th of May about -- by segment basis, Hitachi Construction Machinery declined and Hitachi Capital closing has been extended, and these are having an impact on the forecast.

For the second quarter results when we announced foreign exchange, trends will be taken into consideration, and business trends will also be assessed, and we will consider at that time whether we need to revise or not.

Now regarding expression of foreign exchange from July onward, please refer to Page 24. Foreign exchange sensitivity is provided on the right-hand side.

For the 9 months and from second quarter onward, regarding operating income basis, JPY 1 -- U.S. dollar movement will have an impact of JPY 2.5 billion and for Europe, EUR 1 change will have an impact of JPY 1 billion.

On the 13th of May, when we announced our forecast, the assumption for dollar exchange rate was JPY 110. And so within JPY 5 volatility, we should be able to absorb the changes according to our plan.

However, if it goes to JPY 100 in terms of business profitability, we have to reconsider how much we can absorb the changes in foreign exchange volatility.

Now let me confirm on Page 14, 15. Let me talk about where there's been changes.

The fourth from the top is Construction Machinery where JPY 720 billion has been changed to JPY 700 billion, revised to JPY 700 billion, and JPY 34 billion has been changed to JPY 26 billion. EBIT is JPY 16 billion.

We had announced JPY 25 billion. That has been revised downward to JPY 16 billion.

Now for Financial Services. The original forecast was JPY 130 billion, but adding JPY 90 billion to that, we have revised to JPY 220 billion, and 3 months closing has been delayed for Hitachi Capital Corporation.

So 3 months of revenue had -- has been added.

In terms of operating income, it was JPY 15 billion added to JPY 11 billion to JPY 26 billion. EBIT, the original forecast was JPY 16 billion.

That has been revised to JPY 28 billion.

In terms of corporate items and elimination, the remaining JPY 3 billion has been adjusted. The JPY 3 billion EBIT before operating income as EBIT, the JPY 3 billion adjustment has been made, and overall, we have maintained the previous forecast.

Lastly, I would like you to refer to Page 17. There are 2 topics I would like to elaborate on.

It's 3-1 in terms of your slides. First of all, regarding the status of the business portfolio informed, we have converted Hitachi Transport System to an equity method associate on May 19.

This has been completed.

The second point is regarding the postponement of the date of transfer of the shares of Hitachi Capital Corporation has been extended to October 2016 rather than the original plan of August because of permissions and approvals that need to be added, and we have added 3 months into the numbers.

The second point is regarding the status of business in the U.K. in terms of revenues for the first quarter was JPY 73.6 billion.

Revenues composition ratio was 3%.

railway business and the nuclear energy business.

Hitachi will utilize the manufacturing base in the U.K. to cope with the U.K.

domestic demand and bases of Hitachi Rail Italy and Ansaldo STS in the European continent for other European demands. For the nuclear energy business, there is no change in our plan.

ABWR, the process for reactor design approval, is scheduled for the end of 2017, and the construction of the first plant is planned to start in 2019.

That is all in terms of my explanation. Let's start the Q&A session.

We will bring a microphone to you.

Any questions from the floor?

There are 2 questions. By segment, operating income by segment.

You gave an explanation, and I was able to get a general understanding, but foreign exchange impact, excluding that, what is the actual amount of operating income, if you could share that number with me? If it's going up or down?

Mostly it was flat, I understand. But when I did my envelope calculation, there are certain things that I found not to be flat.

So maybe I'm mistaken. If you could elaborate.

Another question about cash flows. Again, cash flows from investing activities, there is -- what -- such cash flows in the previous year as well as this year, excluding cash flows from sales of business, what is the free cash flow in the first quarter coming from your actual business?

For the full year, what is the projection for the full year in terms of cash flows? What is your prospect?

And M&A cash flows to be used for M&A purposes, are you allowing for some?

Now let me start with free cash flows. First quarter, free cash flows was JPY 113.2 billion.

Reorganization of Hitachi Transport, the shares of Hitachi Transport being transferred, the impact is about JPY 44 billion or so. The proceeds from the transfer, and this is a net number for carving this out and on a net basis, JPY 44 billion is reflected in this number.

And for the full year, free cash flow projections for the full year, May 13, JPY 100 billion or so is the number that we wanted to aim at. This is something that we shared with you before.

So far, JPY 100 billion to JPY 150 billion, we want to raise it to that level because on a run-rate basis, CCC improvements are being observed. So cash conversion cycle if it is improved further, we want to be aiming at JPY 150 billion.

M&A, there aren't -- well, we haven't included large ones yet. But small ones.

There are certain ones that are already decided establishing companies and M&A transactions, smaller ones have been included. So in terms of cash flows from investing activities in a 3-year period, cash flows from operating activities, JPY 2 trillion for -- over a 3-year period and CapEx of JPY 1 trillion, expenditure, M&A expenditure of JPY 1 trillion.

That policy remains unchanged. But when it comes to M&A, it depends on a deal and at every juncture, we have to move in line with our strategy, whether deals that suit our strategy will be coming up or not would be determining factors.

So we don't have a specific number. It's difficult to post a specific number for each year.

So we are thinking over a period of 3 years, and that policy remains unchanged.

By segment, Mr. Nishiyama explained the impact of the foreign exchange as well as reform of the portfolio.

Hitachi Transport and air-conditioning put together and Ansaldo and Hitachi Construction Machinery, Metabo [ph]. After restatement of these 4 pieces, let me explain.

First, in the Information & Telecommunication Systems, revenues is 96% year-over-year. So this is flat at 100% without those factors.

Now adjusted operating income, positive 32 is the number we have here. There are positive sides because of many buys.

So positive. It's not plus 32, but it's down by about 10 to plus 22, foreign exchange being constant.

So what we are saying question is that 4 one-off items and foreign exchange, when they are reversed, what would happen? So 0% of revenues.

This is after foreign exchange being reversed. That is correct.

So Information & Telecommunication Systems plus JPY 10 billion and social infrastructure after -- excluding Ansaldo, it's 101. And social infrastructure, minus JPY 6.2 billion.

Well, foreign exchange translation, the U.K. rail as well as Chinese elevators related.

There's a lot of foreign exchange translation impact. So this JPY 6.2 billion is about minus JPY 3 billion.

As Mr. Nishiyama said, social infrastructure and electronic systems are having negative declines in profit.

Revenues in electronic systems is about JPY 10 billion. So this JPY 2 billion or so.

So the impact itself is not that large. Construction Machinery, 101 in revenue year-over-year, and adjusted operating income minus 2.8 would come to about positive JPY 1 billion.

High Functional Materials, this 87% should become both metals materials declines are reflected in selling prices. So 87% would come to 92% revenues.

So adjusted operating income is minus 3.7 would come to positive 2 or JPY 200 million [ph] or JPY 300 million [ph]. Automotive Systems against 97, it would come to 104%.

Income, minus 35 would come to minus 2 or 3. So it's almost flat.

But domestic is rather weak, this Automotive Systems. Smart Life & Ecofriendly, revenues of 101 or 10.1 -- 101% [ph] and operating income, plus/minus 0 mostly.

Others, 70% would become 96% in revenues year-over-year, and operating income, minus 3.8 would become plus JPY 200 million [ph] or so. Financial Services revenues, 105%.

And operating income is plus/minus 0 or so. As a result, after restatement of the 9 segments, 6 segments would have higher revenues.

Declines in profits, what we need to pay attention to is Social Infrastructure & Industrial Systems and Electronic Systems & Equipment. That's our understanding mainly Kokusai.

Free cash flows, JPY 100 billion to JPY 150 billion is the target you said. Now first quarter, actuals, onetime factors included, free cash flows of JPY 100 billion, including that, you want to raise it to JPY 150 billion for the year?

That's right. In addition, in the first quarter, when we planned this compared to the time that we planned this, CCC compared to the initial plan, there has been a large improvement.

So on a full year basis, we want to factor in this improvement. So that's why we're saying we want to increase our free cash flows by about JPY 50 billion from JPY 100 billion to JPY 150 billion mostly coming from CCC improvements.

I just have one question. There's going to be overlap with what you have already explained but Page 10 and 11 in the first quarter regarding actual results for operating income, once again, I'd like to ask what is the achievement against the original plan internally?

And by business, please talk about outperform or underperform. Are there any characteristics, noteworthy characteristics you can share with us?

And based on that, for the annual guidance, which segments are doing well? And which segments are subject to challenges inclusive of the macroeconomic environment?

Please elaborate further.

Now in terms of operating income basis, against the plan, there's about improvement of JPY 10 billion. That's our view.

And in this foreign exchange impact, when we -- compared to when we had the original forecast for all the currencies, there's been minus JPY 5 billion impact was felt, but that is being absorbed in the JPY 10 billion that I have mentioned. Now the breakdown of JPY 10 billion by segment, there were -- there was good performance in Information & Telecommunication Systems, around JPY 8 billion is accounted for compared to the original forecast.

They were a bit better in terms of the first quarter. Electronic Systems & Equipment, JPY 7 billion.

As you know very well, Hitachi High-Technologies did well in the first quarter. Now the challenging segments in terms of original plan is -- JPY 3 billion was for High Functional Materials & Components and Automotive Systems compared to original plan because of the domestic demand decline, they have also been subject to a challenge.

So compared to original plan, deviation was JPY 2 billion. Overall, JPY 10 billion improvement has been achieved -- is seen.

Regarding the outlook going forward, the segments that struggled are likely to continue to be difficult in terms of High Functional Materials & Components as well as Automotive Systems, their market environment as well as foreign exchange will have significant impact on these segments. Taking into consideration the current foreign exchange, it could be difficult for the full year as well.

Now regarding Information & Telecommunication Systems as well as high technologies, we believe that the strong performance will continue. But there is significant volatility in foreign exchange.

Therefore, in the second -- until we announce the second quarter guidance, we have to reconfirm and reevaluate each of the businesses and segments and to also revisit the foreign exchange assumptions and we have to also consider how much volatility can be absorbed or if it is possible that it will be considered going forward.

I have a number of questions. The first one is last year, in Information & Telecommunication Systems as well as social infrastructure, you did a lot of restructuring in these areas.

Now in this year, structural reform. Last year, in terms of telecommunications infrastructure, there are some that are still continuing.

But right now, what is the status of progress as well as your standpoint going forward? How do you look at it?

When you think about structural reform of your business, can you give us your updates? That's my first question.

Structural reform, restructuring. From last year, we have been working on a number of initiatives.

First of all, information, telecommunication systems, telecommunications network-related area, we will continue to work on that. Staffing measures have been taken to quite an extent last year.

The shrinkage of this business and production facilities will be consolidated and closed. Partly, a review of our assets as well as hardware shrinkage would lead to software assets being taking impairment.

Several billions have been recorded in the first quarter. And basically, things are moving in line with our plan.

Now in 2015, in the second half, there has been a conspicuous IT hardware storage-related developments, large storage demand declines have started to be conspicuous. So development expenses for that.

We will be narrowing down on such development expenses. So storage-related products, we would revisit our production facilities, and we would take rationalization measures, and we would narrow down on the products to be developed.

We will be quite selective. So those are the things that we are working on.

But when it comes to these expenses, they have already been factored into the initial plan. So overall, we will just move in line with the plan.

Now Social Infrastructure & Industrial Systems, in the previous fiscal year, projects that incurred losses, especially overseas projects, those that we will not continue, we will withdraw from such businesses. We have already made a decision.

So we will shrink our structure. But if such projects are still continuing, we will implement such projects and liquidate local subsidiary.

Those are the policies that we have already decided on. So we need to first complete the projects that are progressing right now.

So that's the work that we are doing now. So the policy that we have decided before is being maintained.

So we're just moving ahead with the structural reform that we have already decided on. And restructuring in a broader sense is a review of lower profitability products.

We will continue to and continue to be working on that in each business unit. Those will be picked up.

The businesses that have challenges and businesses that are low in profitability, they will be followed up on a regular basis to check the progress and turnaround situations will be monitored whether a turnaround is possible at all. To make sure that there is going to be higher profitability, we would continue to and regularly check whether such progress is being made.

On a quantitative basis, first quarter results included within operating numbers, what are the restructuring costs that are included? Any indications on a quantitative basis?

First quarter results restructuring, well, JPY 80 billion or so for the full year is something that we shared with you on the 13th of May. Right now, as of first quarter of this year, JPY 10 billion or less.

So fixed assets related matters, impairments mostly. So those are the ones that we have worked on mostly because by March end for special or retirement payments, they have already been provided for.

So information and social infrastructure, yes, we have such payments but amounts are not that large. So fixed assets related until 2015.

Domestic business of Information & Telecommunication Systems have been worked upon. And in conjunction with this right now, we are working on overseas Information & Telecommunication Systems to try to consolidate and rationalize.

Second question, some detailed points. In your plan, corporate items and eliminations, including risk, JPY 3 billion or so have been adjusted, a negative JPY 3 billion has been factored in.

But in the first quarter, this is a positive number compared to the year before in this corporate items and eliminations. How should I think about this?

Normally, I think JPY 5.5 billion would be distributed in respective quarters. But in actuality, in the first quarter again, this is a positive number.

So how should I understand this, if you could give us your explanation.

There's not much to explain and provide my commentary. Basically, revenues and operating income, how they generate.

In the first quarter, it tends to be smaller, and in line with that, the expenses that will be incurred are being planned in line with these developments. For the full year, pharmaceuticals, JPY 40 billion or so contingency have been factored in, in our operating income, so that kind of thinking is maintained.

JPY 3 billion, construction, Hitachi construction and Hitachi Capital adjustments are being made. So that's why we have put in JPY 3 billion in here.

But original perspective has not been changed. So as we examine each business, we may revisit these numbers.

For year-on-year, plus JPY 3 billion, and last year, it was about the same. The major item is reduction of corporate expenses.

Hitachi Limited, the headquarter's expenses actuals, reductions are reflected here. So in the first quarter, such contingencies did not happen.

So that's the understanding that you should have.

Last question. You said there's not big of an impact but Brexit, the impact of Brexit, especially rail-related areas, now that the sterling is so cheap, I would suspect that there could be an impact.

In the first quarter, the business scale is still small. So maybe not much of an impact, but going forward, over 3 years and 5 years when your business is larger, the sterling, if it stays at this level, what would happen?

This is my last question.

There's a number of factors here that will have an influence. The business itself, like I said before, directly would not be impacted by Brexit because there is order backlog, 1,400 cars have already been placed in the order.

And over the next 5 years, 2,000 cars, such demand is already expected. So that's not likely to disappear on the procurement side.

In the rail business, IEP business, in the U.K., production is about 20%. And Europe other than the U.K., procurement from Europe other than U.K.

is 50%, and the remaining 30% would come from Japan, procurement from Japan. So that's the split.

And obviously, foreign exchange issue or tariff issues, unless tariff arrangements are made well, there is going to be that impact. But on the procurement side, local procurement, same with other businesses, expansion of local procurement is one thing that can be done.

If that's not possible, then you have to cover that and compensate for that with lower costs, and those -- that will be brought from Japan. If that still remains, we do currency forward contracts partially.

But basically, cost reduction would be the measure to compensate for this. Over the long term, in our contract, we may need to devise ways to try to pass that on to that and provide for that in the contract.

But for the projects that we already have, there's going to be an impact on procurement side if the sterling level continues at this level for the U.K. company, when they procure goods, the cost increases will be felt at the U.K.

company. So cost reductions, currency forward contracts.

And because the project is long-lived. So local production expansion may be another way to respond to these developments.

Normally, one would think that -- I understand that demand remains unchanged, but the local procurement expansion may not be big enough to compensate for this impact. So if the current level continues, you need to be prepared for losses there.

And if there's a major fluctuation of foreign exchange, if it is based on the sterling, if the sterling comes down by 20% to 30%, cost increases would be suffered. So if such escalation provisions are included in the contract or not, let me confirm that.

IEP and other contracts, I am not familiar with the details of the contract itself. But if for long-lived contracts, maybe such measures needed to be taken.

Does that mean that you have not made such arrangements so far?

The rail itself is a very large project. So at the time that we entered into this contract, exchange risk, currency risk, risk hedging has been conducted.

We entered into currency forward contracts to hedge for that currency fluctuations.

It may be possible for 1 year, but normally, not possible 3 years and 5 years. And when there are such huge fluctuations in the sterling, can you really hedge yourself?

We are doing something that is close to full hedging. Thank you.

So as for tariffs, there is a risk there. How to address that is a question, but for IEP, when it comes to the currency, we hedged ourselves for that currency risk.

I have 2 questions. From April, you have a new organization.

It's been 4 months since you have set up this new organization and in the new organization, you have strengthened the so-called front side. And what is happening now?

Have you been successful? Have you -- has anything unexpected occurred regarding the organization?

According to the original plan, the cooperation in the new organization based on Lumada and IoT platform, service platform BU, these are working well, and all the BUs are actively leveraging the service and platform BU. At the top level Lumada, and the business model based on Lumada as well as the direction and strategy going forward have been fully understood at the top management level.

However, for the employees overall, the rank-and-file employees, we need further thorough understanding on their part. In visiting the customers, they have to be able to provide good explanation on part of consultations as well as for SEs as well.

IoT service platforms must be fully understood. Business model must be fully understood, and they must be able to deal with the customer solutions.

We have to provide training to enable this. So we need to do a better job in terms of human resources development to enable our employees.

And in fact, training programs are underway. First year OJT as well as OJT programs are underway.

So once this is up and running, we've realized that significant resources will be required. So we are prepared to increase the resources that has also been announced when we came up with the new Mid-term Management Plan.

We have to change the mentality, the mindset of people. We have to change the way they were introducing products in the past.

We have to make further efforts to change the mindset of our employees, and we are implementing programs to enable this.

Second question is regarding Lumada. When you made the announcement and the presentation was made, the -- in terms of the IoT business, JPY 5.4 billion was mentioned.

You said that it is close to JPY 600 billion. Now what is the purpose made for this fiscal year?

How is the business expanding on the basis of the quarter as well as on the annual basis? Please give us quantitative guidance or indication in terms of revenues.

Related to Lumada, does exist. In fact, it is making a significant contribution in terms of revenue.

We need more time. Therefore, it's very difficult to talk about revenues in terms of orders received so far.

But once we are able to gain traction, I'm sure that we can talk about the revenues as well as profits. But in terms of quantitative aspect, it's difficult to talk about revenues and profit.

But what we are trying to identify is KPIs will be mentioned. On the 10th of May, Lumada was announced, and since then, we've had good response from our customers.

The number of inquiries were 130 to date as of July, out of which I'd like to talk about the number of POC, where we are conducting proof of concept have gone to the stage are 80 cases altogether. Even prior to the global launch on 10th of May, we have been promoting this product.

But because we have to end the year with the customers, we will not -- cannot divulge the details, but I can say that 80 cases are -- have gone to the POC stage. Another KPI that we would like to introduce is the number of use cases.

This is a concept that we would like to set the KPIs for going forward. From data held by customers, analytics, AI technology will be brought to them to provide the solutions to change, improve the management of the customers.

And use case is a conglomeration of what is being made abstract. That is what we refer to as the Lumada platform.

In terms of this use case, currently -- well, in fact, with Pentaho is also included, which we had in the past. So anything proceeding 10th of May is also included, but altogether, a number of use cases numbering 160, Pentaho or big data analytics are 100 and Hitachi AI technology, H, 60.

In total is 160 so far. So we want to expand this further going forward and grow the related business to this area.

[Foreign Language]

I have 3 questions. The first question is foreign exchange, you haven't changed your forecast but emerging countries’ currencies such as renminbi as well as Indian rupee, the impact of these currencies over the next 3, 9 months as you look at the financial results, how should I consider these currencies?

That's my first question. Second question is Mr.

John Domme stepping down. To the extent possible, if you could let us know what has happened.

And third question, Lumada, POC, 80 cases. I have heard that the reputation is quite high in terms of the presentation.

So these 80 cases, what are the types of customers that are you trying to make any inroads into if there are any certain characteristics of the customers that are showing interest.

John Domme, his resignation, well, he is stepping down for his personal reasons. So there's nothing for me to say.

I have no further comments. And the structure that would succeed Mr.

Domme -- so at Hitachi data systems, the CEO is Mr. Otsuki, Managing Director, Executive Officer.

He would take on the role of Chief Executive for the Americas as well and Hitachi inside platform is being led by Mr. Kojima, Executive Officer and Senior Managing Director.

Social Innovation Business and IoT business would be succeeded by Mr. Kojima.

So Mr. Otsuki and Mr.

Kojima, these 2 executive officers and the CEO of Hitachi consulting, these 3 people would coordinate Hitachi inside and HDS, HCC in the United States, U.S. From the U.S., we will be trying to create a global business.

So we have already put together this structure, so that is going to be how Mr. Domme will be succeeded and his work taken over.

Now POC, 80 such cases and what is the content of these cases? The content of POC itself because of the reasons that I gave, I cannot share that with you.

But if I share with you some of the use cases, manufacturing in the industry, the data to be used would be mostly sensing data, specifications, maintenance, history of the equipment. Such data would be utilized, and the value proposition is shortening of systems development period, reduction of expenses of development, ROI improvements.

Those are the value propositions. So this is the use case.

Now medical. In a hospital, here's another use case.

Patients, locations or emergency medic area, location of patients as well as hospitals that are able to take in these patients, medical data would be used and records would be used to -- for them to be delivered into ER to -- and also to reduce the amount of time needed for treatment. That's another use case and industry related, another one in the manufacturing production condition for age lot as well as condition of materials would be used to enhance the level of quality of the products.

These are some examples of use cases. This is also being applied internally in our group.

Service, for example, warehouse business efficiency to be increased, excess inventory to be reduced and manufacturing process decision-making could be made more efficient. So these are some of the examples of use cases.

We want to build on these use cases to create a platform and further lead that to complete business going forward. And for a number of these actual POC has already started.

Foreign exchange impact on -- in emerging currencies, that's very difficult to say.

Other region, Asia, it's about 10% or so. So emerging countries, currency impact, this not something that is coming out this year all of a sudden.

Back in 2015, this did have an impact already. In a sense, India, Indonesia, Thailand and Vietnam, in these countries, basically, it's not that this is an export model.

This is locally produced and locally consumed. That's the basis.

When we are to convert that to an export base, how much local procurement can be done is going to be a very important point and a determining factor. In North America and in Europe, we have a bigger portion of our revenues shifting to these regions, and Asia is still important but still, the arrangement is more how local production and local consumption is possible.

So that's -- this may not answer your question directly, but this is how we are working on this issue.

The time has come to bring this meeting to a close. Thank you for your attendance today.