The time has come to start the explanation meeting for the consolidated financial results for fiscal 2016 for Hitachi, Ltd. I would like to, first of all, introduce the speakers to you: Mr.

Mitsuaki Nishiyama, Senior Vice President and Executive Officer, CFO; [ Tomami Kato ], Deputy General Manager of the Financial Strategy Division; and Ken Mizoguchi, Executive General Manager of Corporate Brand and Communications Division.

I would like to ask Mr. Nishiyama to explain the results.

We have distributed various materials, but my explanation will be following the PowerPoint presentation. It is entitled the Outline of the Consolidated Financial Results for Fiscal 2016.

Please refer to Page 4, it's 1-1. These are the highlights of the fiscal year 2016 financial results.

Revenues was in line, 162 -- JPY 9,162.2 billion. This is because of the impacts of the business reorganization and foreign exchange.

But if we exclude the impacts of business reorganization and foreign exchange impact, the result was an increase of 3% year-on-year. Next is adjusted operating income, JPY 587.3 billion, down 7% year-on-year.

This is the impact of the business reorganization and foreign exchange. If you exclude these impacts, increase of 13% year-on-year was achieved.

Fourth line, next is net income, JPY 231.2 billion, up 34% year-on-year. ROA was 3.3%.

It has increased from 2.6% to 3.3%. The free cash flow was JPY 485.5 billion, up JPY 161.1 billion year-on-year.

Our year-end dividend for fiscal 2016 is presented as JPY 6 for the interim. We have increased it by JPY 1.

Year-end dividend will be JPY 7 per share.

Please now refer to Page 5, 1-2. This is the consolidated statement of profit and loss.

Revenues was JPY 9,162.2 billion. This is a decrease by 9%, but organic increase was 3%.

The adjusted operating income was 587.3%, and the ratio was 6.4%. There was a decline of JPY 47 billion.

But without the business reorganization and foreign exchange, it was an increase by 30% on an organic basis. EBIT was JPY 475.1 billion.

Net income attributable to Hitachi, Ltd. stockholders was JPY 231.2 billion, an increase by JPY 59.1 billion, which has increased by 34%.

EPS was JPY 35.65 last year, and EPS has improved in fiscal 2016 at JPY 47.90.

Previous forecast comparison is being presented, which is the difference with the guidance announced on the 1st of February. In terms of revenues, it increased by 3% or by JPY 162.2 billion.

Operating income increased by JPY 27.3 billion. For 6 segments out of 8, excluding financial segment, Financial Services improved.

And the net income improved to JPY 31.2 billion compared to the previous guidance.

Next, I would like to move on to Page 6, so 1-3, which is the factors affecting changes in revenues and adjusted operating income. The -- in terms of revenues, foreign exchange impact was JPY 490 billion, and 90% is from the impact of a conversion of the foreign currency-denominated performance of entity services to Japanese yen.

The results -- and to the right, there was an impact of reorganization of air-conditioning business, Hitachi Transport System and Hitachi Capital. So this is the impact to revenues.

Organic growth was JPY 326.9 billion positive. This is organic.

As well as Ansaldo impact is included, and it's 3% positive. And right-hand side is the adjusted operating income.

Foreign exchange impact was minus JPY 73 billion. The impacts of reorganization of the business portfolio, impact of a minus JPY 55 billion, profitability improvement as well as organic scale increase amounted to positive JPY 80.5 billion.

That is increased by 13%.

Page 7, this is revenues by market. A year-over-year comparison is made to the right.

Japan is 91%; outside Japan, 92% year-over-year; and altogether, it's 91% -- the total is 91%. Impact of foreign exchanges for the business reorganization, impact is significant, but if we exclude that, that's 99% for Japan, outside Japan is 107%, and total is 102%.

Overall, overseas is 107%. North America, with slight decline, 99%; but in other areas, we saw increases.

Asia is 107%; and China is 108%; and ASEAN, India, excluding China, was 106%. Europe was 118%; other regions, 110%.

Therefore, Europe grew at 102% even with the impact of -- even without the -- excluding the impact of foreign exchange. If we exclude that, it's 118% and really, business was very successful.

Cash flow is on the following page. Free cash flow, the -- for the -- was JPY 485.5 billion.

In terms of Manufacturing, Services and Others, improvement by JPY 161.1 billion.

Next, the balance sheet explanation will be given on the next page, Page 9. To the right is the consolidated total, and the total was JPY 9,663.9 billion in terms of total assets, and the reduction of JPY 2,887 billion from the previous period.

And interest-bearing debt declined by JPY 2,427.8 billion because of the Hitachi Capital reorganization. This has reduced the size of the asset, reflected significantly.

Now to the left is for Manufacturing, Services and Others. Total assets was JPY 9,663.9 billion, decrease of JPY 254 billion from the previous term.

Third line from the bottom, cash conversion cycle, or CCC, was 72.2 days. IEP of the railway business receivables has been included.

Therefore, compared to the previous year, there was an increase. But the plan was assumed to be 80 days, so compared to that, there was a significant improvement.

The total Hitachi stockholders' equity ratio was 30.7%, increased by 5.1 points. And debt-to-equity ratio was 0.29x.

This was also an improvement.

As a result, as I mentioned earlier, for Manufacturing, Services and Others ROE, although it is not written here, was 2.6% last year, improved to 3.3%. ROE, last time was 6.1, and this has improved to 8.3.

Asset profitability has been improving, and therefore, we have a good platform for growth going forward.

Next, Page 10 and 11, Slide 1-7 and 1-8. Let me explain the results by business segment.

Top, Information & Telecommunication Systems. Revenue is 94% year-over-year.

This is because of foreign exchange and the ATM for overseas sales decline. And with that, revenues declined.

However, the operating income is up by JPY 11.6 billion. The telecommunication network systems and the past business restructuring is showing impact.

And the social infrastructure-related projects, profitability is improving, and that is why operating income is improving. As a result, operating income ratio was 6.7% in the previous year.

It is improving by 1% to 7.7%. Now EBIT is down by JPY 32.6 billion.

Hardware business related, including telecommunications and storage and servers, the products are being narrowed down, so the restructuring cost is being posted, and therefore, EBIT is down because of the higher costs.

Next, Social Infrastructure & Industrial Systems. Revenues, elevator, escalators for buildings, foreign exchange factor was large.

Railways business, revenues increased. And therefore, in total, it was flat year-over-year.

Adjusted operating income, building related, elevator related, foreign exchange factor was large, so it was down by JPY 4.3 billion year-over-year.

Next, Electronic Systems & Equipment. It is up by JPY 14.5 billion.

This is Hitachi High-Technologies' strong business.

And next, Construction Machinery. Foreign exchange was one factor, but in China, in India, we are seeing a recovery, and so 99%, basically flat year-over-year.

And operating income, we saw an increase in India, and the negative foreign exchange factor was offset by the restructuring impact.

High Functional Materials & Components. Hitachi Metals and others had a foreign exchange factor, and China and Asia, revenues went down, so 94% year-over-year.

Foreign exchange, with the revenue decline, operating income is down by JPY 5.9 billion.

Now in the previous forecast, the Information & Telecommunication Systems is up by JPY 9.9 billion. And the Electronic Systems & Equipment is up by JPY 4.5 billion.

And the Social Infrastructure & Industrial Systems is down by JPY 7.9 billion. This is because of the cost reevaluation of the Middle East project that we are exiting now.

Next page, Page 11, please. Automotive Systems, at the top.

In North America and China, the sales went up. But because of the large foreign exchange factor, revenues was down slightly.

And with the revenue increase, the capacity utilization improved. But the foreign exchange factor was large, and so the operating income was down year-over-year, but the operating income is up if we exclude the foreign exchange factor.

And Smart Life & Ecofriendly Systems, Others, Financial Services, these 3 segments. With the air-conditioner business reorganization; and in Others segment, Hitachi Transport Systems reorganization; and Financial Services, Hitachi Capital reorganization, and so both revenues and operating income were down significantly.

In Automotive Systems and Smart Life & Ecofriendly Systems, compared to the previous forecast, EBIT is up because of the sales of land and asset. So gain on sale of land and asset are posted.

That is the reason for the increase. So that's all for this page.

Next, Page 13, please, 2-1. Outlook for fiscal year 2017.

First, the underlying premise, underlying assumption. The exchange rate is JPY 110 to the U.S.

dollar and JPY 115 to the euro. And another is in the reorganization.

As we announced the other day, Hitachi Kokusai Electric is converted into equity-method affiliate, so this impact is reflected. So the forecast, as you see here, revenues is JPY 9,050,000,000,000.

This is 1% down from the previous year. But the business reorganization, portfolio reorganization and the foreign exchange, if we exclude these factors, organic growth is 3%.

Next, adjusted operating income, JPY 630 billion, 7% operating income ratio. This is 7% up from the previous year, JPY 42.6 billion.

So reorganization of portfolio and foreign exchange, if we exclude those 2 factors, it is up by 15%.

Now EBIT, JPY 580 billion. And net income attributable to Hitachi, Ltd.

stockholders, JPY 300 billion, and this is up by 30%. EPS fiscal year 2016 was JPY 47.90.

Our forecast is JPY 62.14.

Next page, please. Page 14, Slide 2-2, this is fiscal year 2017.

Revenues and adjusted operating income, macroeconomic factors affecting the changes. Revenues, the foreign exchange is minus JPY 20 billion.

Dollar's fiscal 2016 average rate is JPY 108; this time, JPY 110, so dollar alone is a positive factor. But other emerging markets' currencies have negative impact.

Yen is strengthening against the other currencies. So all in all, in revenues, we have minus JPY 20 billion impact.

Now in 2016, the impact of reorganization is JPY 176 billion. Hitachi Transport System and Hitachi Capital conversion into equity-method associates and Hitachi Koki, this impact is JPY 179 billion.

And impact of reorganization of Hitachi Kokusai Electric is JPY 61 billion. So excluding this, the business organic growth is 30 -- JPY 323.8 billion.

Next, the right side is adjusted operating income. Foreign exchange, the emerging markets' currencies, the Thai bahts and Australian dollars, for these emerging market currencies, yen strengthened, so this is a negative JPY 5 billion impact.

And impact of reorganization of Hitachi Transport and Hitachi Capital, this is JPY 25 billion; and impact reorganization of Hitachi Koki, JPY 7 billion; and Hitachi Kokusai Electric, JPY 9 billion impact. However, the profitability of improvement and an increase in scale, plus JPY 88.7 billion, so 15%.

Excluding the foreign exchange and the business reorganization, organic will grow by 15%.

Next page, please. Page 15 and 16, Slide 2-3 and 2-4, these are by segments.

Out of the 9 segments, 3 segments, the electric segments equipment (sic) [ Electronic Systems & Equipment ] and Others and Financial Services have revenues down -- revenue decline because of the reorganization. And with that, operating income also went down -- is down.

Other than that, the 6 segments, revenues will be up or flat, and operating income for all 6 segments will be up.

Now in the Appendix, Page 23, please. Page 23, progress in Lumada business.

Lumada business, we have only shown the number of use cases until now. But this time, we are showing the revenues of Lumada business to show you the progress.

#1 and #2 in the table are defined as you see here. Lumada core business, is a service business that converts customers data into valuable insight through AI and analytics and improves management indicators or offers problem solutions.

This is defined as Lumada core business, and the revenues is listed here. Lumada SI business is SI business which is deployed within the IoT area that is led by the Lumada core business.

So Lumada core business and Lumada-related SI business, so both core and related business is the total Lumada business. For 2016, JPY 900 billion and fiscal year 2017 forecast is around JPY 950 billion.

For fiscal year 2018, we want to exceed JPY 1 trillion. That concludes my explanation.

I would now like to open the floor for Q&A. Now because of the schedule, the time is very limited, I would like to allocate first half for the press and the second half for the investors.

So the floor is now open.

Regarding foreign exchange, I have the following question. Last term, the impact of foreign exchange was very significant, according to your remarks.

Which currency was the most significant in terms of impact? And JPY 110 and the JPY 115 are the assumptions for this year in terms of yen and euro.

Do you think that there is uncertainty regarding the outlook relating to foreign exchange this term?

In the last term, the dollar fluctuation was the most prevalent. Yen-dollar accounts for a significant portion.

And because of the strong yen compared to the previous year, the impact was very significant. For the -- for this year, fiscal year '17, for U.S.

dollar, assumption is JPY 110, JPY 115 for euro. But there is uncertainty because there are geopolitical risks as well.

And this will have an impact on foreign exchange movement. Therefore, we will be very prudent in evaluating the foreign exchange going forward.

However, in terms of the overall sensitivity for dollar basis, in terms of operating income, a JPY 1 movement is equal to JPY 2 billion operating income. For euro, the impact is JPY 1 billion for JPY 1 movement.

Therefore, we will reduce costs to be able to deal with this, and local production for local consumption will be the policy that we will be promoting. Next question, please.

Could you elaborate on this year -- this fiscal year forecast? Especially the social infrastructure system, the adjusted operating income will close to double, and so could you elaborate on the factors, the reasons, please?

Page 15, please. So I only talked about the general facts, and so I would like to go into detail.

Page 15, please, Slide 2-3, this shows the Social Infrastructure & Industrial Systems. So revenues, 99%, slight decline.

There are growing business like railway business. But on the other hand, there are low-profitable business.

We are exiting from the low-profitable business, and so the revenues is expected to be flat. Now we are exiting the new -- the Middle East projects that are loss-making and the Southeast Asian project, we are exiting from these loss-making projects or low-profit business.

So we can expect improvement from that. And the railway and building business, capacity utilization will improve.

And therefore, the adjusted operating income will increase by JPY 52.9 billion. EBIT will go up by JPY 138.9 billion.

In fiscal year 2016, the uranium enrichment business, there was an impairment from exiting from the uranium enrichment business. There was -- this was included in our fiscal year 2016.

And there will -- this will no longer happen this year, and so EBIT will improve greatly from that factor. This 99%, excluding the foreign exchange, this is 100%.

In cost reduction, last fiscal year was around -- you aimed for JPY 100 billion. Did you achieve this target?

And what's your forecast this fiscal year?

Cost reduction, by netting with the price reduction, I mentioned JPY 100 billion. And our result was around JPY 90 billion.

It was slightly lower because of the raw materials factor. Raw material price went up, and that's why JPY 90 billion.

This fiscal year, fiscal year 2017, is expected at JPY 60 billion. This is offsetting a net with the price decline.

JPY 30 billion decline because of the increase in raw material price. So we are taking a conservative view.

Raw material and material-related raw materials and semiconductor-related, the price is expected to go up. So compared to the previous year, our cost reduction will be smaller.

But we will not be satisfied with that. We will make further effort to increase cost further -- reduce cost further, reduce cost further.

So that's fiscal year '17?

Yes.

The first question is as follows. For the next fiscal year, the operating income after adjustment, ratio to sales, currently, it is around 7% in terms of forecast.

I have not looked at the previous numbers, but is it close to the highest level in the past? I think it's very high level, but this is because of business reorganization.

Is that the -- having the impact? And what is the outlook, what the Mid-term Management Plan of 2018?

It is not the highest level. It depends on how far you go back.

TV and semiconductors, used to be a high profit in the past. Therefore, if we include that, it's difficult to compare.

But 7% is a result of business restructuring as well as exit from or the reduction of loan profitability projects and business. And we have done a better job in terms of project management.

As a result, the profitability has been improving. But compared to global competitors, this profitability level is not sufficient.

Therefore, going forward, though, we will make efforts to further improve this level.

Regarding Page 14, for the new fiscal year, profitability improvement is JPY 88.7 billion. By business, we can compare through calculations.

But in terms of cost reduction as well as the sales increase, can you elaborate further on this figure?

Regarding JPY 88.7 billion, profitability improvement by factors will be explained. Now in terms of the business development as well as HR as well as depreciation, these are the fixed cost increase for business expansion, that amounted to minus JPY 52 billion.

Against this, in terms of sales scale increase, it's JPY 70 billion. Cost reduction, the amount was JPY 60 billion that I have already mentioned.

Beyond that, industrial project, there have been significant red ink in the past, but this will go away. And the impact is JPY 35 billion.

Furthermore, there is a geopolitical risk such as foreign exchange fluctuation as well as other business risks are considered to be around JPY 25 billion. That's 80 -- that is the breakdown of the JPY 88 billion.

Regarding Lumada, sales and the forecast has been presented this time. I'm sure that calculation was very difficult.

What about the profitability outlook or the profit level, operating income level? When do you intend to disclose the numbers in terms of profitability?

I think that would be very difficult because this is -- there are some that will be included in related businesses. Now -- but let me highlight the major points.

For 2016, 2017, the contribution level is such that it is -- some are in the incubation model. There are also PoCs taking place.

And many of the businesses are in incubation. And costs will be incurred in this area for fiscal year '16 and '17, and therefore, contribution is limited.

But from fiscal year 2018, we believe that the significant contribution will be made. Regarding profit margin or the profit amount, it will not be disclosed for the time being.

We will be referring to the revenue numbers. But I can say that the profit margin is higher than the average level of the company for 2017, 2018.

Obviously, this will drive the company with higher profit margins.

I have 3 questions. First, it's related to the earlier question about the previous fiscal year.

What is the breakdown of the JPY 80 billion profit increase? And next, other income and other expenditure and the profit and loss and the affiliates, equity-method affiliates, and what is your forecast for this fiscal year?

That is my second question. Third question is in the subsequent event.

Your relation with Mitsubishi in South Africa, you are not factoring this in. I think you have included a certain amount.

Provisioned, how much risk will this be, or is there any risk? There's no legally binding factor.

How much is included already?

First, the profit increase of JPY 80.5 billion increase in profit, the breakdown from fiscal year '15 to '16: we did the business development and the personnel cost increase, this was minus JPY 42 billion; the business scale increase, profit increase from business scale increase was JPY 33 billion; and the cost reduction was JPY 90 billion, as I mentioned earlier. So this is the major breakdown of JPY 80.5 billion.

Now operating income, the nonoperating expenses, nonoperating profit and loss, fiscal year 2015. Page 5, Slide 1-2, P&L, the adjusted operating income and EBIT.

Between these 2, the gap is the nonoperating income, JPY 103.8 billion for fiscal year 2015, and fiscal year 2016 was JPY 112 billion. And the main breakdown for fiscal year 2015 -- 2016 is business -- 2015 was business restructuring, JPY 90.3 billion, 2016 was JPY 96.2 billion.

And business restructuring -- business transfer -- gain on business transfer was positive JPY 55.2 billion, and 2016 was JPY 81.3 billion. And another item, the equity-method affiliate profit/loss, 2015 was JPY 100 million; and 2016, minus JPY 47 billion.

Minus JPY 47 billion, as I mentioned at the outset, is the uranium enrichment project impairment. Now other than that, others, 2015, JPY 68.8 billion; and 2016, JPY 50 billion.

Total, 2015 was JPY 103.8 billion, and 2016 was JPY 112.1 billion.

Roughly, what is the breakdown or your forecast for this fiscal year?

Fiscal year 2017, the business restructuring-related cost is minus JPY 50 billion; and restructuring cost impact, JPY 30 billion; and the profit/loss for the equity-method affiliate, JPY 30 billion; and others, JPY 60 billion cost. Total, JPY 50 billion, this is the cost.

South Africa -- South African project, we are still discussing. We are still negotiating.

Regarding the adjustment of the transfer price, we are posting the amount that we have calculated and evaluated, but this amount is still being negotiated, so I would like to refrain from mentioning the numbers.

So the amount that you have reasonably evaluated, but there is a difference with JPY 700 billion?

I will not mention the figure, but let me explain JPY 760 billion that MHI is saying. Let me explain the meaning behind this.

Between us and MHI, we have agreed on the following. First, regarding the South African project, in February 2014, we integrated the business, and Hitachi and Mitsubishi Heavy Industries signed an integration basic agreement and signed an MOU.

So in this MOU for the South African project, the contingent liability before the integration will be borne by Hitachi, and the post-integration liability will be by MHPS. And so this decided the method of setting the transfer price.

And the forecast was discussed between Mitsubishi and MHI -- Hitachi and MHI, and we agreed, and the discounted price was agreed, and it decides on the transfer price decision process. In March 2016, last year, MHI gave us the request for JPY 379 billion.

MHPS latest process plan and profit plan was the basis, according to MHI. However, the rationale was not clear.

They did not -- they included the entire project plan for this claim, and so we could not agree to this amount that they claimed. MHI's current project, profit plan, profit estimate and our estimate has a gap.

And therefore, we are evaluating the project profit and loss from a reasonable point of view, and we have provisioned the amount which we think is to be borne by us. But this amount and MHI's amount has a gap.

We have agreed to bear the cost before the integration. However, we have not agreed to bearing all the costs, even including the after post-integration period.

JPY 763.4 billion was claimed this time, but this was including the entire period. And they are saying Hitachi should bear all the loss, Hitachi should shoulder the cost.

However, this claim is based on MHI's own evaluation and own calculation, and it exceeds the project profit estimate, and it is a one-way claim. And therefore, we think this lacks in the legal basis, and we have not agreed to this amount.

The probability of the loss or the actual realization of the loss has not been identified. This year, the processed data was provided to us, so we are scrutinizing the plan data that has been presented.

We are working hard to come to an agreement. We have been and will be committed to come to an agreement.

Thank you very much. We would now like to take questions from the investors and analysts.

I have 2 questions. First question is regarding the Social Infrastructure & Industrial System EBITDA.

You said, compared to the third quarter, there was a downside of JPY 50 billion. With the uranium enrichment, you mentioned that there is impairment of -- impairment, what is the actual number?

The difference is quite significant. Please elaborate.

On the 1st of February, we have given our guidance. For equity method, profitability has deteriorated.

And inclusive of the impairment, additional business restructuring expense was posted. Specifically, the asset impairment of -- from various business, impairment because of lower profitability, exit policy in terms of products as well as business and the reduction of asset have been factored in on an incremental basis.

However, for social infrastructure, the negative number is very significant, but this is because of -- the risk was incorporated in the corporate items on eliminations. Therefore, on a total basis, it has been covered.

Let me confirm, uranium enrichment, impairment is JPY 70 billion, there's no change. Is that the case?

It was JPY 64.4 billion. It was -- JPY 66.4 billion was the actual.

I have mentioned JPY 65 billion initially. Regarding the exit of this business, the impairment amount has not changed significantly.

What about incremental business restructuring. Is it just for GE Hitachi or for other areas as well?

You have additional business restructuring expenses. Is it -- it is related to areas other than GE Hitachi?

GE Hitachi's uranium enrichment related is JPY 66.4 billion, and that is according to plan. And the additional has been posted incrementally.

Regarding business restructuring plan, for the period just ended and this fiscal year, what is the positive impact in terms of the adjusted operating income for -- expected for this fiscal year? And I understand JPY 50 billion has been earmarked.

Maybe I should defer this question to later, but can we understand that the business restructuring has run its course with this year? Or is it going to continue?

Regarding our business restructuring, impact will be the same, the 2015 -- or 2014 and '15 business restructuring, which has been realized in 2015 was to the tune of JPY 20 billion; for 2016, JPY 55 billion. And for 2017, JPY 75 billion includes what we have done in previous years as well in 2017.

And the difference, it will have an impact on profit and loss. From 2015 to 2016, the impact was JPY 35 billion positive.

2017 will be at the difference of -- will be JPY 20 billion. The difference between JPY 55 billion and JPY 75 billion.

And you said that when is this going to run its course. That will continue.

It will continue because the deteriorating business is what we have to exit from. We have to reduce the size.

So this will be an ongoing process. Now in -- JPY 96.2 billion was posted for 2016.

And major items have already been implemented, so this is going to become smaller to the level of JPY 50 billion. Regarding your question about our future, I don't think it is going to become 0 ever because, as I mentioned, business restructuring is a continuing effort that will be continued.

With JPY 50 billion this year, in 2017, it's JPY 75 billion. But what about 2018, is it going to be JPY 90 billion or so, with respect to the increase?

And where is it included in the information?

It is included in business restructuring.

What is the cost reduction level for 2018?

For 2017, JPY 75 billion was mentioned. The impact of what is implemented in '17 is only included to 55 -- 50% levels, so it is likely to increase to that amount.

I have 2 questions. First, you mentioned South African project.

I contacted MHI IR Department, and their tone changed. This JPY 763.4 billion, this was -- if there was not a joint venture, it would have been JPY 763.4 billion, so it is actually JPY 379 billion, most likely.

That was what their IR Department said. So this JPY 739 billion and JPY 763.4 billion, it seems like JPY 379 billion is most likely, and they are about twice as different.

So these 2 numbers, why do these 2 numbers exist? Please explain.

I want you to ask MHI for details because I did not calculate these numbers. JPY 763.4 billion, project cost increased to JPY 763 billion.

That's not our understanding. Eskom is a -- Eskom client has already disclosed the process, but this has -- the process has not changed.

And I have not heard from them that they have claimed because the cost is doubled. So JPY 763.4 billion, as you mentioned [ Asi-san ] -- so if things have continued on certain condition, this could have been the amount, but this is different from the procedure.

So first, the process has to agree. This has to be the starting point of our negotiation.

So this year, we received the processed data, and we are scrutinizing this data.

This may be difficult to respond, but the JPY 763.4 billion, this was the premise condition if joint venture did not exist. Are you -- do you agree to that?

JPY 763.4 billion. Be it JPY 739 billion, be it JPY 763.4 billion, we don't have the detailed data yet, so it's difficult to say anything at this point in time.

My second question is the impact of Lumada. In fiscal year 2018, the next mid-term plan is coming up, so I may be too early, but the impact will suddenly show up, suddenly jump up.

I don't understand why this will be the case. Not this year, but why so suddenly in fiscal year '18?

Could you explain?

It's not that the impact will not show. As I said earlier, it will be higher than the average operating income ratio.

The Lumada-related business has higher profit margin. Lumada SI business has higher profit margin.

But in fiscal 2016 and 2017, the incubation cost is incurred, and that is why profit margin is still low. And once we start posting revenue and the starting initial incubated cost will decline.

So we are confident that this will start contributing to the business. We will have a revenue -- or profit in 2017, too, so this will increase going forward.

Profit is not 0 now, it's just difficult to understand very accurately, so we are explaining this in terms of revenue. We want to explain the progress in terms of revenue.

Next question, please?

I just have one question regarding social infrastructure business. Operating income, the absolute amount as well as the changes is -- are expected to be significant this fiscal year.

For the manufacturing and commerce as well as building and railway are likely to be significant, so please confirm and elaborate. In terms of buildings as well as the railways, if you can give qualitative information, that will be very much appreciated.

Regarding the manufacturing and commerce BU, for 2016, in terms of operating income, is minus JPY 22.7 billion, minus JPY 22.7 billion; for 2017, plus JPY 11.3 billion, improvement of JPY 34 billion. What is significant, as I have mentioned, for the Middle East as well as Asia, the loss-making projects have ended.

And regarding buildings, building systems, for 2016, the -- it was positive JPY 57.3 billion; for fiscal year 2017, JPY 59.6 billion, or increase by JPY 2.3 billion will be expected. Now in terms of qualitative information, for buildings, building systems, the foreign exchange impact as well as a price decline impact was very significant for 2016.

In terms of volume and for completed projects, it has increased. But in China, the price decline was very significant.

Therefore -- and on top of that, there was impact of foreign exchange. So year-on-year, we have seen a decline.

But towards the fiscal year 2017 as well as for 2018, maintenance work will increase, and the cost reduced version models will be introduced. Therefore, we believe that the profitability will improve and has already announced in Europe.

In the U.K., the maintenance business, elevator company has been acquired in terms of gaining a foothold. Therefore, maintenance business will be generated, for other companies business as well, we have this foothold in the -- in Europe.

This is small in size, but we hope to expand going forward. Now in terms of the railway business, the impact of foreign exchange is the most significant.

If we exclude that impact, revenue has increased, profitability has increased. Production is ramping up.

AnsaldoBreda productivity is improving. IEP sales have now been posted.

And from 2017 and onwards, it will make contributions in terms of cash generation. Therefore, in terms of the social infrastructure, we believe that this business will continue to drive the business.

For the railway, 2016 was JPY 20.7 billion and JPY 30 billion for 2017, so increase of JPY 9.3 billion.

[Foreign Language]

[Foreign Language]

[Foreign Language] One is social infrastructure and investment. Now you acquired Sullair.

In U.S. GAAP material, it has many items: EBIT, minus JPY 9 billion; and loss making 2 years in a row.

So have you included that, first of all?

Sullair, we included half of the revenue from the second half. It is consolidated, so that is JPY 23 billion, about half of the full year figure.

Profit is 0. However, profit is not such a mess, as you said.

In the past, maybe, but we have scrutinized, may take a -- took a close look at their plan. Adjusted operating income profit is not included, so 0.

Is goodwill around JPY 100 billion?

I don't have the figure at hand, but we will be posting a sizable amount of goodwill. And then PPA, and we include the amortization of the intangible assets, so the operating income is 0.

After the acquisition, does intangible asset amortization will go away?

No, there will be a certain amount every year. And based on that, we are trying to develop our business plan.

Now your -- already manufacturing side, so it is very clean. What is your free cash flow forecast?

Forecast for fiscal year 2017. 2016, we had a considerable amount of free cash flow, but we did not do many M&As.

So we only paid for the past deals and the ones that may have been in the future, so we think it is about breakeven. Operating income, operating cash flow -- in fiscal year 2017, we will use about the same amount of operating cash flow for the investment.

So on a free cash flow basis, it will be breakeven. So net will be JPY 300 billion, but free cash flow will be 0?

No, 3-year free cash flow in the mid-term plan period 2016 to 2018. In 3 year, free cash flow was JPY 300 billion, I said.

In fiscal year 2016, we already have JPY 400 billion free cash flow. So we are now entering a phase to use that for investment.

So fiscal year 2017, of course, we will try to capture more operating cash flow, but we will invest about the same amount. So free cash flow for 2017 alone will be around 0.

Of course, we want to have a positive figure, but according to our calculation, it will be around 0 breakeven.

And this will be the next -- next question will be the last question.

I just have one question regarding Lumada, Page 23. There are 4 areas.

Now in terms of domestic and overseas, what is the breakdown in terms of sales? And the Lumada business, how is it generated in terms of information, telecommunications as well as others as well as social infrastructure?

Now there has been -- from 2016, there is a decrease of JPY 780 billion to JPY 760 billion in 2017. What is the background in that -- of that for the third quarter?

Now for domestic and overseas, it's difficult to distinguish. Currently, most of the business is domestic.

Not in terms of revenues, but there are 203 cases, and we cannot give you a breakdown. Japan is accounting for 40% plus; and Europe and the U.S.

is 40%; and Asia as well as South America, 10%. This is a breakdown in terms of the number of use cases, the breakdown of the use cases.

That was the breakdown of the use case. As you can see, there is a significant number in terms of overseas.

In fact, in terms of revenues, it is not the same breakdown. It is not as much.

Now going forward, the breakdown between domestic and overseas is difficult to talk about at this moment. And in terms of segments, for 2017, we have an outlook of JPY 950 billion.

75% is Information & Telecommunication Systems. 25% is in the area of manufacturing and commerce, so the manufacturing and commerce is accounting for a large portion of the 25% for Others.

For Lumada SI business, they will be transferred to the core business from SI business. So Lumada-related SI business could become core business centering on IoT and it could be replaced by core business, so there could be a decline in this area.

But from 2016 to 2017, there will be a decline, but thereafter gradually increase going forward because the Lumada core business will be driving this business.

What do you mean by the changes that you have made -- you have referred to?

For SI business, in terms of social infrastructure business, by divisions, we have identified this business. This is the Lumada SI business.

Now from the conventional SI business, we are trying to drive our businesses, driven by centering on Lumada. Conversion will be made, the shift will be made.

And during this period between #1 and #2, there will be a shift that will take place. At any rate, centering on Lumada, we hope to increase the overall scale.

We would now like to conclude this meeting. Thank you very much for your attendance.

After this, from 5:00, we will be having the next explanation meeting of the 2018 Mid-term Management Plan by President Higashihara. He will be talking about the progress and prospects.

Thank you.