NIDEC Aktie

Now let us start the press conference. Now the presenters are as follows: Ms. Takako Sakai, the Chairperson of Nidec Corporation's Nomination Committee; Mr. Mitsuya Kishida,res Director, President and CEO of the company; Mr. Masayuki Minai, Senior Vice President and Chief Compliance Officer; and Mr. Kazuo Nakagawa, Acting Chief Financial Officer of the company. I'm Keita Watanabe, General Manager of the company's Corporate Communication Department.

In this press conference, first, Mr. Kishida will make his opening remarks and explain quality matters and Nidec's actions on corporate revival. Then Ms. Sakai will present the company's new Board of Directors system, followed by Mr. Kishida's presentation on the company's matters on improving Nidec's corporate value. Then the floor will be open for a question-and-answer session. Please kindly wait to ask your questions until then. Now Mr. Kishida, please.

I'm Mitsuya Kishida, Nidec Corporation's Representative Director and President. A recent inspection of Nidec Group companies led by the Nidec Corporate Reform Committee's Quality Working Group has reviewed suspected inappropriate misconduct on our company's products. We take this issue extremely seriously as quality is the very basis of the Nidec Group, which is a manufacturing company. In addition to the series of cases of accounting misconduct, we deeply apologize for the tremendous anxiety we have caused to our business partners, shareholders, investors, people of the market and the general public.

We are explaining these issues to our customers and informing them of these issues in detail one by one. At this moment, no cases that affect our products, functions or safety have been identified. Today, we have launched an investigation committee that comprises outside of experts. Based on the decision, we will explain findings from this investigation to our customers sincerely and properly. and we will take necessary actions promptly. We will make sure to do everything that is right.

In order to do so, we will update our improvement plan, and we will be united as a team, and we are in the process of making these improvements happen. And we have been able to identify these quality issues during this process of improvement. And we'd like to give an updated information about these activities during this press conference. With respect to the report from the third-party committee as well as the improvement plan, we will enhance our corporate functions, and we'd like to provide you with an information about the enhanced functions of the Board of Directors based on Ms. Takako's presentation.

In order for us to become the true global company, we have a strategy in place. We'd like to provide you with the midterm business strategy to explain the purpose -- for the purpose. From here on, we would like to see it as we make our statement. Thank you.

From here on, Mr. Kishida presents information on quality matters and Nidec's actions on corporate revival. From here on, I would like to explain to you about how to make Nidec reborn. We, together with Mr. Sakai explained this formation matter. First of all, please take a look at this page, the establishment of the investigation committee. After the establishment of the third-party committee on September 3, we established this renewal -- corporate renewal committee on October 30. We, as a manufacturer, voluntarily decided to identify any possible issues. We established this quality working group at the same time. And we started the group-wide quality inspection from January 8 this year.

As for the outlook of this inspection, the period was from January 8 through the end of May, and this investigation is ongoing. There are issues related to quality, and we wanted to check for any misconducts -- possible misconduct, and we promote corrective actions to solve these matters. For details of our actions, we have hearing sessions with the individual business bases. This hearing session is now completed. And we had this voluntary checking process at individual business bases, promote the voluntary declaration.

As of today, 90% of this procedure has been completed. And going forward, we will continue to collect opinions through a whistle blowing system from all the employees on the Nidec Group -- entire Nidec Group. We are to check to see if there is any suspicions for misconnects regarding quality. We'd like to collect such information from all employees within our group.

And please take a look at this slide over here. Please go back one slide here. And from January 8, we started our quality inspection. And on March 3, we have had the announcement on personnel changes. And from April 4, the new management has started. After that, we have received a number of quality-related opinions as well as suggestions based on voluntary checking.

As of today, this year, approximately more than 1,000 suspicious misconnects have been reported. In April, this number increased significantly. So we determined that we need to check, we need to understand what was really going on. And there have been some unauthorized changes to materials processes as well as designs made without having the approval from our customers.

And as soon as we identify issues to be reported, we will take appropriate measures for them. As of today, unauthorized changes to material components, processes, designs, they account for 96.7% of all the issues. and suspicious cases account for 3.3% of the entire cases, as you can see on the slide.

By business, please take a look at this slide over here. Appliances-related issues are the majority of all the issues we have identified. ASIM business unit Global Appliance, Nidec Instruments, Nidec Technomotor appliance section. With respect to automotive business, Nidec Instruments Corporation has had report some issues regarding their production-related products items.

With respect to IT-related businesses, there are certain number of suspicious cases identified. We have already started talks with our customers. And we have confirmed that none of these issues are serious enough to affect our products functions or quality or safety. AI cooling system has no such issues identified. With respect to industrial infrasture and machinery-related products, no such inappropriate cases have been identified.

Until today, in multiple business bases, we have identified various suspicious cases of misconduct, and we decided to promptly disclose this information to the public. And in order for us to make group-wide efforts to eliminate those issues, and we decided to launch an investigation transparently and objectively. That's the decision we have made in today's Board of Directors meeting at our company. And the purpose of this committee will be to understand the root causes of these issues and suggest recurrence prevention measures.

Here are the members of the committee. These people have a wide range of expertise. They are all attorneys at law. And targeting the end of August, we would like to finish the investigation on these quality issues. And please go to the next slide. And in order to work with this investigation committee, as an executive function of the company, we decided to reshuffle or revise our corporate function. We have this improvement promotion office to be established. I will lead this office.

With respect to this improvement promotion office, we will decide what type of communication will be the best type of communication we should have with our customers. We will drastically improve the way we communicate with our customers. That's the type of project we will launch. And at the same time, we have governance and accounting-related issues. These issues will be covered in this other project that you can see on the slide here. We are going to have this type of reset on our activities going forward. In these individual matters, we will check and examine our actions. We will work in group to analyze the financial impact of our actions and these issues.

From here on, we would like to talk to you about the update on Nidec reform.

On the 27th of April, because we have started the third-party committees Infinity started from the 3rd of September based on this final report from this committee, we issued the right version of the improvement plan, which is the second version. From now on, we execute this improvement plan for sure. And therefore, all of the employees will welcome this. Based on that, by the due date of 20th of October towards the submission of the confirmation paper, we'd like to make all that effort for each day.

Furthermore, we see the quality issues identified right now. As of today, we have established the investigation committee to facilitate the dialogues with our customers to expedite the root cause analysis and issue resolution. And then around by the end of August next year or this year, we'd like to complete investigation. And then we'd like to issue the confirmation report of the internal governance under the new system and organization, we'd like to regain your trust as soon as possible.

In addition to that, we'd like to the designation of the special issues. And again, all of our members and employees will work as one team, already so far, we have identified issues that is culture, systems and processes. We have shared these important points over and over again externally too. However, in order to embody these splits into our actions, we'd like to take any opportunities and occasions to reform the culture, systems and processes to be more precise.

We needed to look at the communications as how we needed to how we should revise the pop culture. In addition to that, since governance is such a huge area, we have to how we can specifically work on governance issues. We needed to review organizations, and we needed to review missions. Why we are here. We needed to identify the b that way as a company. And then we can ensure that whatever we will do, everything will be right.

And therefore, we'd like to work as one team, mobilizing all of the employees, including myself, though the available time is limited, we'd like to visit as many sites as possible to meet managers and nonmanagers to have direct dialogues because advices from the working level is very important. We have had so many dialogues like this.

Although this has been reported to you that we have established culture transformation lab where employees are thetabolist to reform cultures. And then we need to listen to the representative voices of employees, and we have to make employees confident that once they are speaking up, their voices will be well hard to the managers and executives. Of course, the training and the education lessons are the very best for our culture. And therefore, we will make further efforts.

Already more than 500 training courses has been conducted. However, this is not a one-off thing because for new Nidec, this should be the continuous efforts to ensure everything should be right all the time. And therefore, we'd like to lay the foundation to ensure such culture. under this situation, new management team is established effective of the 1st of April and the new BODs, all of the BODs got together at one site to have off-site meeting where BOD siders how we can regain the trust from stakeholders and how we should take actions every day, what we have to reform in our daily activities.

There are thorough discussions on these topics. And then the direction identified in these discussions have been shared. We have made the reform statement. And then including myself, all of the members involved will work as one team to be the model of the reform. That is the current situation.

From now on, Mr. Sakai as the Chief of the Committee will share the new BODs. Now Mr. Sakai, floor is yours.

Thank you very much. I'm the external directors, and I'm the Head of the Committee Nomination Committee. Now on the 13th of May, there is the ad hoc BOD committee meetings. And then what should be resolved for the shareholders' meeting. One of them is the new BOD members.

And therefore, I'd like to share the details of these new BOD members. First of all, I'd like to explain the process and its purpose for this governance reform. We needed to enhance the supervising function in order to do that, we realize that we have to have a new BOD system, and therefore, we have to ensure to establish such new system. For example, those who have deep knowledge about accounting and governance, those external officers should be identified and nominated.

In addition to that, internal directors should be identified for this matter in order to ensure good identification of the issues, we'd like to nominate the dedicated members. So through the process, we'd like to realize these 2 important focuses, including shareholders and other stakeholders. We have to regain the trust in order to do that. we have to ensure high transparency and productivity, which should be the basis for the nomination system. And therefore, we have to prepare the framework for that.

And therefore, when we launched the nomination process on the 27th of March, as we have announced, independent external directors alone were allowed to be involved in this process. In addition to that nomination policy and the revision of the nomination process has been made -- now I'd like to explain the specific flow for the nomination. First of all, the new criteria for the nomination was put in place under, which more than dozens of people were identified as the primary candidates. And after the first criteria passed, the first interview was given and then sat and other qualifications in addition to the views of the current state of the corporation and how they can contribute to the reform.

Those questions are meticulously confirmed with all of these candidates one by one. And then based on the interviews, we got the evaluation. In addition to that, we look into the diversity of the expertise and through the experiences and we have to see the balance of these members. And then we can identify the short list of candidates, especially the external directors, home compliance, accounting, finance, the business management experiences, expertise and the skills for the markets.

These are the important points. In addition to that, they are required to understand the current state of the corporation. And then, of course, we have to take a look at excellences in the business management and then the objective for this nomination, more diverse the expertise and more enhanced oversight, governance reform and corporate value improvement for these aspects, we are confident in selecting best members. independence and execution oversight should be enhanced.

And therefore, we have -- we plan to identify external parties to do this. And then I'd like to introduce 2 candidates because of the time, I cannot explain the detail of the reasons why they are identified as candidates. However, please refer to the presentation material if you're interested in the reasons for the nomination. First of all, just one person was identified and therefore, 11 candidates are the candidates for the new directors. You can see the 3 candidates for the executive internal BOD members.

Regarding Mr. Kishida, he has the vanguard for the reform of the culture. And therefore, he can contribute to the improvement of the corporate value, and we can expect the continuous leadership. And because of that, we believe these 3 are the best candidates regarding Mr. Takeshi Miyake and Mr. Masayuki Minai, we expect to assume the management directors for each. And therefore, these gentlemen's leadership, we believe that they can te issues, especially for the execution. And we believe that for this aspect, these 2 are the best candidates.

Next, I'd like to move on to the outside of BOD members. As you see here, these are 5 members. First of all, Mr. as the member of government, he has led many governance-related initiatives. And then Mr. Shinichi Koizumi, who has been involved in the global executives and he has rich experiences in serving as the outside members.

And then Mr. Soichiro Sakuma, he is the COO and Vice President of the Nippo and Sumitomo Metal Corporation, who has been involved in the management of the major companies. And then Mr. Yujinishimura, he has led many activities at major companies. In addition to that, he has served as the Chair of the many companies. He has rich experiences and the wide range of expertise. Then Mr. Roiama Moto -- he is the President and CEO. He has been involved in the business management and the transparent governance management.

Then outside members who will serve as the Audit and Supervisory Committee members. First candidate, Mr. Takeshi Mazaki at Hitachi Corporation. He has been involved in the structure reform, and he has also had the experiences and serving as the Audit and Supervisory Committee member. Mr. Hideki Amano has also had experiences as the outside auditors. And then Mr. [indiscernible] he has to the capital market. In addition to that, she has served the outside members at more than 1 company already.

Then Mr. Mitsuhiro Hasegawa as the prosecutor, he has assumed many important positions in addition to the Chief prosecutor. And then the transparency of the financial report, the specialty. And then as of the 8th of June, we will have the general shareholders meeting. And once the agreement is given, we will have the 12 BOD members -- and then we also have the outside audit and Supervisory Committee members, Mr. [indiscernible].

In total, we will have the 13 BOD members. As you can check in the scheme matric, the new BOD members will have the diverse expertise and experiences without any bias in each area, each one of them has its experiences and expertise. And therefore, even already at the interview phase, they have had a very good document for the current set of the Nidec Cporation and all of them has shared the high passion to reform the company. However, they have to be braced for the huge tasks and difficulties.

And we believe that all of them are ready for such difficult tasks. We believe that they are best members to enhance our corporate values with these BOD members, we are sure that we can meet the expectations of the shareholders because they can serve the tangible of the BOD members. The new BOD members will support the enhancement of the corporate value and reform continuously. And therefore, shareholders, stakeholders, if you can agree with these candidates, it's really appreciated. Thank you very much, and that's all for me.

Now we'd like to go on and explain to you our initiative to enhance Nidec's corporate value. Under even these circumstances, we are united as the Nidec Group going into the same direction. We will be having the integrity. And as the manufacturer, we will face the world. We will go forward united. This is the redefinition declaration of the Nidec Group. And this is the second funding phase of our company.

We have this 5-year Nidec redefinition plan. We have a redefinition of the Nidec 5-year business transformation plan. And I have to give you details of this plan. We have 5 different pillars. We will review business portfolio. We will reorganize our group, and we will reform the company-wide IT infrastructure. We are going to have a drastic reform of these areas. We will improve our ROIC. We will maximize our corporate value. That's going to be our ultimate goal.

For the purpose, what we need to do is to prevent aforementioned problems and issues from happening in the future. And as the baseline of everything, we will improve the profitability. We will improve the efficiency of the ROIC and invested capital. In order for us to become a true global company, we have reshuffled our management. We have a global headquarter. We are going to establish that including regional head offices, this will be part of the core of our global business system.

We have 5 different pillars, as you can see down at the bottom of the slide. Accountability will be allocated to each one of them. And we will make sure to perform full pillar of accountability to the capital market. Based on these 5 pillar notion, we will reorganize our businesses, sales companies, factories and other entities based on these 5 pillars. not only for its own profitability, each business base needs to be able to contribute to the entire group's profitability. The factories have to be working as the guardian of the entire group's profitability.

And we need to work with our customers to solve problems together, and we need to co-create values together with our customers. We will pursue the profitability of individual companies. That's what we have done. But going forward, we will continue to continue with our transition into a true global company. We will review our business portfolio based on the growth potential and profitability, concentrating on selection and concentration of our businesses.

We have 5 different categories for our business bases. We have area where the structural reform is required. And we have another area for product portfolio optimization. And we have another area for continuous growth. And we have another area of new focused investment for future growth. And we have just started these initiatives, but we have major initiatives and they are all new businesses. As you can see on the far right of the slide, these are the 5 different categories that we have in place.

Then at the bottom, it says business restructuring includes e-Axle. We need to redefine our businesses as we try to decide the future of this business here. actively invest in human resources development facilities and growth investment areas. Energy storing, energy saving areas, semiconductor-related factory construction, high profitability potential growth areas. These are the areas and businesses where we will invest in making wonderful products as well as wonderful solutions for our customers. That's the type of chances we like to grasp and capture.

Finally, with respect to defining the new businesses, we need to define new business domains by leveraging technological and social changes. We have eVTOL, the inspection equipment reducers, et cetera. We will utilize technologies from these areas to enter into the aerospace industry. We will invest sufficient human resources there so that we can be a company to contribute to the future of the humanity.

Based on the aforementioned 5 pillars, we will revise the business portfolio, and we will broadly execute the structural reform through a 5-pillar-based business structuring and portfolio review. We have a total of more than 300 business bases, and we will cover all of them in our reform. With respect to the number of business faces, we will cover sales offices. We will consolidate these sales offices as part of our business portfolio consolidation, business footprint consolidation, in other words.

Today, we have accounting-related matters, and we have technological technical manufacturing related quality-related matters as well. Given the circumstance, we need a drastic reform of IT infrastructure. With respect to our operations, with respect to IT in this area, for the next 5 years, we would like to invest $100 billion for the next 5 years to establish a firm sturdy infrastructure in this area of IT.

With respect to quality design and manufacturing, we have various data of various components and various design-related data. We need to consolidate the data in order to create more efficient, better designing capability. We will invest -- make a strategic investment of JPY 30 billion for the next few years. to establish a firm, enhance the firm, enhance our manufacturing infrastructure. Design concept, BOM process operations, accounting, in all of these areas, we need to do what is right as we operate our businesses.

More than anything, we need to resume dividend payments as soon as possible after the completion of restatements of prior year's accounts. Based on that recognition, we will provide you with the directions of these 4 different areas that we have explained to you today. We will share information with the leaders of these areas of businesses as part of our midterm business plan, and we'd like to provide you with the final version of our midterm business plan sometime in the future.

Toward autumn this year, we will make sure to assign people to be having accountability equipped with accountability of all of these 4 areas. We would like to share with you the information as well as we go forward. As I've explained at the beginning of this press conference, including quality matters identified during the turnaround process, we will thoroughly address all challenges across Nidec and implement the fundamental reforms necessary to restore trust across the group in accounting, quality, governance and corporate culture. That's the type of drastic reform we are going to launch.

As I've said, accounting, quality, governance and corporate culture are the areas in which we are going to make necessary investments to make -- we make ourselves as a company to be trusted. By restoring governance and management discipline as our foundation, we will decisively enhance corporate value, build a high profit structure and evolve into a truly global company. This concludes our presentation to you today. Thank you very much for your attention.

From here on, we would like to accept questions from people in the audience.

[Operator Instructions]. We have people from the mass media as well as analysts. We'd like to take one by one.

First, with the people left the person over there, second from the first one. First of all, this is of Asahi Newspaper.

With respect to the newly found quality-related matters, what about the causes of those matters? With respect to accounting matters, before you made the report published, you talked about the excessive pressure for us to have to achieve short-term targets.

And reports somehow served as a backup document evidence of your statement. And that's something that I found in your report at that time. Was there any pressure on the people on the frontline employees? Was that part of the background of this quality-related issues? Is there something similar to quality issues as compared with the accounting-related issues?

Thank you very much for your question. This is something that I've said repeatedly on this type of occasions. Our corporate culture process and systems are what we need to correct as a company. With respect to the newly emerged quality issues, the direction itself remains the same as a company.

With respect to root causes of these matters, the investigation committee will investigate into these issues to find their causes. Some issues may have some -- the same root causes as some accounting matters. And investigation committee will find answers to your question. And we will receive feedback from the investigation committee. And our purpose is to solve those issues, and we need to get together with our customers to solve these problems.

In order to achieve the excessively high profitability and sales targets, I believe there has been a pressure -- excessive pressure to the frontline employees. Is that the case, do you think?

Well, with respect to these issues, the more than 1,000 cases that we have identified, 96.7% of these issues are the issues are the changes made without customers' approval. These are the changes made to components, materials, processes and designs and other issues will be investigated accurately by the investigation committee.

There is one more question from me. Currently, Nidec is in a situation where you are -- your stock is designated as the special alert security status. And you will be having the audit by the Tokyo Stock Exchange throughout autumn this year. But in addition to those accounting matters, you have these quality-related matters as well. That could possibly make another huge impact on your company. I fear you have this upcoming audit by the TSE or Tokyo Stock Exchange. And we have these newly emerged found problems, what type of impact with these issues going to have on your management company?

Thank you very much for your question. These quality issues are -- matters are a huge theme for us. As we -- as the investigation committee investigated these issues, we have had many issues identified in April. It's just 1 or 2 issues. We can handle them one by one by working with our customers. However, as of today, the number is more than 1,000. So this is going to require the transparent and objective perspective of outsiders. And that's the type of decision we have made and that's the type of decision based on which we have established an investigation committee. And we will complete this process -- investigation process by the end of August so that we can go and submit our report as scheduled.

How about the impact on these issues on your maintenance of your company as a listed company on the TSE.

It's not just accounting issues. Now you have the quality matters issues. As you said, it's not just accounting issues. We have some other issues. In that regard, these newly found issues are going to have a huge impact. From the beginning, in the Nidec Corporate Reform Committee, we have had this quality investigation working group to decide to see if there is any issues to be corrected, if there is any systems to be corrected. That's what we have been trying to find out as part of this working group's activities. And after the activities are over, we now would like to address these. Thank you very much for your question. That is all from me.

Next analyst in the front row, please.

I'm Takayama from Goldman Sachs. I have 2 questions. First of all, I'd like to ask about the misconduct related to the quality because in one sense, 97% of those events are related to the change of the OM in the manufacturing industry, meaning that you did not make the notice. In addition to that, there were no complaints from the customers and therefore, probably it's not so important for the appliance and automotive.

Of course, you mentioned that financial impact, which is not known right now. However, we expect that there will not be so significant issues in this aspect. Is this understanding correct? This is the first point I'd like to ask.

Furthermore, how it should be because the obligation for notice, for example, appliances will be commodity products. However, if you make the notice for each one of the minor changes, it would be practically impossible. However, if you miss the notification, to what degree you have to regard these cases as a misconduct and to what degree we can regard them as the acceptable cases. Can you please share the standard for that?

Thank you very much. First of all, regarding the communication for the notice, as you mentioned as the first question, regarding the change, just because this is a change, -- just because of that, we should not regard these issues as minor. Rather than that, once we identify these cases, we have started the communications with our customers. And the customers said that why did not inform this faster. There were such feedbacks. And therefore, we have to seriously consider how we should face with customers, including communications. We have to review our interactions with the customers, and we'd like to take actions for that.

Personally speaking, the level of the impact in the accounting perspective, I'm not in the position to say anything about it right now. However, based on these suggests, the accounting team has been established. in parallel with that. And therefore, including the committee, we'd like to share as much information as possible in the rapid manner. Thank you very much.

Now I'd like to ask about the actions for the enhancement of the corporate values. You have shared the 5-year plan as the overall framework. However, essence here is related to the conversion '27 in my understanding.

Having said that, my impression is that the review of the business portfolio to what degree it should be drastic. For example, you have to make a very drastic selection and consideration because you have to identify where you need to grow and where you have to stop much investment. I believe the basic approach is something like that, but is this understanding correct? For example, one of the criteria for the review is 5% or 15% and 20%. However, it should be more than that.

And you also mentioned humanoid to grow for the future and where your position is? Your position is good enough. I'd like to know this. In addition to that, in the midterm indicators, of course, I understand that you cannot disclose absolute numbers. However, what is the target profit margin and ROI. And of course, the timing will be different because of the midterm plan. But at least I'd like to know whether those the numerical targets are not changed, especially downward.

Thank you very much for your question. Regarding this portfolio, we have looked into this portfolio in details by having many discussions, as we pointed out, in the conversion 2027, the essence or core concepts in this conversion 27, I believe essence has not changed because essence or core points should be what we have to do.

However, once we identify these accounting issues and quality issues, we need to add more actions to enhance our system and organization and not all of these aspects will be incorporated into the midterm plan. What you see in this portfolio, the growth investment area and the core area, if you combine these 2, it accounts for 60% of the current revenue.

Conversely speaking, remaining 40% of our business should be reviewed to consider how we can these areas. That is my personal understanding. And therefore, including these areas, we'd like to have further discussions internally. Regarding the targets, we have made many plans and the targets. And however, it should not be the way we work and therefore, we intentionally don't mention any targets here.

Thank you very much. Now the person in the front row, the second from the right.

I'm Murai from Diamond. I'd like to ask 2 questions. First of all, this time, together with the new BOD members, you will have 5 new areas where you have vice presidents. I assume that are related to the appliance and automotive machinery and the small motors. I believe these business lines are maintained that in accordance with that, there are new changes in the executives and BPs. However, the change as well as the personnel changes in the subsidiaries. Do you have any plans for that?

For example, there is a point made in the third-party report saying that you have to move away from the impact on of Mr. Nakamoi. And therefore, I assume that there are someone who is close to Mr. Nagamori. In addition to that, if I use the words of Mr. Nagamori, the assignment of his is very important internally. I understand it. Therefore, the so-called of Mr. Nagamori will be assigned to executives Vice President or the level of the trust of Mr. Nagamori is one of the criteria to assume important positions. Thank you very much for your question.

It's very important for us, as we have mentioned over and over again already as the corporate, we'd like to respect the process, culture and systems. These are most important 3 imperatives for us. Mizuakai as the Chief of the Committee mentioned how we should nominate the new BODs and executives, including that process, we reviewed it too. With that, we are sure that our reform can ensure a high level of transparency. These are the 5 business pillars as you see here. You mentioned that these 5 areas follow status is au because we'd like to convert these 5 pillars under these 5 pillars, including group companies, we'd like to reform and restructure our group companies.

And therefore, including those points, we'd like to continuously restructure ourselves for the future. And at the best timing, we'd like to share new structure.

Now Mr. Minai , who is in charge of the HR, would like to add some comment.

Thank you very much. I'm Mini in charge of the HR matters. On the 3rd of March, there was a report made by the committee by taking this opportunity, as you see here, headquarter business side included, we changed the leaders quite drastically. And I believe that is one of the characteristics in this time of reform.

Traditionally, there has been strong leaders. However, we changed these leaders to facilitate these 5 businesses. And in order to have the strong leadership, we have new leaders. So all of them are new leaders. And therefore, together with Mr. Kishida, they will work on the team building to lead new Rboridec. Not only that, -- so far, Nidec leadership has been led by founder. However, new leaders will work as one team. such diverse leaders will be garnered across the globe. So that is our intention.

And therefore, personally, there are new leaders, including new executives because we have introduced a so-called the second system where new executive candidates will be put together for the further growth. And then we can expect there will be the new generation of leaders. And that's why there are quite a lot of new members, and we are confident in having these new members. What I'd like to emphasize here is that we need to grow the next generation of leaders more and more globally. You mentioned that the Vice Head of the department. Yes, exactly right. We needed to nominate and identify the next generation of leaders to ensure their growth.

And therefore, we'd like to implement so-called succession plan to collect the right human resources across the globe. So the establishment of this type of new leaders can be one of the core for the new Nidec, and we are very happy to share that. When I look at the current incumbent, including Vice President and executives as well as the presidents of the subsidiaries, do you have any plans to change them? If so, probably some of them will be close to Mr. Nagamori, but how you can ensure the distance with Mr. Nagamori rather than how close or how distant they are one thing I'd like to say is there are quite new members here in parallel with this, we established the committee to investigate accountability and responsibilities.

There are third-party members involved in this committee. And if its conduct or anyone who should assume the responsibility, we needed to consider the change of such personnel. In addition to that, the results of the third-party committee got completed in April. And therefore, we now analyze the contents of the results of the third-party committee. And whenever necessary, including group companies, we are ready to change management and leaders. However, we have to consider what to do from now on.

Thank you very much.

Now for the mobility and innovation. He is the President of the Mobility. In other words, the person in the group company will be the Vice President and executives. And then I see the name Nitani, and he was the President of one of the subsidiaries. However, he will assume the position of the top of this business category. And I believe that is one of the important things.

As you heard already, who is closer to whom and who is under the sphere of influence those aspects are not included in the qualification aspect or the nomination criteria. As I asked this on the 3rd of March, back then Mr. Nagamori was establishing his own office nearby. However, at this moment of time, where is Mr. Nagamori, -- for example, Mr. Nagamori comes to Nidec, how you communicate with Mr. Nagamori right now? Can I ask this question to Mr. Kishida as the President? Thank you very much for your question.

Regarding the Chairperson office, there's nobody. It's totally vacant. And Mr. Nagamori does not come to the office at all. As one of the shareholders, we take appropriate action.

Thank you very much. That's all. Now I'd like to move on to the second question.

Here's my second question, which is for [ Mizuakai. ] You are an outside member of the Board of Directors of the company, and there has been a very drastic shuffle -- with respect to the functions to be played by the outside members of the Board of Directors, do you realize that you have not been able to meet or play sufficient roles as the outside Board members. Is that the reason why all of these outside Board members are leaving the Board this time? There have been various issues such as the information not communicated very well to you and other Board members, but can you please comment on that, please?

Thank you very much for your comment. I would like to take the question and issue you have pointed out sincerely. As part of the Nomination Committee of the company, I'd like to say that we have received a report from the third-party committee. And based on the committee's suggestions, we wanted to secure people of diverse expertise.

We need to strengthen the company's governance. We need to grow our company's capability. We have secured appropriate persons to be on the Board this time. And from the third-party committees and other organization, there have been many issues pointed out.

Do you have anything to say as part of the committee, something you have learned, for example?

I take the current situation very sincerely seriously as well as the part of the Board of the company. As a member of the Board of Directors of the company, we have -- I have made a lot of suggestions, proposals, opinions.

Risk information has not been fully shared with everyone. We have not been able to understand the reality as members of the Board. In the past, we have received reports on issues in the past. We have suspected we should have made some questions regarding possible organization issues.

We like to cover as many questions as possible from the audience. So please make sure to keep your number of questions per person please.

This is Morgan Stanley Securities. I'd like to keep my questions to 2 questions. I'd like to ask you about the time line going forward. And June 18, according to you is the day of the shareholders' meeting. Is it correct to understand that you won't be able to prepare all the financial statements by then, but what is the completion rate of the financial statements? And what will be the right time for you to be able to submit all the financial statements as a company?

With respect to the replacement of business portfolios, reshuffling of business portfolio, you are trying to reduce the number of business cases to 180 or so. What will be the time line for the reduction efforts?

Thank you very much for your question. To answer your first question, I'd like to have Nakagawa-san answer the question.

Thank you very much for your question. At present, -- on April 17, we received a report from the third-party committee regarding the corrective accounting work for the past 5 fiscal years. We have worked on that. In addition to that, we have now have the quality-related matters. We need -- we are currently examining the financial impact of these quality matters. We have a statutory deadline for our financial statements. And we're currently reexamining our schedule for us to submit financial summits. With respect to the submission of financial statements for the past fiscal year of 2025, we would like to take appropriate measures in accordance with the rules and regulations and extractions. With respect to business portfolio consolidation, we give ourselves a deadline up to 2030, something we can start from this fiscal year relatively soon.

Those are deeply discussed as part of our midterm business plan, and we would like to share those information with you whenever the timing is right for us to do so. At this moment, you are yet to determine the exact timing for you to disclose the midterm business plan. We would like to make it happen as soon as possible before temperature decreases before winter comes.

In other words, of course, our top priority is as follows. We need to submit the written confirmation of internal management system, and we need to complete our securities report first. And thus, we would like to completely solve account-related matters. With respect to consolidation of our businesses, we would like to start working on those issues in parallel to our work on account-related issues matters.

Here's my second question. With respect to the new members to the Board of Directors, they have been selected already in my understanding. With respect to R&D and business portfolio, how the Board of Directors is going to have discussions with the executive management. What type of advice should be requested to the Board of Directors or is being requested to the Board of Directors.

If I may answer the question. And I'd like to have Minai-san if he has any additional information to give you. So far, I have been stating that the proposal of the business plan and the contents of the midterm business plan are the priority -- should be the priority to discuss in the Board of Directors.

As I've said before, several times, with respect to the the improvement of the business portfolio, we would like to discuss various issues -- relevant issues with the Board of Directors as well as the management executive function of the company.

This is Mr. Minai speaking. In this new -- under this new management, we'd like to establish a new firm governance system. we will have external advisers, and we would like to utilize other companies' cases as benchmarks. Based on them, we realize many issues -- there are many issues that we have that need to be solved.

We need to have investment strategy compared with other companies' investment strategies, we need to have a lot to learn. We are receiving various advices from various people from the outside. We would like to learn from other companies as we try to establish and try to introduce new systems into our company under the new management rules. Thank you.

Someone from the news media, the person over there in the front row over there on the far right.

This is [ Hhiaaikkei ] Newspaper. I'd like to give you a question on quality matters. All of these issues are related to so-called foreign changes and other issues are country origin related issues and data issues. Are there any possibilities for illegal activities? I believe these are very heavy management-related issues. So how do you think about Jon as well as other executives responsibility with respect to these issues? Are there going to be any actions, penalty or disclaimary actions as a result of these?

So I'd like to have Minai-san explain the first part of the question first, followed by my own answers to your question.

With respect to illegal issues, we do not we have not identified or we have not received any report on illegal acts with respect to the aforementioned. -- is why we need to talk to discuss with the external experts about these issues to find out if there is any illegal activities or not.

This is Mr. Kishida speaking. Based on the result of the previous report, I decided to return 100% of my executive compensation to the company for a while. With respect to the recently identified quality matters, we need to do what is right. We definitely need to address all of these issues. We need to understand any and every issue that we need to identify. That's the issue that we need -- I need to work on.

Here's my second question. With respect to your business policy, how your upcoming measures is going to prevent the future issues from happening -- future problems from happening? The accountability to be on these business basis leaders will be very different from Mr. Nagamori's person dependent style. And I believe that, that will increase the level of responsibility of these individual business pillars and basis. How are you going to -- can I ask your opinions about how you're going to prevent these issues from happening in the future?

Here's what I'd like to say to you in response to your question. We have this convergence 2027. In addition to that, we need to further improve governance functions as well as doing what is right. These are the major points of our midterm business plan.

One thing that I'd like to say that as you have pointed out, the -- it's not just one person looking over everything, monitoring everything. It will be a group of people, leaders monitoring individual businesses.

With respect to CFO function, for example, we have a CFO of each of these businesses. They will be directly reporting to the CFO of Nidec head office. We have legal leaders of these business bases will be directly talking - communicating to the CLO, Chief Legal Officer of Nidec head office. That will be a huge governance merit under this new system.

As I've explained to you today, with respect to system-related issues, quality-related matters, for example, with respect and form changes, for example, if you try to reduce the cost of component, you may replace component with another one that will require design change.

We need to understand that everything is connected with each other constantly consistently. and firm certificate will be necessary under such a process. And we like to establish such a system where everything is connected. And no one can qualify the data by making unauthorized changes. Thank you very much.

Someone from the analyst, please. The person over there.

This is Hirata of US Securities. I would like to give you 2 questions. Here's my first question first related to the quality issues. How are they going to impact your company's performance? You said the main business are what we are doing very good successfully with our main businesses. But under the current situation, how are these main business going to be impacted? And what will be the type of impact that you are expecting from your customers?

With respect to this number, 1,000, how much percentage of the entire sales is going to be with respect to the 1,000 issues?

Nakagawa-san please start thinking about answering the question. I'd like to answer the first question from you.

As of today, we have been communicating these issues with our customers. As I've said, many of these issues are regarding -- in relation to our appliance issues.

And with respect to automotive businesses, it's one of the issues is with the cockpit plastic material. Many issues are like that. because we have been recommended complained by our customers saying how come we are so late to inform them of such issues.

Going forward, we will have a very proper communications with our customers to provide them with accurate information so that we can do business with our customers sincerely. As of today, with respect to our sales, so far, there has not been negative impact on our sales because of these problems or issues. But going forward, we may end up in losing the customers trust in us. We need to avoid the situation. We would like to handle these individual issues one by one very politely, and we are currently communicating with our customers as of now today.

Now let me explain from Nakagawa, actions for the [indiscernible] issues. There were no clear actions yet. However, as we have explained, some of them are related to appliance businesses and the ratio to the total revenue will be calculated from now on.

Regarding the second question, this is actually the confirmatory question. You mentioned that you are reconciling the overall time line. However, if you consider the due date of the securities report as well as this due date for the confirmation documents, there are some due dates you have to follow. For these matters, you will follow the plan that you have already shared with us. if there are any changes, please let us know those changes.

First of all, Mr. Nakagawa, please.

Thank you very much. Regarding the due date for the securities report. We have to identify the level of impact due to the quality issues. In other words, we have to identify the impact level of the misconduct and the quality. We have to identify the level of impact as soon as possible. That's why we have established the investigation committee. They are not third-party committee because we needed to get the information and feedback timely.

And therefore, together with the investigation committee members as the financial group, we needed to identify the level of impact as soon as possible. That's all for me. Thank you very much.

The person from the Amedia, the second from the left, I think you were in the front.

I'm Mori from Toyo Keizai. There were quality issues at Technomotor and other companies. When it comes to the Tekomotor in June 2022, Daikin, Mitsubishi, LGD, Johnson and Hitachi Johnson Control these are the companies related to the motors for coolers and without any acceptance from the customers, without any consent from customers, you made changes. And I believe you are the executives, Mr. Kishida, and you are aware of that.

Yes, I were aware of the reports. However, when it comes to the direct control over those issues, in that sense, I didn't know those issues. However, when it comes to the report, yes, I'm aware that there are reports on that, and we have taken action to that. So instead by identifying these issues in the reform process. When whistleblowing was made, you have already known this regarding the quality issue for Technomotor in June 2022, including the bank customers, we tried to resolve the issues.

And then regarding the issues that have been identified at this time, this Technomotor issue is not included. So back then, including the group companies, there was no acrosse-board inspection. Unfortunately, there was no such overall review of the quality issues involving all of the group members, group companies.

Therefore, together with the establishment of the reform committee, there's a group-wide quality investigation committee. And therefore, once this committee was established, we finally are aware of the important reports and quality issues in April. So that means that up until now since the quality issue in 2022, there was no awareness of such issues, including whistleblowings.

If Mr. Minai could comment further more with growing back then. Can I ask for your comments?

Sure. There are similar issues involving 4 changes. And each time, we have investigated them. And whenever necessary, we have taken appropriate action. And needless to say, we have explained the situations well as part of our actions.

Thank you very much. Now let me move on to the second question, and this goes to Mr. Sakai because you mentioned that you should have been more proactive to ask for what happened in the sense in 2022 and '23, including Diamond, there are many reports related to the governance issues. And once again, because with the report, why you did not believe that you had to investigate the company's issues in more depth.

Thank you very much for your question. I'd like to take this -- your comment very seriously. It's the fact that the information was not appropriately shared. And whenever it report was raised, we should have taken capital actions, and we have to do that duly. In addition to that, we have to confirm whether the capital plan was executed.

We need to check the progress from time to time. So there is a pressure from Mr. Nagamori, and are you aware of pressure issue. information regarding excessive pressure from Mr. Nagamori was not shared actually.

Thank you very much. Now someone from the analyst. Thank you very much. Now I'd like to open the floor for the entire Q&A session.

Now first of all, can I ask for your question? Thank you very much. This is Nagai from Nippon Kizai. Now this goes to you, Mr. Kishida, because you mentioned that finally, you could understand the quality issues in April. However, working Group itself was established in the 8th of January, but why so many reports were raised in April -- what's your take?

Thank you very much for your question. We needed to see the result of the entire issues. However, on the 3rd of March, we have made announcement or matter and then new structure or new organizational structure started to launch in April.

And we ensure that everyone should be able to speak up more openly. We have taken such initiative to do everything right and therefore, as the first step to do right things in the right manner. I believe that's why there were so many reports raised.

Now this question is related to the question of Asahi newspaper. Now the date for the confirmation document is 28th of October. However, the investigation of the committee is expected to be completed by the end of August, meaning that the schedule is very tight. Now regarding the issuance or submission of the confirmation document of the internal control slated for the 28th of October, how you can ensure this due date because lead time is quite short.

If you need to wait for the report from the investigation committee slated for the end of August, for example, the continuous review is to pursue the lift of the securities on a lot.

Thank you very much for your question. Yes, on the 20th of October, this is due date of the submission of the plan for the internal control. There's no change for this at all. Because of that, regarding the invitational committee, you said that the investigation should be completed by the end of August. However, whenever issues are identified, feedbacks will be made to resolve issues one by one. And then we believe that we can resolve the quality issues. And then we can see the due date of the end of August.

Regarding the interactions with the authority, can I ask you, Mr. Minai, to share your view?

Yes, we ensure good communication with the authorities. And then at the end of October, we can issue the information document. However, as you pointed out, from now on, we have only 5 months to go. Therefore, time is limited. Still, we have to ensure resolution. That's why we'd like to work together with the improvement promotion office as well as the investigation committee to ensure speedy actions. Results coming from the investigation committee should be shared in a timely manner.

There were improvement plans already submitted. If actions captured in this improvement plan is not sufficient, we will prepare the additional actions to seek for timely resolution. And then we believe we can resolve all of the remaining issues at the end of October. Just a confirmation, Mr. Kishida, and this is the 20th of October, you need to proceed this approach to lift the securities on alert.

That's right. In order to achieve the list of securities on alert, we'd like to take these actions, and that's why we have to follow the due date of the 20th of October when we have to submit the internal control document. Thank you very much.

Now the person in pink shirt.

I'msukaoka from Nikkei CrossTech. Thank you very much for your time. You mentioned that changes were not so important. However, regarding the component change and changes, I believe all of these changes are significant. And therefore, why you can say that there's no negative impact on the functions and safety. Based on what you can say that, especially from the technological perspective, can you explain why there's no negative impact on the safety and functions?

The other point is related to the number of the misconduct. Someone mentioned that the event of the changes in 2022 and this 2022 issue is not included in the 1,000 issues. And therefore, I'd like to know the period where you identified these 1,000 cases. For example, around in FY '16, '17, the the huge issue on the quality in Japan and there's a fortified document related to the quality back then.

So I'd like to know whether there were any due date. And if there was a clear due date, I'd like to know how and why you set a due date to resolve the quality issues.

Thank you very much for your question. We didn't mean that issues are not significant. We didn't mean it at all because changes are very significant that we have to take actions, and we will take actions too. So that is the first point I'd like to emphasize.

Now regarding the investigation this time, this investigation is conducted in parallel with the improvement promotion of establishment. And therefore, the target of the investigation is from FY '20 to FY '25. And for this target period, we made interviews and we try to identify all of the issues. However, the timing alone is sufficient to make a report, especially for the quality issues. No, it's not sufficient. We don't draw the line to identify any quality issues.

In other words, whenever the suspicious cases are identified, we ask relevant people to make the report. Of course, we needed to wait for the result of the committee when the specific issues happened and how. We said that 96.7% are related to MH and many of them are related to the appliance business, especially within the appliance many of them are related to cost reduction of the parts and components because when parts are changed, should be changed and therefore, BOM and BOM should be changed in accordance with them.

In this sense, design verification should be done.

And then when parts and components are changed, technical verification should be implemented. And of course, we have implemented the verification of the technological verification. However, together with customers, we'd like to review whether our actions are appropriate. In addition to that, as we have explained in the organizational structure, the technological -- and then the back then right or not, we'd like to it too. Thank you very much for your question.

The person in front of the previous speaker, please go ahead.

This is Taka-san Electricity and Electric newspaper. I'd like to give you one question only. If you can go to Slide #26, where you talked about the structural reform. And you said you will focus your energy on this work. And you talked about these 5 pillars, including mobility innovation on Slide #24. I believe details are something you're going to disclose going forward. In the automotive area so far, you have focused on E-Axle among others.

Going forward, are you going to shrink this business? You used to say that you work on motors, individual motors, production of individual motors, et cetera. Or are you going to focus on different types of products and services such as solutions? Can you possibly provide us with your latest information about what you would like to focus on?

Thank you very much for your very precious question, a very important question. The e-Axle will be the first thing that will come to our mind with respect to the automotive business. That's something we need to be very reflective of. If you take a look at the chart here on the slide, mobility innovation includes e-Axle as well as on the blue section of the electronic commercial vehicle, automotive motors. And on the green section, 2-wheel vehicles, flying vehicles, this is going to be our next step as we try to do business going forward, that's the type of mobility innovation that we'd like to achieve.

With respect to e-axle, we are in a struggle. As we speak today, we are in a struggle. We have been struggling up until today. But through this process of a struggle, we have been able to understand and acquire power based on the trinity of different capabilities. And we have been able to learn from making highly sophisticated products. And with respect to NATO and other projects, we have been able to learn many lessons as well. With respect to eAxle, I'd like to say that the vehicle technology, car technology is going to continue to evolve. We like to be involved in this process. Thank you very much for your question once again.

On to the far right, the person who is wearing the cap, please.

This is [ Miyajima ] of Mas Fact Magazine. With respect to this Nidec instance, it is supposed to be due to Mr. Nagamara's excessive pressure. And all the elements are supposed to be gone and there has been excessive pressure based cost reduction. That's something easy to imagine. How come in the accounting investigation, how come this issue was not revealed fully. Sakai-san and Kishida-san both said that towards the end of the last fiscal year, these issues came to light. It doesn't convince me at all.

Sakai-san has been in charge of this type since 2020. That's I believe your negligence of your duty. Kishida-san you are originally from Sony. The making changes and authorized by customers is the betrayal of the customers. You talked about the 3 people organization is going to solve everything within half 6 months or so. I don't -- that doesn't really impress me at all.

And with respect to more respect to incidents that are impactful to the society, are you going to make any investigation based on findings? Are you going to -- are you really sure that you are going to regain trust from the market? And how many people have you received? And those are not really part of your explanation at all.

Kishida-san, I would like to ask this is, I believe, is the gross negligence. You're making huge mistakes on 2 different phases. You have the issues found at this phase of the investigation. And by betraying or by sacrificing trust of the customers in Nidec, you have grown so far. So I don't think you are -- I don't think you are understanding reality very clearly, Sakai, especially, don't you think what you did to as the very negligence of your responsibility.

Thank you very much for your comment. I take this responsibility very seriously. And these issues themselves represent the fact that the something we have -- we should have never let to happen. Based on the lesson we have learned, we have started the voluntary inspections from this past January. And in this investigation, we will do our very best to identify and address these issues as fully as possible.

And we have this notion as the basis of our manufacturing, and that's a part of our improvement going forward. Sakai, what you said is these are the people of a very different background. But you are an outside member of the Board of Directors. You should have done a better job. And Mr. Nagamura should be here talking to us, giving us an explanation about how things were back then.

And outside directors are here, and Mr. Nagamori should be here talking to us. Otherwise, I'm not going to be convinced at all. It makes me wonder how the TSE is going to forgive Nidec.

And based on Sakai-an's lessons, I believe these people have been chosen, but I really don't quite understand the actions you have taken.

Thank you very much for your comment. I take this responsibility very seriously. With respect to quality, quality is the basis of our company as a manufacturer. As the investigation conducts its investigations, I believe everything will be clear in the future.

Any other questions from anyone? The person wearing glasses over there has been raising their hand for a long time.

This is [indiscernible] newspaper. I'd like to ask a question regarding the changes made to components without approval of the customers. in the area of appliances, what type of products, what type of components were replaced by what type of components? Can you give us any example?

I will have Minai-san answer the question.

And I would like to provide you with some additional information as necessary. I'm talking about the mold renewal, having additional malls, these were done without approval of our customers. With respect to resin components, for example, malls became too old and have to be renewed. That's one of the examples that I can give you.

And we need to make the mold production more efficient. And in order to do that, we had to add more. Such addition was done without approval of the customers. Another example is that we -- when we were trying to automate the manufacturing process, part of the process was automated without approval of the customer.

Another example would be the change in the manufacturing product and a partial change to the production process. These were some of the cases among all the cases we have found identified.

With respect to material changes, did they happen as well?

With respect to material changes, there are some cases with respect to material changes. So those changes -- unauthorized changes were never reported in the past. durability declaration, et cetera, could happen as a result of these unauthorized changes.

At this point, we have never been reported of such changes that affect -- that make such effects. We will find out as the investigation goes forward. That's my second question.

There are some issues with the inaccurate testing results or testing data. Was that intentional falsification of data or intentional change of country of origin. In shipping inspection, for example, data from the inspection or the substandard data were judged as accurate or sufficient data. That will be part of the investigation committee investigation so that we can prevent from such cases from having in. That is all for me.

Any other questions from anyone? The persons second from the left, lady over there.

This is Tkuda Keizai. And majority of these 1,000 cases are related to appliances. Can I ask why that is? Is that due to the structure of the business that so many cases have happened? Or is it a specific person that have caused such issues?

Thank you very much for your question. The essence of these issues will be identified in the investigations -- investigation committee investigation, in my opinion. We have automotive businesses, part of the IT businesses. In some areas, we can decide -- we can make decisions on our own.

In some other areas, we need to work with our customers to go forward. And there are some structure and structure restrictions that are applying to us in some areas of our business. you could call it the degree of freedom in appliance section, there is such a degree of freedom as to making changes. And investigation committee will clarify those and other issues as well.

And here's my second question to you, Mr. Sakai. With respect to these talented people that are candidates to the Board of Directors, even if however talent they may be, they need to be able to express their opinions freely. And one of the previous questions to you was that you neglected to understand the issues in Nidec Group. What type of criteria did you use to select these candidates? And how come -- why -- what makes you confident about these people, the best candidates?

Thank you very much for your question. In selecting these candidates, we utilized the governance improvement and one more important element, corporate culture improvement, et cetera, were the elements we focused on. And we wanted to choose the best candidates for the company, and that's what we did, I believe.

For example, pressure resistance as related to better identification of the potential risks. I believe these are the important software powers and is that included as one of the criteria? Yes, because we have meticulous interviews, we got very good observations. As we pointed them out, we believe that they are the best BOD candidates who can take actions for those matters, too. Thank you very much.

The person over there.

I'm Katsura from SMBC Nikko Securities. I have just one question. Now direction for the reform involving the culture system and the process to make sure everything is right. However, depending on the people, culture can be born naturally. However, the corporate culture should be created intentionally. This is the common concept. And if you look at the Slide 6, I can see portfolio 26. Of course, now you will review them from time to time.

And then you have to consider the external human resources and existing employees. There may be many people inside Nidec. However, if you try to enhance your corporate values, what are the messages you'd like to share to promote changes while enhancing corporate value.

Now can I ask this question to Mr. Kishida to share your message to everyone.

Thank you very much for your question. To me, under this situation, we needed to consider what we can do. And actually, we have thought about it for more than 6 months. What are the values for Nidec -- and with that values, where we have to move on, we have consided these topics. And then we have identified that splits and split. These are very important.

And therefore, we'd like to maintain these 2 splits. Not only with the company, we have to look at the world, and we have to work with partners, customers and employees to move forward. You can see that in our message mission. And therefore, under this mission, we'd like to develop the midterm plan. if we reset everything to do right. And then it's not about just the next step. But personally speaking, Nidec itself should be redefined. And that's why we have made the declaration of redefinition.

I have one follow-up question. If you consider current status, revenue has been good. And that is only one communication we got. However, you are going to change portfolio and then the way the company exists will change inevitably. And therefore, portfolio alone will not be the important piece because Mr. Nagamoi established a huge threshold or hurdle of JPY 10 trillion, and that has been the starting point. I don't know whether the future plan entails 5 years, 10 years or 15 years. The important thing is what KPIs you appreciate. I expect that you can share the clear KPIs.

Thank you very much for your suggestion. Thank you very much.

Now person second from the right. Yes, the person in the post.

This is Sakurai from NHK. Now I'd like to ask this question to Mr. Kishida. First of all, misconduct for the quality issues. The number of such cases is more than 1,000 according to the presentation material is at the right side. For example, it's not about 2,000, 3,000 or 10,000. So if you say more than 1,000, all of them within the category, I'd like to know the level of the numbers of those cases and how many vendors and suppliers are related to these quality issues.

And then if you consider the final products and the appliance domain, what are the typical final products?

Can I answer to your question first? Yes. First of all, the number of quality issues, more than 1,000. Roughly speaking, the number is about 1,000. That is the size of the issues in our understanding. Then next point, impact to the customers. Actually, we are still in the discussion with the customers. And in addition to that, there's the contractual issues. And therefore, please allow me to reclaim from replying to this question. For example, it said 3.3%, meaning that it's around 30% to 40% I believe that is the right level.

So first of all, the population number is more than 1,000. And then how about the final product of appliance domain, air conditioners, refrigerators, what are the final products?

Actually, these are used in many products. For example, one motor can be used in many places. And therefore, regarding final products, together with customers, we'd like to determine what we are going to do. And we are in the process.

Now the second point, that is the background of the misconduct. I understand that the detailed investigation will be conducted from on. But so far, I believe you have conducted interviews with employees. Through the interviews, what are the major reasons or background why these quality issues occurred? If it's possible, can you please share the results of the interviews with employees?

Minai, can I answer to this question first?

These issues have been identified in the wide range of investigations and inspections. And that's why we needed to ask the investigational committee to identify the root causes of these issues. But what we have so far is similar to the background for the accounting misconduct, but we needed to look into more whether the root cause is limited only to that or more than that, we'd have to wait and see the results of the investigation committee report.

I believe Mr. [indiscernible] mentioned that the root cause are similar to the ones in the accounting misconduct, but why you have reached to that conclusion? -- the major -- main objectives of the change related to the cost of reduction, and this is really me things for the manufacturing industry.

Actually, we had to do this because we should be able to offer the same value with lesser cost. However, we should not be trapped by the cost reduction alone. That is my personal principle at any rate, we'd like to wait and see the results, elabate investigations and I'd like to share the results with you.

Speaking of changes, changes should be informed with your customers. And all you have to do is to do it, but you do it due to the cost reductions, that's alone. Probably cost is one of the pieces. However, because our production capacity is limited, but the orders are really huge. And then we had to consider how we can make certain high orders.

And then there were requests from customers asking us to reduce costs as much as possible, and we have taken initiatives. And because of that, sometimes we do not make the duly notice of the OMs at any rate. We'd like to take right actions based on the results of the investment committee.

Now the second from the left in the [indiscernible] lady please?

This is from [indiscernible] newspaper. First of all, quality issues and its misconducts. I assume that the product related to the misconducts are motors in my understanding. However, are there any products related to the quality misconduct?

The second point is related to the number of cases, 1,000 as we mentioned. However, this is a result of the inspection. However, regarding the number of products where quality misconducts were involved, how many of them or how widely the products are related to the quality issues?

Regarding the product related to the quality issues, we understood all of them are motors and where those motors are used. And then there were wide diverse products, and we have not identified which products are related to those motors, and that's why we have to wait for the result of the investigation committee.

Speaking of motors, there are many types of motors, small motors and midsized motors. All you can say is a wide range of motors or many of them are related to the small motors. Within this category, for instance, motors for home appliances, then we can see a certain level of sizes. In addition to that, some IT products are related to the suspicious cases of the misconduct. However, in the IT domain, the size of motors are quite small. However, we have already started discussions with the customers for IT domain and therefore, some of the actions, including good solutions are being taken.

Thank you very much. Although we plan to conclude the session at 7:00, but there were some people who needed to ask questions. Therefore, let us continue. Thank you very much.

This is Kai from Yi newspapers regarding the background of how the quality issues were identified. You mentioned that the inspection of the NT Corporate Committee have identified these issues. However, the committee was established to list the securities on a lot nomination. However, the inspection for these qualities should be deeper because someone should take the lead to study the quality issues because there have been very similar quality issues happened. That's why you launched such an inspection and investigations.

Thank you very much for your question. The Head of the performance committee in order to assume this position, we had to consider the core of our business, that is monozuk manufacturing. That's why we needed to prevent anything wrong from happening in the quality domain similar to accounting misconduct. That's why quality working group was established under the reform committee within this working group, what Nidec has to do to prevent the misconduct from happening just like the accounting misconduct in order to do that, we need to know the global situation.

Then through the discussions within the working group, we have determined to conduct a group-wide inspection. And that's why we have started the group-wide quality inspection starting this year.

So when you came up with that idea because of the previous cases, that's why you have reached to this action?

No, no, not at all. Just because of the several past cases, we have determined the quality committee. No, we need to return on deck, meaning that we have to look at many aspects related to the monukle manufacturing going beyond accounting because monukally the core of our business. So we needed to review the system process and the scheme. We needed to identify the necessity for that. And that's why we have established a quality working group within the reform committee. Thank you very much.

Now this investment committee is expected to complete their tasks by the end of August. However, when I look at the previous cases, investigations of the quality misconduct, sometimes it takes a long time, longer than 1 year. And the past cases, 3 months will be very short. However, just like the Party committee, final report will be issued or all of the necessary tasks will be completed by the end of August.

This will be a group-wide effort when it comes to this investigation committee.

With respect to this investigation committee, these attorneys who are the members of this committee are professional in their respective areas. They have expertise and they have transparency and they have enough knowledge that are appropriate for this committee. Every time there is a problem, we will take appropriate actions, and we'd like to finish everything by the end of August. This invest period will be -- investigation will be targeting from 2020 in the previous investigation was used -- launched to cover from 2020 through 5 years or so. But what about this committee? We will cover this 1,000 cases. We are going to start to discuss how much or how we would like to discuss the range of the investigations going forward. Thank you.

Next person. The person seem right behind the previous speaker.

This is Yam of Toyo Keizai. While ago, Mr. Mori asked you about the Tchnomotor-reated question. And other than that, there are 10-plus some whistleblown cases. And according to what we were told, all of these issues were solved one by one. And all of this is solved and these issues are not included as part of the present investigation that is ongoing. are there going to be any chances for these past cases to be disclosed in the future? Back then, these past issues were solved, but never disclosed. Is that the correct understanding? And 20,000 other companies have similar issues. It could be too late for me to talk about this, but how come Nidec didn't disclose such issues back then.

When they were trying to solve these issues internally, can I ask a comment about this whistlebling cases, trying to reveal these cases to the public.

We launched a group-wide quality checks. We established whistleblowing tools. We have voluntary checking. It's not whistleblowing through which we found that these cases. It's not that we solved this issue internally, but we discussed these issues with our customers to solve these issues eventually. That's the first point that I'd like to make.

When I say internally, it's -- even if you solve these issues in communication with your customers, is it correct to say that these issues were never disclosed to the public? With respect to these 4 changes, your understanding is correct. Those past issues were never disclosed. Looking back all those solved issues or issues solved with your customers, do you have any plan to disclose those past issues that are already solved? When it comes to how to disclose what issues we would like to discuss with the investigation committee.

Here's my second question. In addition to accounting issues, you have quality matters, part of which we have already reported. Now all these issues are out in the open. Now it makes it clear that more -- makes it more necessary for Mr. Nagamori to come out and explain all of these issues. Is it possible for Mr. Nagamori to come out on the stage to make an explanation? What is your comment on that, Mr. Kishida.

As I've said before, as a company, we need to improve corporate culture, processes and systems. That's where we are focus should be. We're not going to trying to find someone to be responsible. Mr. Nagamori is no longer with us. He's completely away from us, and that's how we would like to continue to treat Mr. Nagamori. Please make sure to keep your number of questions up 2. About what is the current status of Mr. Nagamori's memorial hall? Can I answer the question? Yes, please. Please go ahead. The construction has halted is halted with respect to Mr. Nagamori's memorial hall.

Next question, please. a person on the back over there who has been raising his hand for a long time.

This is Harigama of Asahi Newspaper. I'd like to ask a question about the personal assignments of the Board of Directors. One person resigned from the office based on his or her own will. Can you explain that point, please?

Please correct me if I'm wrong. All the other ones have had their tenures expiring. This person in question has been one of the Corporate Auditing Committee and this person has decided to leave before his tenure expires. What's the reason for this person to have decided to leave the office? -- we have decided to reach out for the members of the Board of Directors replaced by -- to be replaced by many new people.

And we decided to have this new group of people replacing -- to replace the existing members.

And this person who decided to leave office before the tenure expires, is they feeling responsible? Or can you please be more specific about the reason about this person's departure? This person's departure is based on his or her own decision. I'd like to ask a question, Mr. Sakai. What type of person was he to you? Thank you very much for your question. As I became the member of the Board, Mr. Nagomor was CEO of the company. And up until his resignation from Avis, he was one of the executives who are leading the company. That's not answering my question. What is your assessment of Mr. Nagomor as the Board of Directors?

Well he grew Nidec to be a JPY 2 trillion company after found this company himself. Has your assessment changed somehow now? Well, she has constantly aimed to hire that attitude has created excessive pressure in people below him. And information about excessive pressure hasn't fully communicated to me.

What is your assessment of this person as a leader? All of these questions are related to it. Mr. Mitsusaka has already expressed her view. So you I'd like to talk about the skill metrics, finance, accounting, legal compliance, et cetera. We have 3 people have a circle on this chart for finance and accounting. And in this new metrics, we have so many different cycles here. What is the evidence for the skill assessment criteria? How do you assess these new people?

With respect to changes in criteria, Minai-san, who is the Chairperson of the Nomination Committee, will provide you with an answer, followed by Mizuakai.

This is Minai speaking. I'd like to provide you with an answer to the question. With respect to finance and accounting, there is no change in the criteria. Criteria remain the same. And people who have a very good experience with the financial background have been selected as candidates. That is all from me. Sakai-san, would you like to say anything? If not, that is okay. If I may add one thing here. With respect to accounting and finance, there is no existing member of the Board who is an expert in these areas. And the Nomination Committee has been able to identify such people. There are circles for the skill metrics. Are these people not experts, even though they have a struggle? Such ambiguous criteria, I believe, is the reason for Nidec confuse struggle at this moment. -- thank you very much.

This is Ms. Sakai speaking. I believe your comment is right. With respect to the creation of the skill metrics, we checked definition of each of these works, jobs to see if these candidates are the right persons for these jobs. Proper accounting standards are what we need to be pursued by these candidates. these candidates need to have experiences in these areas, and we need to have a very -- these people need to have a very good expertise as well in these areas. And we are trying to see if these persons are truly correct or not.

And these 2 people will be the final people to -- for us to answer the questions for -- the person on the far right.

This is of CTech. At the end of March, there has been the litigation raised by one of the shareholders. It has been 60 days pretty much. And please provide us with any information about the impact of the newly emerged matters with respect to the litigation.

We are aware of the litigation. And we have established a responsibility investigation committee. And based on the proceedings procedure of the investigation -- status of the investigation, we would like to discuss what best approach measures to launch.

What is your second question? And could that litigation request impact the asset quality issues?

With respect to the current issues, we'd like to make a decision based on the status of the investigation by the investigation committee.

The person on the far back, please.

This is Nomoto of Nikkon Newspaper. That's my first question. With respect to the accounting matters, these are not going to impact your actual business operations, but I believe some business partners of yours are complaining about your companies in the group. If you think about the impact of those current issues on your current businesses, and I believe some people are saying that you should have noticed these business partners earlier. What type of risks are you taking into account now?

Thank you very much for your question. and quality is the issues that is the very basis. And these issues are the very -- that affect the very basis of our company. As soon as we found out these issues matters, we communicate with our individual customers one by one in detail. And we'd like to change the way we work with our customers. That's what we conveyed to our customers as a part of our messages. That's what we like to do as part of our reform. As of today, exact financial impact, et cetera, are yet to be able to be told to the press or any part of the public, but we would like to make sure to continue to work on as a part of the business management. This is spring, and I believe this is a season of price negotiations. Is there any impact of the current issues on price negotiations of your company? At this moment, there is no such problem that I'm aware of, but we will receive some comments in one way or another from our customers. At this moment, -- and going forward, we would like to continue to address those issues with our customers. Thank you very much.

Now I'd like to move on to the second question, which is related to the business portfolio. As we have already discussed, so that is the area for the structural reform. Before the identification of the misconduct, there were some businesses who had seen the difficulties. And therefore, you said that you'd like to prioritize the profitable businesses. However, what's your energy about the business domains that will grow drastically?

Thank you very much for your question. This is related to the direction of how each business should be reinvented or redeveloped. We have discussions internally. For example of the existing businesses that can grow drastically is related to the joint venture in China and France.

Furthermore, in addition to what you see here, we'd like to increase the Japanese customers, and we'd like to incorporate Japanese customers' perspectives into our businesses. However, there's no businesses that have been defined. And therefore, we will be in the world where we can create new values together with our customers. Are there any domain, there any plan to withdraw from e-Axle. And of course, we have to cost risk structuring and we'd like to retain all of the possibilities to identify the future direction. So including the withdrawal from a certain business, we needed to have wide views. Of course, it does not mean that an e-Axle is classified in such a business.

Thank you very much. With this, we'd like to conclude the press conference. Thank you very much for your time. Thank you very much.

Now we'd like to start the first press conference. From here on, this press conference will be moderated by the third-party committee member. I will excuse myself here.

Hello, everyone. My name is Misaki, the assistant of the Third-Party Committee. I'd like to introduce to you our presenters today. Here are our presenters, Mr. Kaku, the Chairperson of the Committee; Mr. Teruaki, a member of the Committee; and Mr. Makutoshiari, another member of the committee.

First of all, Mr. Hiroi, the Chairperson, will provide you with the result of the investigation, followed by the question-and-answer session. Mr. Hiroi, please start your presentation. Thank you.

Can you hear me okay? This is Hiroshi, the Chairperson of the Third-Party Committee established by the Nidec Corporation. I'm the attorney at the law, in charge of foreign law, joint enterprise at Nishimura and Asahi Law Firm. Please take a look at the document the outline of the investigation report. Please take a look at the document in front of you. This is a summary of our investigations. And based on that investigation, I would like to provide you with some verbal explanations as we go forward. Prior to launching the presentation, I'd like to let you know that the investigation by our committee are still ongoing. But investigation so far have reviewed various facts. We have analyzed various facts, and we have accumulated the facts enough for us to be able to make proposals and recommendations. And for a long time, we have had these investigations ongoing. We have had a root cause analysis, and I believe this is the right timing for us to make the announcement of those findings. And the purpose of this committee is as follows: the launch -- this committee was launched to reveal all the facts relevant to the issues involving Nidec corporation and to make recommendations for recurrence prevention. This committee is not intended for finding someone responsible for any areas of business-related responsibilities.

Please take a look at the document in front of you that I've mentioned. And please take a look at the document over there. Starting from September 3, 2015, that's the start of the period of our investigation range time range. The investigations are ongoing, as I've said already. We have three members. These members are all in charge of those investigations based on the guidelines established by the Japan Federation of Attorney's Associations. And based on those guidelines, we have launched our investigations. We examined all the relevant documents. We launched forensic investigations as well. And we interviewed via a questionnaire various managerial and executive employees. We established a hotline on various issues. And we have covered 319 people, including former Nidec employees. 532 times, we interviewed various individuals. Forensic investigations include former employees, 113 people in total. We have covered past fiscal years 2020 through 2025 first fiscal quarter. When necessary, we expanded -- we went further back in time.

Now I'd like to provide you with an outline of Nidec Corporation as a company. You may not know all of you. Mr. Nagamori established this company back in 1973. It's a corporation and this company has expanded their businesses very rapidly. M&A was one of the driving factors of this company. Back in 1984, the business was purchased by Nidec. Since then, Nidec has been expanding itself, and its businesses through M&A, the small -- the precision motors and appliance, commercial, industrial and motion and energy and various areas are now Nidec's business fields. The Nidec started with hard disk drive motor business, which supported its rapid growth. But due to the changes in the market, Nidec has expanded its areas into automotive and appliance and industrial other motor-related areas. Nidec Corporation is not the only entity within the Nidec Group. 354 subsidiaries and affiliated companies exist within the Nidec Group. And business group system have been were introduced in 2014 or so. We have SPMS A sim more business units as well as machine learning and automation. These five different business entities are in existence as of today. In addition to these business units, there is another unit of business management for the group companies, 15 companies. There is one exception is that one company with the overseas offices. All of these companies are managed by Nidec Corporations Group of Companies Management Department.

I'd like to give you some findings as a result of our investigations. Section 1 findings outlined. I'm not going to details. We have 250 pages or so long document. I refrain from printing all of these making copies. We didn't make all of these copies for all of you today, but we have a large number of findings. As you can see in the document, the document that the investigation is still ongoing and the numbers of inappropriate accounting practices were found in numbers of Nidec Group business basis. There is a variety of such practices, low profit materials. And intentionally, the material loss was not really recorded despite its low future prospect. There was a case of avoidance of financial impairment and inappropriate personnel expenses were recorded as fixed costs in order to postpone the recording of fixed assets or fixed costs actually. There were some subsidiaries regarding the return of subsidiaries. And there are some subsidiaries whose nature were falsified intentionally. An inappropriate recordings of the allowance for bad loans. These cases were just among various the inappropriate practices that we found.

I have just picked up 12 of all of these cases. I'd like to pick up 12 of these cases to explain them in detail in the document. And in 2025 quarter first, there is JPY 139.7 billion is the amount of negative impact on the latest corporate earnings of Nidec Corporation. There was excessive pressure on people to achieve company provided profit targets under the strong leadership by Mr. Nagamori for a long time and also has been in existence that it is seen to be domestic. It was mandatory for each entity to achieve its own target. For a long time, Mr. Nagamori has made -- established these targets for individual subsidiaries on a top-down way. These targets were based on future expected growth. It was above the capability of some of these subsidiaries and other entities. And to the CFO of the head office as well as other executives, Mr. Nagamori applied a strong pressure to achieve these targets from himself. When it comes to these pressures, these pressures were applied to these executives, organizations and subsidiaries. This is just one example. One of the examples we have understood is that if you cannot achieve the target, each and every day, Nidec executives held meetings each and every day to force or blame these managerial executives for not achieving the target and such unreasonable instructions were given to these subsidiaries managerial and executive employees.

And even after the end of fiscal term, if a certain organization fails to achieve its target, the instructions were given to achieve its target even after the end of the second quarter. There was sometimes a direct pressure applied from Mr. Nagamori directly to those executives. Such a strong pressure was applied from Mr. Nagamori to others. Fixed avoidance of financial impairment cost was made into assets by these manipulations in some cases of -- some organizations, they try to achieve the targets. When it comes to CFOs and other organizations, executives came up with a way and explain those methods to financial -- the auditing firms for approval. But sometimes people fortified facts and sometimes people neglected giving explanation of course asset calculation method as well as other methods. There is some range of accounting processes. Not all of these methods were incorrect, but our investigations found sometimes those processes were beyond the realm of proper processing. That's the inappropriate accounting practices. And in order to achieve the consolidated performance targets of the Nidec Group as a whole, Nidec Group CFO and other executives were under the pressure to achieve the company's target. And if they fail to achieve the target, they were reprimanded very severely by Mr. Nagamori.

Now I'd like to mention negative legacy. I would like to explain that in detail here, and there were some results efforts made to eliminate such legacies. This was part of the reasons for this committee to have been established. In the internal investigations prior to the establishment of this committee, there were quite a few issues in existence. And there were some documents about the suspicious activities or conducts by Nidec executives. Sometimes assets were created as a result of stagnation, and those assets were called negative legacy in Nidec's term and Nidec Groups collected information about these negative legacies and the actions were launched to handle those negative assets and negative legacies. And on a periodical basis, Mr. Nagomori and other executives will receive the information about those negative elements. And in the announcement made on structural reform, instead of reporting the negative legacies, self-funding was one of the times used in Nidec Group. Self-funding is to use a term to cover the negative performance with the something that you can use, and that's so-called self-funding. And recording loss means that deterioration in your organization's performance. So you can only do so much about taking such methods to handle process such losses. And while doing -- while having those process, new losses will be created in some cases. And then under this situation, the internal audit department has completed the project to normalize the asset quality. And then in place with that, the structural reform was launched in the fourth quarter of the FY '22 because these two initiatives are similar. Therefore, I'd like to introduce what it is. In the first quarter of the FY '22 under the leadership of the head office CFO under the name of the structural reform, the process of the negative assets or negative legacy was started in order to facilitate the candid reports from facilities, and we used for this initiative CFO believed that this should not be incorporated into the performance evaluation of the BUs and subsidiaries, meaning that self-funding was not severe enough that this was not regarded as self-funding.

In other words, this would be processed outside of the performance evaluation of the BUs and subsidiaries. And that is a scheme for this, and this was proposed to Mr. Nagamori and approval was given. And then as a result of that, around JPY 160 billion of the self-report for the negative -- the legacy was made. However, when the CFO got the approval from Mr. Nagamori throughout the year for the FY 2022, the policy not to go below the JPY 100 billion of operating profit was reported to Mr. Nagamori and approval was given. In addition to that, Mr. Nagamori gave the instruction that V-shape recovery should be achieved in FY '23. And then in total, around JPY 160 billion of negative assets were reported. However, which the assets that required the process high and the necessary assets for the V-shape recovery were prioritized. However, other deals or other assets were put on hold to be covered in FY '23 onward. This is called the planned process at each BU and subsidiary. This planned treatment or assessment should be done at each BU, however, or at subsidiaries that this is so-called the self-funding, meaning that they have to achieve the performance forecast while they have to process the loss.

However, this loss must be absorbed by the profit. As a result of that, JPY 56.6 billion of negative legacy was processed in the fourth quarter of FY '22. However, at the same time, the deficit is not to go below JPY 100 billion of operating profit throughout the year. Then the simple subduction tells you that the negative legacies reported by BUs and subsidiaries, most of them are outside of the structural reform. However, our committee found that when this structural reform was made, although there were report made, however, this was sorted as the however, the appropriate process was not conducted because of the self-funding. And this is the situation for the fourth quarter of the FY 2022.

And then I'd like to explain what happened after that. So the negative legacy going through the planned process required the expenses. However, these expenses were covered by self-funding and therefore, actual implementation was not done. For example, in the fourth quarter of the FY '23, because of the launch of new businesses, JPY 59.8 billion was recorded as the expenses for the structural reform. In addition to that, the expenses necessary for the process of the negative legacy was not incorporated into the performance assessment of BUs and subsidiaries, meaning that this is related to the self-funding. And then President Kishida explained the necessity for this initiative over and over again to Mr. Nagamori. However, Mr. Nagamori assisted that the operating profit target must be achieved. And therefore, this request was turned down. And then regarding the authority of the approval of Mr. Nagamori, as you find in the official version of the investigation report around Page 44, up until August 2025, authority of Mr. Nagamori, including the personal change the allocation of fixed assets, all of them have to get to the approval by Mr. Nagamori. In this sense, former President [indiscernible] and former President, Mr. Nishimoto, although they are called the President, but they didn't have the authority, as you imagine, because everything must get to the approval from Mr. Nagamori. Because this request was turned down and therefore, as a result of that, in the fourth quarter of FY '24, the negative legacy must have been processed. However, there's no treatment made. That is the situation regarding this situation for the untreated or unprocessed negative legacy, Mr. Kishida has recognized it. That's all for the situation for the negative legacy.

And then furthermore, what happened furthermore at Nidec, I'd like to explain what kind of fraudulent happened before that. One of the characteristics for the company the fraudulent in many cases, the fragile or the internal audit function was appointed out. And then this does not apply to Nidec in the 1990s, Mr. Nagamori found the situation where subs is committed to the accounting fraud. And therefore, he felt the necessity to set up the dedicated functions. And that's why Mr. Nagamori reinforced the personnels by hiring the certified accountants externally, for example. At the same time, he established the department for the internal audit. This is really rare for other companies because Nidec has established the internal audit department dedicated to the audit activities. This internal audit department covered around 60 sites. In addition to that, through the whistleblowing system, and if the suspicious case was reported, special investigation was implemented. This is so-called the official public initiative. However, at the same time, Mr. Nagamori has found that there are some employees who are regarded as having highly capable for the audit functions and he asked them to conduct the audit activities, mainly for the drives and the other accounting fraud. So if the suspicious case was reported, instructions were given by Nagamori -- Mr. Nagamori to conduct the focused investigation. This audit or investigations were conducted anonymously -- around 2011 to June 2020, this anonymous audit was conducted. However, the contents of this -- the anonymous audit was not reported to the internal audit department nor the accounting firm.

However, this employee found any accounting fraud, he or she asked the correction immediately. However, if the amount is huge, instead of immediate correction, instruction was given to process those the accounting fraud more than 1 year to prevent the huge loss of the operating profit and this act itself should be regarded as accounting fraud because certain loss should be recognized as loss. And then upon the report from the employee, Mr. Nagamori recognized that there are some cases where the immediate actions were not taken. However, he has accepted those cases. Secret audit was ongoing. However, apart from that, if the ruling was made and then the official investigation was conducted within the Nidec Group, each year, more than one accounting fraud was found. And each time, the internal department has implemented special investigations, and there's no delay of the fiscal settlement announcement. However, all of these accounting fraudulent cases were not published at all. And then the former executive said in our interview that Mr. Nagamori believe that it's very important to announce the financial statements faster than any other companies, and it's impossible to delay in the schedule for the financial statement announcement.

And therefore, they have to prioritize to make it in time at the most important time at any rate, whenever was captured, the internal audit department has taken function. However, in the second half of the FY 2018, the external law firm has conducted the investigation. This period, the second half of the FY '18, there was a report by the party who were in charge of the audit for the United States sites. And then external audit investigations were made as a result of that, more than one accounting frauds were captured. In addition to that, as part of this investigation, forensic investigation was conducted and the forensic investigation has found that the similar accounting frauds were committed at many cases within Nidec Group. E-mails and the documents have been shared with PwC, and then it should be reviewed by the internal audit department. And then this relevant e-mail correspondences and documents related to the negative legacies related to the asset normalization project. That's why CFO of the head office as well as the accounting department head had explained what happened for this project for the asset normalization to PwC Kyoto. For example, if you refer the list of the negative legacy prepared by the internal audit department that was shared with PwC Kyoto says that the total amount of the negative legacy as of the third quarter of the FY '18, JPY 6.3 billion. In addition to that, quite a number of negative legacies were generated due to the intentional fraudulent actions. In addition to that, this provision investigation found that the anonymous audit was conducted for subsidiary and this was also shared with PwC Kyoto.

In short, as a result of the forensic investigation, the e-mails and other documents were confirmed. And based on them, seven cases were legal accounting process. And then the total amount was estimated as JPY 1.66 billion. However, by the end of FY '18, corrective actions were taken. And therefore, all the necessary actions were taken. And then as a result of that, the announcement of the fiscal financial statements were done on time. And then PwC Kyoto submitted this report of the appropriateness of the financial statements. And then as I have mentioned, legacies include the cases where the intentional wrongdoings or the fraudulent acts were not denied. And then if you see the mark of the intentional in the draft of this list, we have not yet confirmed whether the actual intentional fraudulent act was committed or not. There is no confirmation on that. And there was no explanation for the PwC for the actual situation of that. Now this external audit firm act as a result of this audit firm, although the audit opinion of the appropriateness was submitted. However, a series of accounting frauds were identified every time the investigation by the internal department -- internal audit department was conducted.

And there was a strong excessive pressure from the Nidec's head office. And Mr. Nagamori's style, people refrain from trying to change the way Mr. Nagamori tries to force people to achieve the company's target. I'd like to give you an example here. This is about Nidec Server Corporation. Please take a look at Page 2 or 3 or so. If you have an version of the document, please take a look at the page. Internal audit has confirmed various facts. Nidec Server executives committed internal misconduct because of the excessive pressure to achieve sales targets. Despite all that, internal audit excluded such information about the Department of Fraud, the meeting minutes, and there was no reference made about the incident in any document. Mr. Nagamori had a favorite person and people thought that if this issue was written in the document that would upset Mr. Nagamori according to the Nidec executive.

When it comes to Nidec head office managers provided the pressure, the information -- relevant information was shared with the PwC Kyoto and CJ, which Nidec's head office. And CJ has applied various excessive pressure that is the root cause allegedly. And the comment about such reference to the excess pressure was made. And we have hearing minute meetings was found as well. And from such executives, there was a strong pressure of such reference was excluded from minutes or documents. In meeting -- according to the survey employees, they knew that it was necessary to achieve the target, but they had no choice but to process those negative legacies within a limited time range. There was a strong except pressure from the Nidec's head office. And we needed -- there was a comment requesting additional interviews with the NCG executives. And there are some comments -- corrections are made to some comments as necessary in internal e-mails. NCG's involvement was very aggressive and some corrections are made in the documents to make the situation look normal. And such comments were eventually accepted by parties concerned. We reviewed all the accounting books. We didn't do it actually. We didn't get to check accounting books. We didn't have hearing sessions with the auditing firm personnel. We are referring to describe some objective opinions here in the document.

From PwC Japan, we received a reply in paper. PwC Japan said in the document, based on inquiry request received, as you can see here on the page here, we received -- I'm going to read that reply out. With respect to the investigation and that first Senior Vice President as well as other executives, and we had NSRV [indiscernible] acronym, in order to achieve the targets and such explanations from the teleconference was there, but there are some incoherent facts included in the meeting minutes and sharing minutes were corrected to check the facts. And when it comes to this partner, prior to fact checking in appropriate as well excessive pressure were needed to be confirmed to be nonexistent, such reply was made to us. With respect to the series of these accounting misconduct, there was found some cases -- such cases were found in every single fiscal year.

I'd like to explain how these facts were explained. And these facts were reported to the Audit and Supervisory Board. There was no report made about excessive pressure from Nidec's head office to various group entities. There was a strong pressure from Nidec head office, but these -- all the board members -- audit members didn't realize that there was the problems occurred because of the existence of excessive pressure from head office. In various areas, we have found these accounting misconnects. It is because of the excessively high sales standards set by Nidec's head office. That was our notion initially. And targets were set very high by this with Mr. Nagamori's management itself. It's very difficult to fight such method head on. So such information was never shared with outside members of the Board of Directors.

Next, please go to the next section of the document over there. We never found any facts about the instructions leadership taken by Mr. Nagamori about this excessive pressure. But Mr. Nagamori knew that some corrections are made to accounting information that it will be -- could be accounting misconduct. So it's inevitable that Mr. Nagamori at least tried to accept the manipulated accounting information. And there was a strong pressure once again for all the employees to achieve sales target and those pressures were coming from Mr. Nagamori himself. It's very unusual for a department to be established to be in charge of handling or processing accounting information. But Mr. Nagomari still continue to request everyone to achieve excessively high sales target. Mr. Kishida and others requested to Mr. Nagamori to go to a structural reform several times to go -- not to use the negative legacy related to [indiscernible]. But Mr. Nagamori rejected such idea for reform. So therefore, Mr. Nagamori himself will be very individual to be blamed for -- to be responsible for all of these disconnects.

There was no evidence found of Mr. Kishida's involvement. Mr. Kishida made efforts to improve the situation in my -- in our opinion. But the final decision authority was in Mr. Nagamori's hands. But due to the lack of the launch of the reform efforts, Mr. Kishida and the rest of his companies are in the current situation. Mr. Kishida himself should have been proactive in handling those negative legacy related issues. Even in violation of Mr. Nagamori's instruction, Mr. Kishida should have acted more strongly in our committee's opinion. Mr. [ Kobe, ] who is one such a person, he has been long been in charge of sales operations of the company. Mr. Kobe wasn't found to be responsible for giving instructions for forcing people to achieve accessible high sales targets. There was no evidence we were able to find still Mr. Kobe even less frequently than Mr. Nagamori received would receive reports from people in behaving committing misconduct. Mr. Kobe was aware of such misconduct in our committee's opinion. Mr. Kobe was regarded as -- excuse me, Mr. Yoshimoto and Mr. Seki were both regarded as successor to Mr. Nagamori. There was no evidence found these two individuals to have been aware of such misconduct. Once again, the outside members of Board of Directors as well as members of Audit and Supervisory Board, internal audit department made reports to them. But those reports never touched the root causes of misconnect.

They were doing all that because of extremely pressure for a better business performance. That's the reason for this misconduct and nobody was aware of that. And outside directors, none of them based on our committee hearing interviews. For this company, it's hard to reflect honor Mr. Nagamori's management principles and aspire always to perform higher and achievement of that target was essential. And that pressure was not recognized as anything extraordinary. And the negative legacy issues were never shared with outside directors. And out of those that we intervene amongst outside directors, they were not aware of Nidec having a longtime issues of negative legacies and those efforts to resolve that issues were carried out for quite some time under the name of structural reform or making asset a more healthier project. Those are not recognized either.

So to get to the root cause analysis, I believe that for our committee, we wanted to focus on the root causes, narrow down to the fundamental causes. The first issue is massive pressure for better business performance. And that is a core reason for this fraudulent accounting practice. And first of all, unrealistic target was established and to achieve that target, they face enormous pressures. And that pressure started from Mr. Nagamori, and that is passed on by Nidec's management executives and to all the business units and subsidiaries executives. And that, in the end, resulted in fraudulent accounting practice. And Nidec had this very unique internal audit entities with accounting audit dedicated division. And in that sense, compared to other companies, there are fewer opportunities to commit to account practice. But the amount of pressure is way more than those possible fraudulent prevention functionality that accounting dedicated internal auditing team to fulfill. And what's in that context is Mr. Nagamori is absolute power within Nidec. And all the authority decision is, in fact, concentrated to Mr. Nagamori. And Mr. Nagamori is, first of all, has an ultimate authority over personnel matters for group's executives. And that is causing the accounting fraud, the enormous pressure to meet all the monthly target, and this negative legacy that they are facing for a long time. And there's been some efforts to reduce that sometimes, but they were not drastic enough.

And all that is because of this enormous pressure from Mr. Nagamori to achieve business performance target. And in the background of that, Nagamori had a power over appointments and nomination for executives personnel matters. Regarding the divisions that were not functioning, first, Accounting division. We have discovered that frauds were conducted involves accounting departments of a Business division and subsidiaries. Accounting irregularities involving accounting departments and Nidec headquarters are also discovered as well. The reason why accounting department to act as -- supposed to act as a second line of defense and supposed to act to check and validate the accounting practice of the company, but that was not functioning. We have consulted with external legal firms. And as a preventative measure with external legal firm, they were asked to install a special report line at the business unit and subsidiaries accounting, but that never realized. And actually, that's mentioned in the report as well. So they were quite weak in cross-divisional functionalities. One of the typical example is to try to grasp the negative legacy, but they were not, and despite the fact that they are within the same group. Regarding internal audit divisions, the reason why the fraud accounting practice repeatedly happened, internal audit department recognized that origin core reason relies in Mr. Nagamori, but -- and also together with that business performance pressure, but they didn't dive right into the core issues.

And internal audits research reviews could not possibly delay all the business settlement fiscal year closing schedules. That was most important. And internal audit departments, auditing committee, auditing Board members and regular auditors and the committee members were aware that a core reason for accounting fraud practice were because of the enormous pressure from Mr. Nagamori. And regular audit members were saying directly that because of this high aspirational target and to do the best to achieve it. And that is Nakamori's management style itself. And it was quite difficult to question that straight on. So there was no governance working at all. And external auditor, there's been some individual cases explanation in the past, but those explanations were remaining in the service level. And so there was no core reason for this accounting fraud shared with external directors. So outside auditors were not aware of the fundamental reasons -- core reason that Nidec was facing. So this issue -- this problem awareness were not aligned amongst the group. And amongst the Nidec Group at the various different sites are constantly repeatedly having a wrong accounting practice is quite abnormal. And there has been no outside director who saw some oddities in that situation. The committee concretely agrees that anyone with a professional knowledge, different knowledge or experience looking at such a unique situation, they may handle it differently because when our third-party investigation committee faced these issues, this amount of significant account wrongdoings were already discovered within the group. And we were surprised with that. It wasn't the first time they discovered it.

And Nidec's executives and employee private inaccurate and misleading information in accounting firms to elicit favorable opinions. And Nidec directors were seeing personnel of PwC Kyoto as an easy one target to persuade or to give into. What's recently discovered is some of them were on extension of aggressive accounting practice. And because they saw PwC personnel, counterparts as an easy target to persuade, that also led to this nonstop practice of accounting fraud. That's also a possibility. And amongst this accounting fraud, we saw the Nidec employees hiding some of the evidences or testified in a false manner to PwC Kyoto. But even if the auditing entities were not fully aware of those evidences, the ones who were -- they shouldn't be blamed for the wrong accounting practice. The ones who are actually doing is not the auditing entity, it's Nidec itself. Nidec bears a full -- they lack in understanding that they are fully responsible in providing the correct and accurate financial statements. And Nidec reform reconstruction committee head is led by the current CEO and the President. And Nidec improvement measures from our committee's perspective do have certain concerning points. But fundamentally, we believe that those measures are beneficial to prevent accounting fraud from happening again. So our assessment is that their improvement measures were valid. So on this occasion, we would like to provide additional advice from this committee. First is complete ejection of Mr. Nagamori presence. He needs to be leaving the company completely because this was a company that he founded. His management principle is permitted throughout the company. And this whole series of accounting practice cases, root causes is because of Mr. Nagamori's management styles, and his governance not working in order for Nidec to reform itself, Nidec needs to exit Mr. Nagamori's presence.

And in order to reduce the impact from Mr. Nagamori other shareholders, I do believe there is a discussion that's worth doing for the possible termination or the rejection or cancellation of the shares or under some consensus to limit the certain rights exercise. But it's not something that Nidec can do through its own initiatives. But it can be a part of a preventive measure. Many of these measures that the company put out are on the surface level. What's important for Nidec is not only Mr. Nagamori, but only the part of Mr. Nagamori's surroundings and making significant impact for the appropriate business practice. How to prevent that, the key player will be outside directors, of course. What's the problem here is a business manager may be influenced by only a certain limited number of stakeholders, right proper business solution. And the most powerful countermeasure is by not the supervision functionality under the direction of management, the one with legally backed up authority. That means external directors. It's easy to be said, but the external directors participating in the Board meet only once a month. It's quite difficult to understand the root cause that is hidden behind our businesses. And even if they are recognized certain agendas that challenges the company bears, and they make a comment at the Board meeting levels, but it's quite difficult to to combat the counterargument from the directors who are in executive positions, who are involved in day-to-day business.

And given all that advices, even if we were to include accounting professional or someone with a significant management experience in external advice, will not completely guarantee that any tinted [ color-looking ] us when making completely independent audit responsibilities. In order to fulfill the functionality of external director as the way it should be, we believe that we need to improve the information that is shared to external director. That's essential. And also, you need to have a system where outside director can work with other external parties to strengthen his or her advices. First of all, the information, quality is essential. That's been the biggest issue here. And outside directors are legally backed to save the company in the times of emergency. So it is essential for outside director to provide advice to save and rescue the businesses to the Nidec management at the time of needs. And regarding necessary support, having a dedicated staff may not be -- maybe too excessive. But whenever external director requires some support, companies need to provide that as well. And as needed for the outside directors strengthening, it's probably beneficial for these companies to have attorneys to get advice from legal professionals. And outside director has a strong authorities, but the reality may be different because there may be a certain reservation, certain consideration paid to the regular directors, outside directors also a human, too, it's in-avoidable. And that's mentioned in the improvement measures taken by Nidec, but getting teams involved is essential to improve this company. One person will not be able to save this company. But if there were three people with aligned issues awareness, then they can cope with those issues, and then we will be able to combat those difficult challenges. So I think that is quite important. And in the end, sincerity to the investors, to the open capital market is essential, and that needs to be done thoroughly. As I mentioned in the root cause explanation section.

Disclosing inaccurate financial statements that are approved or disapproved by auditors is a fraud. And it's a fraud against the capital market. They need to recognize that Nidec is losing the trust of investors now. And that is the first step to Nidec to restore the trust is to show the true and honest business situation openly to the capital market. And that is essential work that needs to be carried out by CEO and CFO.

And last but not least, I don't think this accounting fraud practice gives questions to Nidec's capability as a manufacturer. The issue is because they were so focused on meeting the targets and that pressure causes accounting practice. And Nidec's core business value of [indiscernible] company still remains. The company is not what Nagamori-san imagined to be. But if Nidec can prove to the market that the real capability as a manufacturer, I think the market can trust the Nidec again.

I have to emphasize that the current investigation is still ongoing. And for my officers and the current officers, I really appreciate your support and assistance, especially for the current officers at Nidec. Please make new born Nidec and that attitude too has been felt quite strongly throughout of our investigation. And therefore, on behalf of the committee, I'd like to appreciate your support. And because you are a member of Nidec and therefore, as a human as well as the manufacturing enterprise, you are the [indiscernible] and through strength of Nidec. And then I believe Nidec can regain the trust from the market and investigators -- the investors because of you, sorry for occupying the stage for a long time, but that's all for the result of the committee investigation. Thank you very much for your kind attention.

Thank you very much. Now I'd like to open the floor for the Q&A session. [Operator Instructions]

I'm from Laurie from [ Toyo Keizai ]. I have just one question. Now this time of investigation and its result, it's concluded that chronological responsibility should be filled out or by no means, there is no such grievous cases identified in this investigation. Sorry, it's not chronological, but criminal, that's right.

Okay. As I mentioned at the very beginning, the role of our committee is to analyze the root causes for the fraudulent accounts. At the same time, we expected to present the recommendations. Of course, there's the criminal penalties put in place based on that requisite, whether we have to ask criminal responsibility or not, that is outside the scope of our role of committee, and this was not what I have to do as the attorney at law, because of the ethical issue as attorney -- because it's related to the ethical issue for the attorney, please understand that it's very difficult to respond to that question as an attorney or lawyer.

The next question, the person in jacket at the front row, please.

I'm [ Murai ] from Diamond Corporation. Now this time accounting fraudulent, when I read the report at each company, there are wide varieties of the fraudulent activities such as the avoidance of the impairment processes or the deferral of the profits and these activities were identified throughout the group companies because of the very strong aggressive pressure imposed by [ Mr. Nagamori ], this is one of the reasons. In addition to that regarding the fraudulent accounting process?

There are no cases where the instructions or orders given by Mr. Nagamori. However, regarding the disposition of the leg liabilities or involvement of the CFO to legacy liabilities or the organization of special audit department processed and disposed the legacy liabilities in a very planned manner. When I look at these activities, is that regarded as the systemic disposition of the accounting activities conducted. There's no instruction or order from Mr. Nagamori for these fraudulent cases. I read it in the report. However, special audit included disposition of legacy liabilities included each time there is actual conduct of the fraudulent accounting. And therefore, to what degree Mr. Nagamori was aware of these conduct or activities? And then based on the recognition, what kind of instructions given by Mr. Nagamori, for example, did he say that he didn't know anything?

Thank you very much for a very good question because billion, I should have explained it in my presentation by spending enough time. That's why I really appreciate your question. Then first of all, regarding the legacy liabilities, let me elaborate on what it is. These legacy liabilities are not caused by the fraudulent accounting necessarily. Of course, the future impairment process is necessary or the possibility of the impairment loss should be reviewed and the legacy liabilities are most of such nature.

However, some of them -- some of the legacy liabilities must be disposed right now here or some legacy liabilities must have been disposed in the past. However, some of them still remain. And therefore, when you hear legacy liabilities, you believe everything is negative. However, it's kind of risky assets. However, because they are risky existing assets for each fiscal year, that is a problem because disposition is necessary. Although some of the employees believe that they wanted to dispose the legacy liabilities. However, if they did so, they could not achieve the expected performance, and they had to defer the disposition of the legacy liabilities. And because of that, they have lost a good timing. So recognition of legacy liabilities as a whole, and they should be disposed in a planned manner.

However, they are not equal to the recognition of the fraud accounting. In this sense, the CFO at Nidec head office he has used the planned disposal. However, it's not good because JPY 100 billion should not exist as legacy liabilities. He has to look into the details to identify which one should be disposed and which one can be remained. The order is important for these activities. And therefore, for CFO, for example, although the CFO recognized some of them as bad liabilities and they should be disposed, [indiscernible] hear that much? No, that level of recognition was not done by the CFO. What is your question, sorry?

And then to what degree Mr. Nagamori was aware of this. Regarding this special audit?

Nature is different from usual audit. To be more precise, please refer the Nippon [indiscernible] description in the official report.

Let me see the page number. Sorry, I don't remember it, but you can see the detailed explanation for that. If you happen to have the report?

I believe it's around Page 102, approximately speaking, where you can see the descriptions related to Nippon [indiscernible].

Suppose that there's a certain fixed asset and it's inevitable to apply impairment accounting. However, in the process of impairment process, Mr. Nagamori himself negotiated with the counterpart. However, it's failed, and that's why the inevitable impairment process was applied. You see the detailed process who were involved in the special audit report [indiscernible] was red to Mr. Nagamori. So Mr. Nagamori was aware of this, although this is just one of the examples, but regarding the special audit to its activity, we believe that Mr. Nagamori was aware of the detailed information. And therefore, based on that, we regarded that Mr. Nagamori accepted the fraudulent accounting. So that means that Mr. Nagamori himself was aware of and accepted the fraudulent accounting. Please refer to the description of the report.

To begin with, he should have been instructed that these assets should be disposed immediately. However, the employee in charge of the special audit said that the special disposal was made and therefore, he accepted it.

By the way, Mr. Nagamori accepted this during interview.

Yes. He was interviewed. I don't remember how many times we got interviews, but I remember at least 4 or 5 interviews were made with Mr. Nagamori.

If I may, I have a follow-up question regarding the detailed report. Pages 108 and 109, you can see the exact descriptions referred in this Q&A.

Now the next goes to the person in the second row from the back.

I'm Sato from Morgan Stanley. First of all, thank you very much for your explanation. Then at this moment of time, investigation is still ongoing, as I heard. However, at the end of the day, the report from the investigation will be available. When can we see the report? And at that time, can we see the amount of the impact on assets, net assets compared to the previous fiscal year, there is a negative impact of the JPY 139.7 billion according to the current report. And are there any possibilities that this amount may change?

In addition to that, because the investigation is ongoing, the reason why the investigation is going on, what's the missing point?

Thank you very much for your question. Now let me answer to the questions where I would be the best person to reply. Final report of the investigation. I assume you'd like to know when the final report will be coming out. All I can say is TBD. So nothing is determined yet regarding the timing of when the final report will come out.

And then the third question, probably I should answer to the third question, but can you please state your third question once again?

I don't know when, but the JPY 139.7 billion, this is the impact on the assets -- net assets. And additionally, what your committee has to investigate?

Thank you very much for repeating your questions once again. Regarding the question two, we have completed the root cause analysis and [indiscernible] remains. That is each case of fraudulent accounting investigation. We have to complete this investigation. That's why in this report, there are 12 specific cases. Although this is just part of the fraudulent accounting, However, in addition to them, there may be other fraudulent accounting. That's why our committee is still conducting investigation. However, what internal audit has done and then what audit and supervisory committee has done and what is the special audit was. These are related to the root cause analysis, and we believe that our committee has exhausted the root cause analysis of such. Then the second question or the first point in the original questions, probably I need to ask Mr. [indiscernible] to respond to that.

Thank you very much. So this amount of JPY 139.7 billion may change or not. Our investigation is still ongoing and just 1 week or another would be suffice to complete our investigation. I myself cannot say it clearly, but we have to wait until investigation completion and there may be further negative impact on the net assets. However, how much will it be? I cannot say it right now. However, please understand the following regarding the [indiscernible] impact on to the consolidated financial statements. Probably usually, you'd like to see the impact for each fiscal year. However, what we got this time is FY '25, the end of June, as of the end of June 2025, that is the timing of calculating the impact on to the net assets in order to disclose and publish this report. We have completed the root cause analysis, and we have confirmed almost all facts. And the committee believed that it's better to share some numbers, although it's still work in process.

However, we believe it's better for us to share some numbers. And therefore, it's not a number for each year, but we'd like to share the latest number that is JPY 139.7 billion as of June of 2025. That's why from now on, we'd like to finalize the number for each year. There were some deferrals. However, as a result of the investigation, we may see some deferred numbers. However, we have to wait until the investigation completes. Once we complete the investigation, we'd like to share the number. Most important point is that what is the amount of the fraudulent accounting for each year. We have to clarify the number for each year. That's why we needed to investigate those matters more.

How far -- how many years do you go back in time? -- when you do investigate?

It's from 2020 fiscal year till 2024 fiscal year, plus first quarter 2025 fiscal year. So 5 years and 3 months actually.

The investigation has spanned over 6 months and your numbers are yet to be finalized. Does that mean that Nidec has not -- does not have enough information or documents or would it be because of a lack of appropriate personnel at accounting or financial departments?

Let me answer the question once again. There are quite a few factors involved here. If I may give you some information. As you can see in the investigation report, we conducted digital forensics, questionnaire, interviews, hotlines. We used all of these methods to understand what issues were. And there are quite a few issues we found. It's a huge number of issues we found actually. And we had the committee checked all of these issues one by one. And some issues were truly terrible. We had to cover all over the world, issues all over the world. It was difficult for us to be able to handle all of these alone. So we recommended the voluntary accounting inspection. That's the approach we took.

We cover all the CFOs, accounting GMs to go back the over past 6 fiscal years, starting from 2019. So they have to cover all of the 6 fiscal years to check for any problems or misconnects that they were able to find. And in order to optimize, we found various schemes for misconnects and inventory assets, for example, they're overestimating the quantity or the amount all of these schemes have to be covered. So we need to come up with a checklist to cover all the related affiliates as well as subsidiaries around the world. So no one would trust you, if you could do it everything yourself. You need to come up with the evidence.

And we had these people provide us with evidence from the past. That way helped us to understand various relevant matters. And we had the cross-checking mode introduced as well. Our company and CFO or accounting GM were checked by equally experienced accounting personnel from another organization. We did this cross-checking, to all these different business bases all over the world. And this process is almost over, and we have more than 1,000 issues. Cross checking is still ongoing. There are some 10% to 15% of the entire business bases that are actually finished with this approach. And Nidec head office is supporting -- we're getting support from outside experts. And these experts need to check evidence. This is a triple checking method we have employed.

Then we -- the third-party committee examined the results of all of this checking. It was a huge amount of volume we have to cover and schemes were various. We had to go through various people's eyes to understand the truth. This is why it took as long as 6 months or even longer.

I would like to cover questions from as many people as possible. One person -- one question per person, please. The person over there, we're short.

This is [indiscernible]. I would like to ask a question regarding Mr. Nagamori's power harassing management. It was very influenced from the past, a long time ago. And that person was very strict about achieving a target from the very beginning and the foundation of Nidec. Since approximately when this misconduct started taking place, Mr. Nagamori's strictness was shifted into misconduct-related approach. When will be -- would you say with the timing?

Thank you very much for your question. To give you a conclusion first, we couldn't find that exactly when this misconnect started. Still, at least we can say that 2020 or even 2012 or even 2013, even around that time, JPY 10 billion or so negative legacies existed, that facts were checked or confirmed. Because I believe that's when the accounting misconnects were being connected back then.

And Mr. Nagamori himself in hearing session with us told us as follows, Mr. Nagamori himself liked his so-called hands-on approach according to Mr. Nagamori himself. His approach according to himself was not really perfect enough.

In the recent years that we have checked, I believe his hands-on approach was insufficient, and the business targets were decided based on shareholders' perspective. Because of that, these targets were unrealistic. It was inevitable and unavoidable for such unreasonable targets to be created. And that is what I could say to your question.

And when the sales exceeded JPY 1 trillion, for example, when the company launched the EXL business in 2020 fiscal year or so. He started explaining in a very large blueprint -- in my impression. How about what would you say to those situation events?

With respect to financial impairment, there was a huge impairment that's a fact, that happened. But when it comes to accounting misconduct, I believe that occurred far before such event took place. And this is something that I've mentioned in our investigation report. Mr. Nagamori himself were talking about achieving the sales target of JPY 3 trillion or even more. Mr. Nagamori was around the 40th anniversary of the company. I believe he probably started saying something he -- this company could not achieve. Mr. Nagamori [indiscernible] that described. In our interview with him, he said that.

He knew he was leading the target. He didn't say the exact words, but he was feeling that way. It's not exactly related to the accounting misconnects themselves. But it wasn't that there was a certain trigger for all the misconnects -- accounting misconnect, but there was excessive pressure for people to achieve the very accessible high targets under such circumstances and misconnects occurred.

This is Hirai, a member of the committee. I'd like to add some points to Mr. Hira's point. And it was during the company's 40th, P40 and Page 40 is where this fact is measured. Around 2023, Nidec was 40 years old. He started thinking that he was saying something that is rather unreachable as a company.

Any other questions? Okay. On the line, the person fourth one from the top.

This is [indiscernible]. In your explanation, you said Mr Nagamori, Mr. Kobe Mr [indiscernible] leading these negative efforts, but CFO organizations were in charge of those problematic issues. And these -- some people thought about these manipulating methods. What layers people came up with such methods? Were these people able to come up with such methods after being told of such methods by other people?

We have identified various schemes at different timings. If you take a look at the document, we have 12 different cases. These people are very various. These people vary CFO by subsidiary. And after giving approval from the subsidiary's President, he came up with the scheme for misconnects in one case. In another case, head office accounting personnel led such efforts.

Therefore, as a background, people were forced to achieve the targets. The subsidiaries were forced to achieve their own targets and CFOs of head office, they need to achieve their consolidated targets of the company. And head office accounting personnel try to help subsidiaries achieve their targets based on the conversation between the head office and the subsidiaries. There are quite a few variations. So it's all part of the same background. You have the CFO of the head office, you have the executives of subsidiary Nidec Group companies and other personnel concerned were involved in these misconnects in many cases, in my opinion.

Any other questions from anyone? The person at the fifth from the top.

This is [indiscernible]. Thank you very much for your efforts. And the question that I ask you the most is about the internal investigation. Mr. Nagamori was never interviewed internally. But here, you have interviewed 5 to 6 times with him. How frequently did you accept an interview from him? And he himself said that he himself, it was to blame, but what type of statements did he make to your committee? Did he really apologize truly from the bottom of heart? Did he give any instructions?

There's no instruction made from him, but its forensics, et cetera. There is no live voice opinions from him. It's like the groups of wolves as well as sheep. And each group says various things, start various things, the royal way of business management, et cetera. Is it true that there was no instructions? My people knew that how -- what results were going to be created as a result of such instructions. Who is going to be responsible, I wonder. In that regard, I can see only see the two different groups, sheep and wolves, about forensics. We like to know all the words of the true words spoken by Mr. Nagamori. I believe shareholders agreed with me. And our media -- we, the media are to blame, of course.

You are the third-party committee. I'm not sure about your contract terms with the company, but you need to clarify the truth about Mr. Nagamori. Otherwise, this third-party committee will be meaningless in my true opinion. What do you think?

Thank you very much for your question. You definitely have a point, and I appreciate your candid opinion on this topic. I personally think that those words from Mr. Nagamori, voices from Mr. Nagamori. I think it's worth sharing how much interviews have we conducted. We can't share exactly what date, but frequency-wise, I think I'm correct. I met with them. We met with them 4 to 5 times, and we spend 2 to 3 hours each time. But I am not in position to disclose all the exact words and comments shared by Mr. Nagamori. Everything that we need to disclose are within the report. That's everything, nothing more.

Regarding your point about sheep versus wolf. I think you have a point. And Mr. Nagamori talking about that traditional accounting, traditional management, mainstream, mainstream, that is true. He really wanted to have a proper management of that committee. And I -- nobody in this committee members are in a position to deny that. But it is true that he was in part acknowledging accounting fraud and that originated from enormous pressure and realistic business target put up by Nagamori-san.

And I'm sure, including [indiscernible] and the media has expressed their thoughts. And I do understand your sentiment from that question too. And I do recognize there are various views against the report that we have compiled as well.

Thank you very much. We have a limited time for this session because there will be additional press conference by the company. So I would like to take two more questions, please.

[indiscernible] from Asahi Newspapers. I just would like to ask a question regarding [indiscernible]. So you acknowledge the accounting fraud from 2012 time 2013 time. Is there -- is my understanding correct? I don't want to mislead anything. In our survey process, there was some story about 2013. If I say starting from 2013, that would be misleading. You can say that from the past, but from 2013, that is just simple wrong. And that it was one episode from one of the subsidiary. I'm sure what they were shared was true. So that's why I picked up in my report. But that doesn't mean that the accounting misconduct happened from 2012 to 2013. So your research scope is from -- investigation scope is 2020 onwards, and you believe that this kind of improper practice happened for quite some time, correct?

Our survey period started from fiscal year 2020.

Okay. You don't need to share the detailed numbers, exact numbers, but number of misconduct, how many cases were you aware of as a third-party committee? Are you talking about dozens or hundreds or possibly thousands, that was fine ballpark.

Regarding number of cases of misconduct, it's quite difficult even for us to grasp. The reason for that is because we've been asking self-check by all the stakeholders. So what happens is that once the reports filed, there needs to be certain corrections regarding, for example, in journaling process in the entries like ABC on the debt size may need to be recorded separately because of things like this, we are unable to calculate the number of cases at this time. And furthermore, I don't think we'll be able to get an accurate picture of it either. So regarding your questions, I'm sure the number of misconduct is over 1,000.

And regarding the misrepresentation of the business performance, false statements about business performance. Did it happen?

What do you mean by I would like to have an exact definition of false reporting of business performance?

For example, in official performance figures that are written in, let's say, securities report, you, those are supposed to be official. I think if there was a false representation, they got to be facing administrative or criminal penalties, I believe.

In the [indiscernible], so you're talking about the full statements in the [indiscernible] security reports. That did happen. That's a fact. So there can be some penalties. I am not sure about what kind of action that they will be facing.

Okay. I understand. I'd like to take the next one as the last one. person who is sitting way back in the venue, please.

I am from [indiscernible] Automotive newspaper. Nagamoti-san was considered to be an expert in M&A acquisitions. He has acquired various businesses inside Japan and outside. And in that process, PMI activities, integrating all the operations, including governance and also treasury financial accounting work too. That balance perhaps was not well done. Do you think that the failures in the PMI effort is part of the reason for this incident? Did you hear anything about that from Nagamori-san himself? If you could please share, that would be great.

In that sense, we are not looking at this practice from the perspective of PMIs -- from accounting fraud, because our perspective was conducting accounting fraud. So I don't think we'll be able to answer your question 100% because the purpose of the report is different. Survey is different. This is a part of our report, too. It's already publicized. But he was adamant regarding subsidiary, is to manage it the way he bought it. So he's quite persistent in not doing scrap and rebuild of the businesses that they -- what he acquired. That is the reason why Nidec has over 350 subsidiaries.

Of course, they are doing sub consolidation, too in the reporting entity units, the number will be less. But the accounting practice is quite complex and the business headquarter and subsidiaries are not connected apple-to-apple, so to speak. One subsidiaries are doing multiple different business units work. So those cases definitely exists. So it leads to complexity in their accounting practice. But that is not the core reason for this accounting fraud. I'm sorry, we are focusing quite a bit on accounting department. And regarding accounting department doing work across the division, that is one improvement that -- that is one organization work that they can do. Sorry, I'm not directly answering to your question about the impact of PMI.

Thank you. I'm sorry, you asked me about the number of cases, and I answered a little bit. But I don't want to mislead anybody regarding the number of mis-fraud cases. If you could please refer to our full report, Page 163, please. Not 163. Please go to Page 155, Chapter 7 regarding the impact of consolidated financial statement.

And this time, JPY 139.7 billion, and this is mis-practice and also mistakes that are discovered in this self-check process. And there is a simple error in accounting. Error is not misconduct. It's not fraud. So we don't want to add fraud with errors. I don't want to mislead you with a number of cases. I definitely would -- definitely like to have all the generalists refrain from referring to the number of fraud cases in your report. That's what I ask as an accountant as well.

So how would you see this situation?

Rather, I would like you to notice that this kind of mispractice, fraud were happening at various different sites over multiple different systems and fashions. And from that, you can make your own assessment. It's not of one particular business unit or one particular country or the site. And there's a segment information in Page 162, there's a misconduct in the small motors, there's misconduct in group companies, 6 -- all 6 places that this practice were discovered. So it's not a number of cases. It's a significant diversity.

Okay. This concludes the third-party committee's press conference.

Thank you very much. Now we would like to start the press conference. First, we would like to introduce to our presenters, Mr. Mitsuya Kishida, the President and CEO of Nidec Corporation, Mr. Kazuo Nakagawa, Vice President and Acting CFO of the company; and Mr. Masayuki Minai, Vice President and Chief Compliance Officer.

I am [indiscernible] of Nidec Corporation's Corporate Communication Department. In this presentation, first, Mr. Kishida will give his opening remarks, followed by his presentation on the investigation report and our company's response. And we'd like to have the question-and-answer session after that. Mr. Kishida, please start your opening remarks.

Thank you. I am Kishida, the company's President and CEO. it was September 3 last year that we launched a third-party committee on a series of issues. For the following 6-plus month period, the committee conducted objective and comprehensive investigations to identify those issues, root causes, make proposals for recurrence prevention purposes, et cetera.

And on February 27, which was last week, Nidec Corporation received the committee's initial investigation report. We are truly grateful to the members of the committees. As they explained the report in detail already, I will explain how Nidec will regard this report. The investigation revealed numbers of inappropriate accounting practices at many of Nidec Group's business bases. The identified inappropriate accounting practices and errors will make a financial impact on our net assets by approximately JPY 137.9 billion on Nidec's consolidated financial statements as of the end of fiscal 2025 first quarter. The aforementioned findings include inappropriate accounting practices were conducted based on unrealistic business targets and under excessive pressure to achieve them. The company's management could not correct the circumstances and accounting and internal audit departments could not perform their check and balance functions. And further, employees submitted the wrong information and disclosed inaccurate financial statements to the auditing firm, acting insincerely to the shareholders and investors in the market.

We take extremely seriously the fact that we caused such serious accounting misconduct. To all people concerned, we deeply apologize about the fact that we disclosed inaccurate information and failed to meet the expectations of shareholders, investors and people of the market, that the inappropriate accounting practices have been causing anxiety and trouble among our business partners and that we have caused anxiety and trouble to society. To all the people concerned, we deeply apologize from the bottom of our hearts. We are truly sorry.

Now please allow the presenters to settle on the chairs. Mr. Kishida explains how Nidec will con the investigation report and the company's actions going forward.

From now on, I would like to explain our response to the investigation report. Please take a look at this document back in September 27, we received the actual report, and we did some masking and other adjustments. The investigation by the committee is still ongoing. We will continue to be fully cooperative and fully committed to cooperating with the members of the committee members. And as soon as we receive the final version of the document, we will disclose its contents. The investigation is currently still ongoing. At many of our business bases improper accounting practices have been identified. avoidance of recognizing valuation losses, avoidance of impairment losses based on the sales plans and low profitability of achievement and the impact on consolidated net sales as of the end of first quarter of fiscal year 2025 resulting from the correction of misconduct and errors to date is approximately net JPY 139.7 billion.

We extremely seriously take this effect, and we will launch following appointments of our personnel. Please take the middle section of this slide. I will remain committed to doing our -- my very best to reform Nidec. And in order to have the current status of special -- [indiscernible] lifted, we will do everything we can. I will return 100% monthly base compensation until submission of the written confirmation of the internal management system.

As of today, March 3, Mr. Kobe, the Chairman; Mr. Kitao, Executive Vice President; Mr. Samura, Senior Vice President; Mr. Nishimoto, Executive Consultant, they have resigned from office as of today. In addition, first Senior Vice President [indiscernible] has his job suspended and his retirement process has started as of today. As of CPO, Chief Performance Officer, will be abandoned as a position as of today. And you can see the compensation will be reduced as follows beginning in March 2026.

First Senior Vice President, Senior Vice President and Vice President, 50% of monthly base compensation for 4 months with respect to the members of the Board of Directors outside of Board members 30% monthly compensation for 4 months. And based on voluntary request, this compensation reduction will take place. Based on these personnel actions as of 1st of March and as of April 1, there will be a major change to our personnel system. And based on the third-party committee's report and these personnel changes, all the business places in and outside of Japan, we will make sure to make our company transparent, and we will rebuild Nidec.

To be more specific, Michael Bricks will be in charge of ASM and MOM business units. And Mr. Wada will be in charge of AMX business unit. And we have the senior GM system, and some people will be promoted to the Vice President level from the level of senior GMs. This will be one joint step for our bright future as a company. I, as a CEO, will take strong leadership to unify this company. We need to regain trust from all of our stakeholders. As a company, we need to fundamentally rebuild our governance system. We will check the configuration of the Board by inviting individuals with corporate management experience and accounting expertise. We will build a management oversight structure that combines professional expertise with diverse perspectives. We will establish a truly sufficient and mandatory supervisory system.

In this third-party committee's report, we have received some factual information. We will establish -- properly establish the responsibility of investigation committee. And we will target the current and former directors and executive officers. We will investigate whether they bear any legal responsibility, including whether they breached their duties in the execution of their responsibilities. The timing of the committee's establishment and its overview will be promptly disclosed once determined.

Last year, after October 30 that we established a Nidec Corporate Reform Committee, and based on improvement plan and status reports, specific improvement measures are currently being reviewed and implemented. And based on the latest report from third-party committee, we are promoting highly effective measures to prevent recurrence by making timely revisions to the improvement plan. With respect to restoring the market trust, we will complete the establishment of our internal control system and submit the written confirmation of internal management system to the Tokyo Stock Exchange.

As our upcoming schedule. But before that, I would like to give you some more information to share on this slide. As of fiscal year 2025, the first half and second half year, we will have no division, year-end division. The investigation is still ongoing and based on the material impact. And this, I believe, will be the right decision for us to make as a company. First of all, to restart the division process, we will stay unified. Please go to the next slide. Dividend will be provided and hopefully -- please look at this document impairment losses. There is a possibility that additional impairment losses may need to be recognized as derivative impacts of downward revisions to past fiscal year's profits and losses based on the findings of the third-party committee. This has been disclosed just today. Next slide, please.

As of our business situation, I would like to give you a brief summary of that. Since last time, we've been continuing to communicate with you that under any circumstances, we will not have disruption with our existing customers and our suppliers. And regarding business overview, our sales, manufacturing status and also about our filing, I would like to give a brief update. The current order status is -- remains strong, and there's been no major changes to our existing production plan.

And on the right-hand side of this table, under Q3, what used to be JPY 612.2 billion in sales in the last year Q3 has increased to JPY 677.7 billion, at a total of JPY 1.98 trillion levels as a cumulative total. And our production base are operating normally and have maintained supply capacity. Then on the bottom right, regarding our financing situation. And regarding interest-bearing debt, you can see from Q2 to Q3, we are at JPY 1.2 trillion against JPY 112 billion. So that means that reshuffling of the debt we have cash in hand of JPY 500 billion plus cash and cash equivalent is at JPY 344.5 billion became JPY 890 billion, but that is a borrowing of JPY 500 billion itself plus cash flow on operation improvement of JPY 50 billion. So JPY 550 billion improvement is included. Then Q3 is JPY 890 billion. And we are not tempering any commitment line of JPY 600 billion regarding this cash situation additional note.

And various disclosure that we shared on the February 27 and March 3. This is our company's response, and we are waiting to receive the third-party committee's final report to continue to enhance our improvement measure. And we plan to file -- submit a confirmation of our internal control system on upcoming October 28.

Thank you. Now we'd like to take questions from the floor. [Operator Instructions]. The press person, sitting on the front row, please.

I'm Hiraoka from Nikkei Newspaper. Regarding the scope of a possible impairment loss of JPY 250 billion, if you could please give additional information on that, what that will be in the relationship with our current -- this time accounting inappropriate practice regarding the timing of this impairment loss. Okay. I would like to have Nakagawa explain and i will provide the explanation as needed.

Thank you for your question. The third-party committees reported -- I mean we are reporting at the same time, so it can be confusing. First of all, this JPY 250 billion is separate from JPY 139.7 billion that came from inappropriate accounting practice that impact our equity. That is a separate thing. This third-party investigation on our wrong accounting practice will continue, not finalized yet. But at the moment, the loss will be JPY 139.7 billion. So the third party will continue to work to deliver the final results, and we would determine the impact for every year.

Then we will conduct impairment loss check tracking back to the past. That's what you're seeing right now. So at this moment, we don't know by when and how much. So we would like to first set a certain premise as a hypothesis and made the simulation based on that. So this is not necessarily a final amount. When we close our book once more time, and we will do a calculation once again, then we would scrutinize again about the amount of impairment loss.

Let me add to that. As I mentioned in the beginning, this has nothing to do with an appropriate accounting practice. This time, JPY 139 billion loss that we would go back to the past. That is a rough impairment loss scope that we have recognized now.

My second question, within the third-party report, there was an explanation about negative legacy. That is the same as President Kishida's comment. How is that situation today right now? What is your -- what's your awareness levels?

Well, negative legacy doesn't necessarily equal to inappropriate accounting practice. And that was mentioned in the third-party investigation report press release -- press conference as well. It's a list of assets which can contain risk assets. For example, I was in charge of automotive business, and we were discussing a few times about how to recognize such negative legacy in our book in this time's investigation report.

I -- it's first -- it's a news for me that this kind of discussion were taking place in various different parts of the company, too. But we need to put that in the right practice in terms of having a formal process, and have a systematic approach so that we won't repeat this kind of a misconduct to happen again. So that's my understanding.

So regarding negative legacy, what is the scale in terms of amount currently? And what kind of policy do you have regarding how to handle the negative legacy?

Regarding how much is remaining as negative is not something that we have a clear understanding. But in future, we will have appropriate accounting practice in accounting timing. And like self findings, or plan postponement to have a phased approach in the impairment loss is not something that we would do everything to avoid. We'll be working together with the global operation teams to make sure that we will have a firm process to prevent from this kind of practice to happen again.

Next question is from -- we need to take from analyst, person in the back, please.

I am Takayama from Goldman Sachs. I have some question about numbers to make sure that there's no misunderstanding on my side. This JPY 250 billion, this is of the past, and you have studied every year's impact and this is amount of scale. It's not a wrong practice or errors. It's [ legal ], but this is something you should have done. Is that how you're seeing it?

And is there an overlap to so-called negative legacy to this asset scope of that this is a scope for the impairment loss of JPY 250 billion. Please let me know your thoughts. And in the additional press release, it says additional loss of JPY [ 223 ] billion. I'm not sure whether it's something that will come in the future or of the past.

Let me first answer, Nakagawa, to take the first part of the question and for the future from Minai.

Now this assessment for the impairment loss this time, it has nothing to do again with [ an appropriate ] accounting practice. We have went back to the past because actual figures are being replaced. So when looking at the future with the new figures, we now have revisited the forecast. Of course, we are validating the necessary impairment loss every year, but our financial statement was fixed, revised this time. So we have to go back in the past and to check again. And regarding when we would impair each asset, that is yet to be decided.

So what we have discovered under the scope of investigation period, for example, the asset at the end of June end in 2025, how much of that we should book as an impairment loss? That amount is JPY 250 billion. I hope my answer is clear.

So this is because you need to revise the [indiscernible] of the past, in addition to JPY 139.7 billion, you would need to record an impairment loss of JPY 250 billion. There will be more of that?

It really depends. We first went back to the first fiscal year and looked at impairment loss booking was appropriate or not. We keep going back all the way to the 5 years in the past. So this is based on our simulations.

And -- regarding additional tariff impact of JPY [ 223 ] billion, this is still yet to be seen. I mean, we are still investigating. This has to do with FIR misconduct, having to pay for additional tariff. We are investigating to see whether similar practice was taken by other overseas entities. With those errors found, we would need to pay additional tariff. And that amount is JPY 23 billion that we will be paying in future. To whom is -- against what is regarding past 5 years of import, we were paying a wrong amount of tariff. So this is JPY 23 billion for the wrong filing of tariff duties of the past.

So when we investigate -- investigation completed, and then when we know for which year we should have paid this amount of tariff, then we would match impairment loss. So we have a provision for that to be ready for that payment.

Okay. So my assumption is that there will be a major negative hit to the [indiscernible] levels, right?

And as you can see on our earnings call, we -- there has been some sudden impairment losses. And based on that, we would like to mitigate those volatility. So we need to have a regular booking of impairment losses when needed. That's why we are doing checks after checks, and we're doing that as soon as possible. So when we reflect the revision necessary for the past financial statement, this is a probability amount that we need to book as a loss. And of course, we will need to get external auditing regarding this cost.

Are there still more negative legacy remaining after this JPY 250 billion loss that you're going to book?

As our President, Kishida mentioned earlier, our current negative legacy will be solved all the way to cover to June 2025. That's what the final report will clarify. Then at that time, we will know how much is left. So that's something that we need to give it another try.

What I mean is, as Kishida mentioned, how much risk asset we have right now will take the stock count. Then we'll have involved the export [ too ] with our internal accounting team, our auditors and auditing and supervisory committees included, will disclose the negative asset and what to do about it. Of course, we are doing business. So when there's risk in order to minimize that risk, what kind of countermeasures we can implement. And that's the first thing that we'll think about. But once we are determined that we need to have a right accounting practice process and to book it as a loss, we will. And amount is not something that we know now. If I say one word, we can mitigate the risk for the future quite precipitously in our commission.

[Operator Instructions] Now this from [indiscernible] point person from second and third from the front row.

[indiscernible]. Thank you very much for your presentation. Regarding the third-party committee presentation, key that is for the [indiscernible] one of them is going away from Mr. Nagamori's [indiscernible]. But the [indiscernible] will be very difficult and it cannot be achieved overnight. However, that Mr. Nagamori should be put behind. However, how are you going to do that? Sorry for talking about the very severe point.

No, not at all. This is a very important point. When we established the rehabilitation committee and as we have mentioned in the previous meetings, we have to be Nidec. We have to be who we are based on the corporate cultures and philosophy, and we have to respect them. And some of them should be handed over to the future in our recognition because for us, we need to add more. That is we have to do anything in the right manner all the time. And therefore, based on this concept, the recommendations, including the improvement document submitted by the rehabitation committee or the reform committee, we'd like to apply this concept to a split.

And because we are going to do anything right, the processes, including the way we have done the business in the past should be abundant. However, we have to do it courageously because doing right, this should be the basis for the corporate culture to be at the center of whatever we are going to do. And I'd like to share this split.

Mr. [ Minai ], do you have anything to add?

No, no, not at all. I totally agree with you. First of all, doing right. This should be applied to all of the activities in daily businesses in order to practice this split. We can consider what we have to do in what way.

As you heard in our improvement plan that we have shared the other day, we will implement this improvement plan, but we have to walk the talk, meaning that all of the employees have to do their work in the right manner, and we have to check the actual status. And then across the globe, all of the colleagues in the Nidec Group can follow this by getting aligned on this concept. And this is what we have to do.

Thank you very much. In the interest of time, I can raise just one question. Right now, even now, Mr. Nagamori is one of the major shareholders. And therefore, do you see how you can eliminate the negative influence of Mr. Nagamori and what kind of countermeasures you are going to take, if any?

Thank you very much for your question. As you see in the report from the about the investigation committee report. Yes, Mr. Nagamori is still one of the major stakeholders, and this may not change. However, for us, we have many stakeholders, including shareholders. Therefore, all in all, we have to consider how we can operate our businesses soundly. This is the most important thing for the company because we should not focus only on the part of the stakeholders because the partial stakeholders should not distort our operations and businesses along the smooth operation of the businesses, and that is the best for us to establish process and schemes, and we take this as a mission for us.

Thank you very much. Now the analyst over there. I saw your hands up.

I'm Sato from Morgan Stanley. I really appreciate your explanation. But on the 14th of November, when the financial statements were announced, there were some discrepancies between those numbers and this time numbers.

First of all, JPY 87.7 billion impairment loss was registered in the first quarter. In addition to that, JPY 139.7 billion and JPY 260 billion losses happened and therefore, how they have impact on the net assets at the end of the first quarter of this fiscal year, that is [indiscernible] and then we have to [indiscernible] to JPY [ 139.7 billion ]. This calculation is right? This is the first question.

And the second question is related to the change in the cash flow. Are there any changes in cash flow? I understood there's no change in cash flow, but please confirm these 2 questions.

Yes, we have announced the financial statements on the 14th of November due to the impairment loss for the first quarter. However, this is the result of the third party. This number may change depending on the result of the third-party committee and we said it in the disclaimer. However, after the tax, this JPY 877 billion have the impact to the net asset, and this has been already incorporated. And therefore, regarding the next step.

This time, JPY 139.7 billion will be offset internally in addition to that JPY 250 billion, although the timing is not clear, but this will have the impact on the equity at the future day.

How about cash flow?

Both of them don't have any impact on to the cash flow.

Now the second point, I'd like to know when the next -- the announcement of the financial statements will come? Although you said it's TBD. However, towards the next announcement, President Kishida, are you going to issue the internal governance report as the demonstration that your internal governance is sound and good?

Thank you very much for your question. We'd like to share our financial statements as soon as possible in the correct manner for each quarter, and we'd like to share the update for each quarter. And we'd like to return to such -- they should be status as soon as possible. However, as of today, as you heard in the third-party committee meeting, the final report timing is not finalized yet. However, we'd like to make sure that everything would make it in time to ensure no delay of the report toward the shareholders' meeting slated for June, we'd like to make all our effort to realize it.

Now regarding the internal governance report, you will make the description that there's no problem in the internal governance in that report?

We have not finalized that much. However, what we'd like to pursue regarding such targets. We'd like to hold the meeting to share the financial statements, or financial results for the FY '25 as soon as possible, and we'd like to make all our effort to realize it.

The next question, we'd like to take the gentleman and the blue tie.

I'm from [indiscernible] Newspapers. I'd like to ask about governance. The report of the [indiscernible] committee says that the diversity is not sufficient, including the outside officers of there are many people who had experiences at the [ bureau ]. At the same time, there are not so many people who had an expertise in accounting and management and how this structure is accepted, or why the structure was accepted? Although there is no enough diversity, especially the former bureau, for example, we like to establish better interpersonal relationships by hiring the former bureau? And are there any influences of Mr. Nagamori?

Thank you very much for your question. We'd like to reform our organizational structure from the from the very bottom and we'd like to reflect it in our partner change. And you see it in the partner change in the executives and officials, and we have to respect the expertise, especially in the business management and accounting. They are essential. And therefore, as soon as possible, we'd like to proceed our reform to reflect this concept.

Why we have had such organizational structure? For this matter, from my perspective, I myself would like to reform this structure. That's what I say.

How about the intention of Dr. Nagamori? Is his view reflected on this.

Needless to say, Mr. Nagamori has served as a representative of Nidec. In addition to that, he has assumed all of the responsibilities for the management and so is for the structures and members of the executives and officials. And then the reason why there were so many former bureau and how Mr. Nagamori's intention was reflected, for example, 2 person from [indiscernible] another 2 person from [indiscernible] and why those former bureau were hired.

Are there any criteria to hire former bureau?

Regarding the selection of the outside officers, there's a so-called knowledge metrics, capability list put in place. And therefore, we refer to determine the members of the executives, and we have made it [indiscernible]

Regarding the responsibilities of the outside officers. What do you think about that?

We see the handling of the executives. However, there are different treatments for officers and executives. And I know there are background reasons. And regarding the outside officials, what would you do, including outside officials, responsibilities of the executives, we need to consider them even for the future.

As you saw in today's presentation, you saw the change in the executive structure. And therefore, as you said already, in the future, we'd like to assign a person who has good experiences in the business management, as well as expertise in the accounting. We'd like to reinforce our top management structure. And that's why, as you saw in the previous presentation, we'd like to establish the responsibility investigation committee in the very near future where we'd like to investigate how the person involved has taken his or her responsibilities legally. So we'd like to investigate it. And based on that result, we'd like to take the robust actions.

The target is the former and current executives. So all of the top executives should be covered by this investigation. Therefore, in the future, we'd like to take these opportunities to explain the accountability and the legal responsibility objectively. And in order to do that, we'd like to conduct good investigations.

Sorry for being so persistent about it. However, regarding the existing executive because of the commitment to the accounts, depending on that, there are different treatments. For example, self-ucination as well as the suspension of the duty, these 2 are obliged to the overseas executives. Because of the local requirements, legal requirements, we have to take these actions. This is the reason. And those who resign him or herself, there were a severe commitment into the accounting misconduct. That's why he resigned his own.

I didn't understand what you'd like to know exactly. However, regarding the suspension of the duty, as well as self explanation, I believe that influence is the same. That is our recognition. As he mentioned, regarding the suspension of the duty, we have to comply with the local applicable laws and regulations. And that's why we didn't say that self because this is in compliance with the local legal requirements.

Now the next one is for an analyst.

I'm Akizuki from Nomura Securities. I have two questions. First of all, this amount of [ JPY 139.7 billion ], you said there was no breakdown that you could share this time. On the other hand, however, the target of impairment loss is mainly from the automotive businesses. And therefore, this amount of JPY 139.7 billion in order to get a clear that, if you can share the segments as well as the target businesses, if you can share those information, that's really helpful.

The other question is in addition to the question one, this amount of JPY 139.7 billion of assets, or the assets will be reduced because of the impairment loss. In addition to that additional JPY 250 billion reduction happens. And then I don't know the level of the profit. However, ROIC must be really high operating profit is right. And then based on this prerequisite, ROIC should be very high because usually, especially for the manufacturing companies, your ROIC must be higher than usual conversely speaking. Probably [indiscernible]. However, this is there, it can be a range. I believe there are some people leaving the office. And therefore, as a negative aspect, I believe there will be a future possibility for such assets to be calculated. How are you going to secure profitability in the future?

Nakagawa, please go ahead.

First of all, in terms of scale of profitability in which area of businesses. Please go to Page 163 of the document. You can see the amount in individual businesses. Small business model business, JPY 1.3 billion, attraction and [indiscernible] organic JPY [indiscernible], [ JPY 15.7 ] billion; group companies, JPY 39.3 billion. And that's the breakdown of JPY 139.7 billion. And you can see how much additional amount will be made based on this.

When it comes to JPY 250 billion, which is the second amount, is approximately JPY 250 billion to be subject to financial impairment. And we need to recalculate and reexamine the exact situation in detail to understand the exact amount of the assets to be subject to the financial impairment. We need to go back in the past to understand a proper way of doing businesses, and we need to discuss with our auditors to come to conclusion.

I'm not sure about the correctiveness of this term aggressive or not aggressive, but these are what we are doing. As has been explained by Mr. Kishida a few minutes ago, this is basically primarily in connection with the automotive business. If there is any financial impairment, there was significant reduction in the future amount of such impairment. A goodwill is also included, if I may add.

There is one more question from me. You, I believe, announced the midterm business plan and the plan was unrealistic according to the comment by the third-party committee. You may not want to hear this, but did you announce the midterm business plan realizing the plans will be unrealistic from the outsiders, and those will be looked very aggressive, but as an analyst, I thought part of the plan was rather unrealistic. As you announced the midterm business plan, objectively speaking, did you think that the plan was unrealistic? Or did you accept the plan as such in order for you? And are you willing to achieve the target at the time?

That was a very deep question. Thank you very much for that. So far, in the third-party committee's report, there is a reference to that from a different perspective. With respect to the midterm report we submitted, Mr. Nagamori said that it's a very conservative plan. And [indiscernible] direction, we should have a slightly stretched target. Back then, we thought that if we stretch ourselves a little bit, we will be able to achieve the target. That's what.

And I believe you understood some points we have made in the past. In addition to active investments, infrastructure in [ IS ], for example, to connect information with a piece of information. Looking back now, I believe that -- and we have to cover more than 300 business bases as has been explained by third-party committee. We need to build the infrastructure to connect all of these bases. That was actually the basis of our midterm business plan. We believe that's part of our target at this moment as well.

But when it comes to figures, given the current circumstances, we need to reexamine and we will be able to provide you with the realistic figures in the future. That is all from me.

Thank you. Next question, someone from the mass media. From your right, the person in the front, male person here.

[indiscernible] I'd like to ask you about Mr. Nagamori. He resigned the office from the Chairperson [ Ameritas ]. How is it now? When he became Chairperson [ Ameritas ], he was a non full-time executive. What is the difference between then and now?

I believe the Chairperson's office is now gone. And as Chair [indiscernible], he was receiving a salary, but not anymore, I believe. What are the major differences between then and now about Mr. Nagamori? And what type of thought feelings do you have now about this third-party committee's report?

You have worked with Mr. Nagamori. You became President after being promoted by Mr. Nagamori after giving a positive evaluation by him. But now Mr. Nagomari is being accused, criticized. You were taught by Mr. Nagomor in one way, I believe. What thoughts do you have about Mr. Nagomori?

Thank you very much for your question. [indiscernible] differences, physical differences between then and now. Mr. Nagamori is no longer Chairperson [ Americas ]. He is no longer receiving money salary from the company. And his former office, based on his will, is now being reorganized. It will be removed from the company somewhere outside the company, that will be my understanding. Not major physical changes between then and now about Mr. Nagamori.

It's been 4 years since I joined Nidec. In the first year, I was overseas. I became working closely to him and having a conversation with him only after I became President 2 years ago. In fact, he taught to me a lot. And in this company, it was totally different from my previous [indiscernible] I learned a lot. I learned a lot about this company's corporate culture. I need to understand what to master. I received several important lessons from him. Still, now we have received this report from third-party committee. So it's a very candid, straightforward report about him.

I honestly was surprised. My own mission, as I've said at the beginning of my presentation, is to unify very strong technological capabilities with [indiscernible] of employees. We need to make this company more global and better company. I would like to dedicate myself for the purpose. That's what I have thought so far, and I'm going to have to thought more strongly than before.

Mr. Nagamori is gone, as you said. Going forward, in the past, Mr. Nagamori as the founder of the company, he would like to visit the company sometimes when the timing is right, et cetera, as the founder of the company. Is there going to be such interactions between you and Mr. Nagomi going forward?

There is -- has been such that there is no plan like that.

When did you see Mr. Nagamori last time?

When he [indiscernible] Chairman [indiscernible] in the morning of December 19, I was contacted by him. That was the end. That was the last time that I communicated with him.

Are you going to meet with him?

Not in my schedule. [indiscernible] there such a plan to meet with him.

Someone in analyst someone [indiscernible] from west media from your left, second row, or the fifth row, lady over there.

[indiscernible] Tokyo. I'd like to give you two questions, Mr. [indiscernible]. First of all, about the contents of this midterm business report. And what are you going to review based on the third-party committee's report? There are quite a few points made by the third-party committee's report, the departure from Mr. Nagamori's business method, among others.

In addition to all the points you have made already, what are the additional points you would like to make as changes or improvement?

Thank you very much. First of all, in the third-party committee's report, we have this improvement plan. I believe the direction of the improvement plan has been endorsed. It's a very -- that's something that is recognized very strongly. In addition to that, what we need to achieve is a shift from Mr. Nagamori's company to a different and better company. We need to establish a process for the shift. And that's an important mission theme for us. I [indiscernible] Mr. Nagamori in the third-party committee's report, but we, as a company, we need to improve our corporate culture. We need to improve our corporate systems. That's our major and largest mission for us. And some of those actions may take time, but we need to do everything correctly. That's the center of our mission. As we go forward, we would like to brush up our improvement plan as we go forward.

Do you have anything else to add [indiscernible]

Mr. President is absolutely right. And in addition, if I may add something from the third-party committee report, there is a strong mention about particular emphasis on the [indiscernible] and restraint. I believe that's quite important.

And especially our auditors and outside auditors and all the internal auditing department personnel, they would need to strengthen the governance within our company and work together, integrate and to strengthen the problem awareness mindset.

And when they need support, those outside resources needs to be available. So that kind of working environment needs to be better prepared. And we do recognize as a company, we need to create a better place to work for those who are in charge of auditing activities. I myself [indiscernible] deeply feeling that we need to rely more heavily on outside directors' opinion and also we need to seek experts as well. Outside directors bears legal responsibility as well. And also in this third-party dialogue, including audit, we need to strengthen the quality of the information that we pass to auditing entities. That needs to be a part of improvement idea.

Thank you Second question [indiscernible] mentioned in the third-party committee report that he has uncovered so many numbers of accounting, mis-practice, malpractice. And even under the significant pressure from Nagamori-san who was the President for the entire company, this fraudulent accounting was a common place for the entire company, and it's become your entire corporate culture. I think that concept is already permitted within ingrained in the companies. Is that something you can change?

I'm taking this report from the third-party committee quite seriously. And I understand that from a long time in the past that this kind of accounting practice, wrong accounting practice were done at many different sites of our companies. And as a company, we must develop measures to prevent this kind of practice from happening ever again, and to respond to the capital market and all the partners and all the suppliers and all of our stakeholders, we need to respond to their needs sincerely and taking this report firmly to come up with solid improvement ideas and act accordingly.

President Kishida, this fraud on accounting has taken a root already with your organization. What do you think about that? Are you aware of that?

Well. There are many new discoveries for me after receiving this report. So as the President and CEO, I was not fully grasping the scope of this kind of practice taking place within our organization. I regret that quite seriously. So I need to look at this fact straight on so that I can implement the improvement measures and systemize it so that we would never repeat this kind of incidents happen again.

Now I'd like to take questions from the floor.

I'm [indiscernible] from [indiscernible] In the investigation report says what's the key for the improvement is outside directors, strengthening outside directors' governance. And there are many outside directors they needed. And they didn't recognize there is such a significant pressure coming from the top of the organization. And regarding this significant amount of negative legacies, they want to fair either. So I think they were not doing their job. It's clearly the [indiscernible] of duty.

So I think you need to clarify the kind of penalties that you would be requesting to the outside directors because they were not doing the job. I don't think otherwise, you can start your revitalation process in a proper way. I think they need to file the resignation letters, or all these retirees from tax agencies and the Ministry of Finance, all those people. They have created some group of superpowers. That's what the report says.

And one more thing. And the presidents were back then before you were reporting to the Chairperson, but they're being ignored. But at that time, usually, President should consult with outside directors, but they aren't doing that. That's a wrong governance. The governance is not working. So this is really equal to breach of the outside directors' duty. It's -- they're not doing breach of duty of care. So I would like to clarify about the kind of penalties that you need to impose to those people who are not doing their jobs. Usually, when a company faces serious instance like this, usually directors go to outside director for consulting, but didn't happen.

Thank you very much for you to point out this is a very important point. It's very serious. I myself do recognize that I need to consult and leverage our experts outside directors' opinions. As this report mentions, the quality of information that our companies were providing to the outside directors were not all that great, didn't raise the alert concerning mindsets amongst outside directors. So I myself did not act enough to seek support from outside directors. And all the directors included, including outside and full time, including legal responsibilities, we would investigate what kind of penalties would be -- needs to be imposed once we establish the responsibility Investigation Committee, including legal responsibility, too.

I'm [ Furukawa ] from Bloomberg. I have two questions to President Kishida. Before you start this press release, this securities investigation surveillance Commission announced that there's been a possible infringement. It may violate the Financial Instruments and Exchange Act. And third-party investigation committee [indiscernible] mentioned that there is a misrepresentation in the statements in [ UHO ] as well. Is that your understanding as well?

Regarding the first point of the questions, I have no ideas about us infringing this Financial Instruments and Exchange Act. I would look at this report and to confirm what is the situation, what's the claim. And second point regarding [ UHO's ] security reports, are we going to go back to the past report and make the revision. And as Committee Chair, [indiscernible] mentioned, I do recognize that when the [indiscernible] needs to be revised, we will, we need to. So after receiving this time the investigation report, once we know the amount and the timing of the revision necessary, we would like to conduct a change.

So you think that the current mis conduct would require changes to the [indiscernible] securities report?

If necessary, we will.

The second question regarding these currently implementing various reform because you are determined to maintain being listed. I would like to ask Mr. President, do you think that being a listed company is essential? If so, why?

Thank you for your questions. I myself and for the company today, for October 28 report that we need to file to the authorities, we are working to get delisted from the security -- our stock as a security on special alert. And there are certain choices of going private too. And I think some companies who are in similar troubles did consider such measures too.

At the moment, we are designated as a security on special alert. So our first effort is to be delisted, designated as security on special alert.

I'm sorry. My whole question is the reason for maintaining the listing in the stock exchange. What is the real reason?

Well, so that we maintain large extensive fundraising capabilities and also resulting in a broader business canvas, I would say. If you have anything else to add, please?

I'm okay. Thank you. You are comprehensive.

I'm from [indiscernible] Newspaper. I would like to ask questions regard to confirm. Chairperson [indiscernible] and 4 others are resigning on the press release. But resigning from the position that will still have a position in the company, they all resign from the company. They still do have some roles in the subsidiaries. So including those roles as subsidiary, they would exit from our group. So they don't have any seat in your company as of today?

Correct.

My next question is, regarding the legal responsibility of your directors to pursue that, you will establish the responsibility investigation committee. And you said swiftly by when you are going to launch that? And what kind of study this investigation responsibility investment committee will study? And what will be the scope? Would Nagamori-san be a part of the investigation as well?

Let me give a first try in answering it, and please get -- provide additional information. So now that we are receiving this external party, third party committee report and existing and the past director executive officers we will study the legal responsibility of those management levels, including the opinions from outside experts with objective viewpoint. We are already selecting the nominees, people's makeup for this investigation committee, responsibility investment committee. So as long as we know more, we will share with you.

So are you going to possibly file for possible damages before possibly face a claim for something that is driven by shareholders, lawsuit?

Thank you. We are considering various options.

One more question. In this report, there was a comment about President Kishida regarding the settlement of negative liabilities, process of negative liabilities in 2024. [ Kira-san ] mentioned to Nagamore-san about the need to process negative legacies many times, but Nagamori-san said no. What does that mean? What really happened, Kishida-san, would you please explain with your own words?

Thank you very much for your question. So what is negative legacy? That's something that we explained already. It's not that the entire negative legacy equals all the misconducting accounting practice. I myself, since I joined this company regarding the businesses that I was leading had a certain structural reform. At that time, I didn't know there were over 300 subsidiaries. Back then, various businesses we had to complete some of the manufacturing plants. That need is definitely there as a business unit leader. So under this slogan of structural reform, I kept mentioning about the need of that many times to Mr. Nagamori. And this time, the third party committee report mentioned is about the one of Nidec business, about the automotive business, regarding the processing of structural reform outside our operating profit layers.

It will be the extraordinary loss, if any. It won't be within the -- above the OP line. So it will be outside this OP target under this enormous pressure. So a part of what should have been processed was not something that was executed within that given fiscal year. That's what I mentioned.

So whether everything is a result of the accounting misconduct or not, it's not clear. However, as a result of all of these activities, there were legacy liabilities. However, you are aware of that as the person in charge of the businesses. And therefore, what kind of wording phases did you use to appeal for the necessity to disposal? Can you please explain the situation?

Regarding the situation, including interviews and forensics, this is part of the investigation. Therefore, actually seen and what kind of discussions went on, everything was captured in the report by the investigation committee. And therefore, there's nothing I have to add or I can add.

[Operator Instructions] Now the person in the front row here.

I'm [indiscernible] from NHK. Thank you very much for including Mr. [indiscernible] There are 4 people who resigned the company. But this time regarding Mr. [ Kobe ], based on the points identified by the third-party committee Mr. [indiscernible] should be regarded that he was aware of the misconduct, accounting misconduct in a planned manner. That's why this treatment was given. However, including other executives and officials regarding the fraudulent accounting as well as the recognition of those misconducts, did they recognize all of them, or because there are high involvement, and that's why these people had to design the company.

Thank you very much for your question. Regarding the report issued by the third-party committee, if you see the actual name, all of them are basically the executives and therefore, nonexecutives such as the officers, I cannot explain the specific descriptions.

if you see the actual NIM, all of them are basically the executives and therefore, no executives such as the official officers, I cannot explain the specific descriptions.

However, as the executive side, we reviewed the content of the report. And based on that, we made this decision, and we have shared that decision today.

Thank you very much. The other point, regarding President Kishida, you met the recommendations of again to Mr. Nagamori. and despite the repetitions -- recommendations, although your requests were turned down. And therefore, how did you feel back then after being turned down your request, there's nothing conducted. And therefore, even though the kind of the objection position to Mr. Nagamori's intention, however, you had to proceed with the proceeding according to the report by the third-party investigation committee, what did you think -- what do you think.

Thank you very much for your question. Right now, I will deeply regret that I should go furthermore because for 4 years after joining Nidec, I tried to normalize the asset quality of the company towards the future sound operation of the assets. And I'd like to lay the foundation for the future growth. However, every time, everything I tried to do, that was not executed.

In addition to that I had to go deeper to give the [indiscernible] insights. And then probably I should have been able to do something more. This is very regrettable in order to prevent such things from happening in the future. I'd like to make my resolution on me.

Thank you very much. Now the person over there in pink shirt.

I am [indiscernible] from [indiscernible]. Now regarding the selection of Mr. Nagamori is to nurture the copy of Mr. Nagamori, and that is the process for promotion and that concept is represented by a president Kishida sitting over there. So the -- because there are many many Nagamori or copy Nagamoris mainly the executives and officials and then there are many people still remain in the company. And therefore, I wonder whether you can be eliminate all of the misconduct, including for the accounting. And there is no more. Mr. Nagamori still needed can maintain high profitability by growing further more, both at top line and bottom line.

Thank you very much for your question. I take the situation quite seriously, of course, the company should be business concerned and therefore, can be eliminated. And is so totally to move on to the next step, it's impossible because there are something we have to inherit, especially in the manufacturing company, and therefore, we have to make good selection and the concentration to determine what we have to take over.

And then I believe we can achieve the high profitability I myself would like to stick to that concept. And then I believe we can Nidec highly profitable company once again. So you have to set a high target otherwise, you cannot expect the growth. And therefore, how you define the high target regarding our growth if the target is high enough, can we achieved at the high side it no way because of the [indiscernible] among manufacturing company, and therefore, we have to sophisticate our technology through the discussions and dialogues with our customers. And then we can generate something new, totally new, that has not yet existed in the world. And we have to generate such mobile products.

And in order to do that, we have to develop our technologies and human talents. And then I believe that Nidec can be highly profitable company after resource. It's interesting. However, there were many impairment loss related to the automotive business. I believe this is actually related to e-Axle. And therefore, what is the actual station of e-axis right now.

Eastern [indiscernible], however, you have stopped new development. I don't know whether it's stacked or not. But right now, this e-axle as part of the automotive business, can you please explain that because we see so much development in the EV and did you see the sales increase or the increase of the production units, there was no such announcement. And therefore, I'd like to know the current status of the e-axle.

Thank you very much for your question. There are mainly 2 sites for the businesses of the e-axle. One is at the joint venture or NPE. This is a joint venture with the strategy, where the manufacturing and the developments were done for e-axle. The other side is the joint venture by the consortium [indiscernible] in China, we call this company [indiscernible] so joint venture of [indiscernible] is the other manufacturing site for e-axle. Now regarding the production in China, as of today, Japanese company related to the joint venture we on a Chinese company. And then right now, production level has been stabilized, and therefore, based on this site in China, probably Japanese company or Indian company can be a banner to develop new products for our customers. So you still work on new development. Is that right? That's right. We don't discontinue the new product development.

Thank you very much. Now the person in the [indiscernible], over there. Second from the right.

I'm [indiscernible] from [indiscernible]. Now first of all, as you mentioned, there were 5 officials resigning with the company. then because there are influences -- negative influences of the corp culture will be huge. That's why the company has determined to ask them to leave the company. Is that right?

Yes, the people who resigned the company this time as a result of our managerial decision because the influences are quite huge, regarding the selection of the business, they have had high influence of the businesses and in order to change our operations in a new way. Their resignation is essential, and that is the business management by considering many things comprehensively.

Thank you very much. Now next, I'd like to ask about the future generation because pruning may happen. However, thanks to M&A, you have grown this much. However, when we the improvement plan, you said regrettably that management of many, many days were poor. And therefore, for the future, you have to be lean and do you do anything to be a more lean organization, including BUs and the sites?

Thank you very much for your question. I believe previous question is quite similar to yours. In our midterm plan, for the bigger scale, M&A and further growth should be there. But before that, we have to integrate and eliminate unnecessary manufacturing on the site and the business is to be more lean. In addition to that, we have to make a system investment. And then we can put together necessary information that should be the basis for the future growth. That is our intention. And you can see that policy in the report or even after receiving the investor committee reports, this policy will be maintained. And then when I look at the message, Mr. Nagamori as the Chairperson Emeritus. He will work on the shipment development as 1 of the frames. And therefore, at Nidec, he will still be involved in the human development or there's no involvement, how Mr. Nagamori will be involved or not involved regarding the human development at Nidec, not their intention. He has schools and educational organizations. And therefore, we assume that he will focus on these institutions, not Nidec.

Any other questions? Yes, person in the fifth row on this slide, thank you very much for raising your hands.

I'm Nomura from TV Tokyo. Regarding the recognition for awareness, the accounting misconduct, [indiscernible] was described as he didn't recognize the misconduct -- the attending conduct, but another [indiscernible] Mr. Anabara, is that to suppose that you didn't recognize the accounting misconduct that and how you should assume the responsibility as executive.

First of all, I'd like to answer to your question. And after that, Mr. Nakagawa will answer to this question. First of all, to me, I believe I have to assume the managerial responsibility regarding this time scandal, I'd like to give a much deeper thought to take actions or I should have to get enable deeper to take appropriate actions. And therefore, including this regarding my own policy. I, spontaneously or voluntarily return my remunerations 100%. Still, I'd like to get involved in the management of this company. Now Mr. Nakagawa, please -- accordingly, please the report.

Yes, there has been the huge pressure imposed to [indiscernible] of the employees. However, I didn't -- don't have any personal recognition of this accounting misconduct. I tried to reduce the financial costs as main activities to the financial personnel. And therefore, I was immune to that increase, I was immune to that pressure. Thank you very much. It's my turn, I don't have a recognition of accounting misconduct regarding the pressure for the business performance. Yes, I'm aware that pressure to better performance was very strong. However, whether that related to the attitude of that or not, be of that pressure. You mentioned that there has been strong pressures across the board. But to you, what can the prefer your exposure to, including how you feel at that time. Can you please share the specific wording and how you've felt because I'm a member of administrative department. Therefore, I don't have a direct pressure regarding performance. However, every year, I saw that not all of the business units have to set up really high targets each year. That's how I feel.

Thank you very much. I see many people still raising their hands, but I'd like to cover you call by [indiscernible]. First of all, the person in this role, please?

Thank you very much. I'm Yamamoto from [indiscernible]. I'd like to ask 2 questions to Mr. Kishida. First of all, toward October, fully for asking qualitative questions, but are you sure that you can get away from the current status in October. Now regarding the cultural change, is the really hard to capture it quantitatively. And therefore, how the organizational structure should be and how the corporate culture changes, not only the structure, but also you have to work that all and how do you take it? Just 1 question.

Thank you very much for first question. When it comes to the date October 28, we will make sure to achieve our test by that [indiscernible]. There are quite of a you heard us go over [indiscernible] ago, but we need to cooperate to working together with [indiscernible] concerned as we go towards that goal. We need to change our culture, corporate culture as a company. It will take time. I do realize that. First of all, in our improvement plan, and to a towards the line of October 28. On the next 8 months, there are things for Nidec dnegative, and there are quite a few things for us to do in the next 2 to 3 years. We have -- we need to make such a road map and we need to share the other map of family among those concerns. And that's what's important, in my opinion, and we need to visualize status we like to share information with everyone involved in this process.

Thanks very much. And I would like to do my previus speaker's question. You need to bring som masculinity. You make your organization stronger. You -- as necessarily, you borrow with some capabilities, some help from the outside. Do you already have any specific plan for that in our regard, we have gone through M&As, and we have constantly been growing as a company in the history of our company, Nidec, address during this time, we need to be firmly steadfast and committed to our belief to understand what we need to do.

We need to introduce our new ROIC system based on that perspective as well. We need to review our management system. And we need to make sure to work on those various actions are you going to differentiate the core business from non-core businesses.

Yes, exactly. As part of our midterm business plan, we have core businesses and non-core businesses. We have future hurdles go over. We need to understand what's only profitable as businesses beyond that, as a manufacturer, we need to understand -- we need time anticipate future. And towards our future goal, we will make firm steps going forward.

Thank you. From your right and the person over there at the far right.

This is Naito, Citigroup. I'd like to give you 2 questions. First of all, with respect [indiscernible] message in it, what was the problem with the business unit. What will be your opinion for improvement. According to [indiscernible] this company's report and improvement and at the major product lies with the [indiscernible] business unit. We have been tracking [indiscernible] business unit [indiscernible]. Do you think you have to make or down at the revenues about MX profitability? What will be the major reasons for the current struggles that -- of this [indiscernible] business unit. Well, what's the reason for you to have to have incurred negative legacies. Can you provide us with your opinion.

With respect to AMC automotive motor business the scales of investment is huge compared with the other businesses. No financial impact is huge at contains to be regarded as issue generators problem generators. They are in a very -- currently very exterior competitive situation. In the past, we have been trying to reform the business business net and [indiscernible] business unit and we are continuingly making efforts to improve the business as a motor business we have automotive motors.

You have to have high-quality motors, high quality performance level performance as well. Technological is very difficult to make these automotive [indiscernible]. We will continue to produce those more strict gigawatt done more to certificate met. That will be part of our product portfolio. We need to reexamine I believe the pages company have had some problems in the [indiscernible] business unit. Well, it's not that the M&A has had problems within our practice companies. Within [indiscernible] JPY 250 billion, [indiscernible] is included as of M&A could become 0 in value not only our own business, but there are quite a few protester businesses whose issues have to be solved.

And there was 1 more question, which is related to the previous [indiscernible] question. With respect to cost, it's about strategic investment is very important, as I understand, in order to make ourselves a new report, are you going to make investment in human resources or infrastructure what drive cost increase are you expecting to see occur in the future?

In the end, we need to be able to disclose our midterm business plan. And that will be the right time for us to answer your question in detail. But my gut feeling as of today is that infrastructure investment in human resources, for example, we have more than 300 business entities. We need to consolidate them. We need to educate people to do the right thing when the world class they work, we need to increase our investment in such infrastructure. And that's what we need to discuss internally.

And second person from the right -- the person, fourth person, male.

This is with [indiscernible] news podcasting station. Thank you very much. there's a huge financial impact and that will make a huge impact value in your company as a whole that as you try to repeal Nidec. You may decide to shut down factories. You may lay off people would that be a possibility?

Thanks very much for your question. Production facilities and the large-scale consolidations. We are not making any of that yet. In our day to day operations, we may decide -- we will continue to work on consolidations and improvement of our business is our projects. With respect to business consolidations, portfolio reviewing will take place and we may realize a larger scale of a need for refarming portfolio. We will have no sanctuary as we go forward with our reform efforts.

And a person from there in this row, the third person on the top.

I'm Yamato of PSM. I have 2 questions for you. First of all, after all, what has been done is sacred audit report on stations. Mr. Nagamori this is a [ sacred ] request. There was a person on special missions. This part is very black in my opinion. Nothing is very clear in other words. There are some facts seen here. As of now, as a company, what did you find and put the information do you have about this special mission.

Special Mission audit, I do not know anything about that.

I do not know anything more than reports -- report to us to buy the third party committee. It may be difficult for you, but do you have any plan to investigate into these special audits as a company? With respect to the content of special audit, I do not have any plan or thoughts about it.

And my second question is as follows. With respect to the negative legacies according to your explanation of rhetoric, you did not understand any misconducts. Of course, the special [indiscernible] sales, not everything was a misconduct but with respect to the negative access as a whole, there are quite a few issues and problems.

Mr. Kishida, you and yourself had some very strict. I request Mr. Nagamori, did you really not recognize the misconduct, but did you think that to some extent, such misconducts will be okay. Did you have such a recognition or did you not have such a recognition at all?

And that's a very important point that you pointed out. And in side Committee's report, I am referred to there as one of the individuals to be mentioned in the report I need to make 1 step further -- I should have made one step further to try to address those issues. That's something that I'm reflective of. In order to prevent a request of such misconducts, we'd like to build a new Nidec as a group wide project.

There is one more question from me. We'd like to reprice the question. And with respect to the corporate reform, corporate cultural reform. We have -- I have people from Diamond Publishing and from us Toyo [indiscernible] Publishing. And some of us have been prohibited from contacting you while visiting you and now we are allowed to be here, and we are grateful to be part of this press conference. Are you going to try add to Mr. Nagamori's [indiscernible] was to refrain from communicating with such a highly critical mass media outlets. I don't want to know that Mr. Kishida. Can you ask your opinion about this. It's a very important opinion.

In this meeting as well, we like to have as many people as possible. We like to have many opinions from [indiscernible] as possible as we try to operate our business, that's my strong determination. Going forward, we will like to have opinions for as many persons.

[indiscernible] from Nikkei Business. I would like to ask you about how you recognize the need for governance. In the third-party report, he says up to August 2025. Your power was quite limited. And finally, this year making especially in the personal matters that were given to Mr. Nagamori. For the President and CEO's authority, they were quite small. And did you ever question how about the level of governance? And review and any other management levels ever questions are all the powers considered to Nagamori-san.

I became a president in April 2024. And in June 2024, we became a Representative Director and President [indiscernible] and until August 2025, third-party report states that all the final decisions were made by Mr. Nagamori, that is true. But from 2024 June onwards, I was on enrolled as representative Director, President and Executive Officer so I have no intention to indicate that kind of responsibility in the past that are bestowed on me meaning we're anything small. I do believe that I will [indiscernible] role as a CEO. And in order for this company to truly revitalize itself, I would like it at my all in this effort.

One thing -- this is a question to Mr. President Kishida as well as all the top management levels. Final decisions belong to Mr. Nagamori. That was a common sense. How was it perceived by all. First year of becoming the President is really transitioning traditional year in many ways. I do recognize there were issues in our company. And actually starting to make a change to our internal approval systems. That started around that time. But actually, the time -- that the responsibility that was given to me was not until the 2025 August time. But there has been a discussion how to transition in the past this decision-making power from now to myself. It's been [indiscernible] for quite some time.

So under the new management leadership, how to manage and how to set the right business making authority. And we need to establish operations and systems and processes based on these running.

I am Kishi from major market. Regarding getting delisted. That is an option for some companies do. Then if that's the case, I will think that the investment plan are [indiscernible] based. I wonder whether they are making only special proposals like that. You would like to maintain a position of listed company, but moving forward, I wonder whether you are saying definitely now to go in private. What I can say is upon the filing of the internal audit plan structure confirmation documentations. We are aiming to be designated as the security on a special alert. That is our first priority, and we have no intention of going private at this moment.

Thank you. I'm Kato. I'm free journalist. I have a question regarding audit. First one is in the third-party report. The patent report, these owners report information shared to the audit firms. CFO is now resigned, but in the report says that there are comes like many incidents like that mainstream information [indiscernible] were found from various different parties. And it looks like it's a corporate culture. I wonder how 3 of you have recognized the same. What do you view facing the current accounting firm as an easy target to persuade.

I have no sense like that against the [indiscernible]. I echo the same opinion as a project.

Okay. Another question related to audit. And you have switched from a company with [indiscernible] supervisory board to a company with our committee. 10 years ago, you have the [indiscernible] Audit and Supervisory Committee then they supposed to do our organization audit. Does that mean that shifting to committee level was a mistake for you. It would have been better to depend on [indiscernible] responsibility to a single person, highly independent Board of Directors, don't you think.

I, also, we need to improve my capability not as a member of the Audit and Supervisory Committee and taking on lessons learned from the report of third-party committees, we would like to carry out the various improvement measures to manage this business there.

[indiscernible] from Diamond. I have a question to President Kishida. And regarding your responsibility as a business executive Officer regarding business execution. And you joined Heidi I 2020. Then you became VP or CEO of Europe of Ebix business. And this time, impairment scope, the biggest 1 is against the AMC business. You can be forgiven just by saying no. I didn't know. I think you were in charge of meeting the business target. And I understand that the relationship with Mr. Nagamori deepen only after you stepped up as the president, but regarding your execution responsibilities, I wonder what were the difference between those who resign and you remaining as the President.

I don't think it was something that some people are forcing everyone to come up with those numbers and some are [indiscernible]. I don't think it's that simple. I joined the business actually in 2022, Ever since I joined this group, been proposing very structural reform and try to drive that for myself, too. The first business that I'm doing is Europe, [indiscernible]. And then I was giving a specific path to handle various claims and we've been been continuing to do so until today. And I would like to go 1 step further and to revisit some of the measures that I have implemented. I could have done a step deeper and you start to do it differently. And that's something that I take quite seriously. I will continue to work toward the soundness of this company's assets management and make operations more efficient.

And my second question is related to the first one. From outside perspective, for us, when trying to revitalize a new company, I think it would only make sense to bring in a new person to [indiscernible] organization. But Mr. Kishida, someone called you as a manager of Nagamori. You are appointed by Mr. Nagamori. I think you are considered a person that undoubtedly who helped encourage Nagamori the way he works. So I wonder what sort of feeling do you have against those claims?

I never saw myself as the manager of Nagamori or [indiscernible] of Nagamori. My most important effort is to the designated Nidec stock is currently under security on special alert. And that is the most important theme for our management. That's why I am fully [indiscernible] on achieving.

In this report, there were quite a few hard comments against [indiscernible] Nagamori. And it makes sense because he was head of your organization. But it also can be read as if Nagamori-san is the only 1 who's doing this wrongdoing. What about the response of outside directors have our question by [indiscernible] and what about existing management, including [indiscernible] Kishida, your business execution responsibilities or each business responsibilities had I wonder whether you are purposely directing all the response to be concentrated to Nagamori.

I understand your point of view, but I personally think that this report is not about that only blaming an anomaly. Rather, for us, the business manager, it contains a lot of the ideas or suggestions and improvement made advices. The starting point of the proper accounting practice started from Mr. Nagamori. And -- but regarding company structure and mechanism process and culture, what kind of those things led to incidents were mentioned clearly in this report. So we will take this report of serious lessons learned and try to work as 1 unit, the [indiscernible] company to other to turn this company around.

I'm Kurokawa from Sankei Newspaper. I don't mean to repeat my colleagues' questions. But regarding this responsibility, [indiscernible] committees future activities, and how Mr. Nagamori and how other people who led to improper accounting practice, this committee will in [indiscernible] legal responsibility. And once they were found guilty, is it true that there may be actions taken such as filing a lawsuit seeking damages.

Let me take that question. Thank you for your question. And that is very much the task of the Responsibility Investment Committee, and we would -- the scope is all the Director and Executor Officer of President and the past and including anomaly. And -- what to do with our finding is not yet decided.

Thank you. Now one more question. This is a bit outside my specialty. I hope I'm not asking your question -- complete the time. This first conference started at 08:00p.m. and is already close to 10:00 p.m. Why didn't you decide to start this press conference earlier, it's quite a difficult time for even the media to cover. Why did you choose this late evening to hold its press conference. The other point, I would like to thank you for allowing us this such late time of the day.

And the timing of disclosing this committee's report and I wanted to -- we wanted to have a press conference soon after this kind of official venues to make sure I address to all of your concerning point in the Q&A questions. So we wanted to piggyback 1 after the first from a third-party committee report then our own press release. And I apologize for having you attend to our press conference until very late evening.

Thank you very much for your explanation and presentation. I am Takasago from [indiscernible] device industry newspaper. I have a question from a different angle. Your order taking manufacturing is on track according to your forecast and plan. Okay. So business is proceeding as usual. But regarding CapEx plan for the future, I believe you are planning to spend JPY 140 billion, majority of that is for India. And currently, I think for your plan, you are trying to build 6 new plants in India. And out of that, the 4 plants are already in construction. And there's JPY 140 billion of CapEx budget. Is this something that you are progressing as planned? Or perhaps you are postponing or suspending some of those CapEx plan. That's my first question, please.

Thank you very much for a very important question about our business. Regarding CapEx budget of JPY 140 billion because of the current circumstance. What is most important for us is secure our cash on hand. So right after Nidec stocks being designated as a security on special we have a strict scrutiny of every single investment. So this year, we will not be able to exercise our entire JPY 140 million on CapEx and budget. But within the India's CapEx, 4 plants plus 2 more. Those are AMC business plans for India market and also compressor plants for white goods. Those constructions or studies or land surveys are conducting as planned.

And demand in the India market is progressing as we have forecasted. And we are carrying out the investment to India market as plan. You mentioned that in order to secure the cash, you will spend less than JPY 140 billion CapEx. But of course, you haven't closed the year. So it's quite difficult to ask for you to disclose the details. But to what extent do you spend this CapEx. It's not that we have revised our plan for the entire budget for the CapEx, we haven't suspended any of the major CapEx projects. But we are trying to control that spend, and we would are prioritizing that spend as well.

The other question is related to the auto model business because if you are [indiscernible] in China, [indiscernible] e-axle will be launched in China in 2028 before that in 2027, [indiscernible] will be launched. There were such a specific plans presented that the exhibitions and so on. For example, the [indiscernible] free component in 2028, all of these the market-related plans will go on as planned? Or are there any changes in those plans?

Now let me explain the current set us for the development men. 7 in 1 has already been launched, meaning that it's already available on the market. Then the next item, [indiscernible] item. This is has a really hard hurdle. That's why including research institutes, all of the research activities has gone well.

Thank you very much for your question. Thank you -- the other point regarding the financial statements, when the next statement will be issued according to your explanation regarding the quarter 3, that's on today's press release. That's all. And then we have to wait for the shareholders' meetings related for June. And then we will see more information related to the financial statements. Is this understanding or correct? Now I would like to ask Mr. [indiscernible] to respond to that.

Thank you very much for your question. Regarding the third quarter, its estimate not to finalize financial statements. And therefore, we would like to share the revenue and the profit at the [indiscernible] official report. Therefore, please wait until the end of March because we will close our books. And then usually towards the announcement in June, we prepare for the official financial statements, and we'd like to follow this time line.

Thank you very much. It's only passing the 10:00 in the morning. And therefore, we would like to take this question as the last question for today's press release conference. Now on the right-hand side, the person in the front row, please.

I'm [indiscernible] from [indiscernible]. Those who resigned including those people, how you take the legal responsibilities. They accruing responsibilities or civil responsibility.

If you want to mind, [indiscernible] would like to respond to this question. Yes, we have to post all the possibilities. So including criminal procedures, yes, the criminal cases should be incurred.

Now next question is related to the impairment loss because you mentioned that the amount would be around JPY 250 billion but is that possible that impairment loss will be low.

Now regarding JPY 250 billion Jaeson, this amount. If I start answer to this question, is the amount subjected to the impairment loss. And therefore, yes, it can be [indiscernible]. However, again, as we explained, we needed to go to duly processes to finalize the exact amount for the impairment loss.

Thank you very much. Now how about you, the person on the back.

[indiscernible] from [indiscernible]. My question goes to present side because I'd like to know the relationships with end and the accounting firm according to [indiscernible] by the third-party investigation committee, the explanation shared with the accounting firm was different from the fact and inconvenient truth was not shared versus the accounting firms according to the report. This may be the problems on your side. On the other hand, regarding the accounting conduct count is more than 1 [indiscernible] as you found in this investigation.

In addition to that amount is also huge. Therefore, I believe there must be the problems on the side of accounting firm because they need to do what they had to do as the accounting firm. I assume your accounting firm is PwC [indiscernible]. Actually, this PwC [indiscernible] was working for the KDDI where the misconducts were identified. However right now, it's become a PcC [indiscernible], and that's why they can work for you as accounting firm. Now I'd like to ask your evaluation or assessment of PwC code.

In addition to that, this problem or the scale of the issue is still huge. And therefore, you may want to consider to change your accounting firm? And if so, can you please share your plans?

Thank you very much for your question. First of all, regarding good assessment of our accounting firm, we are not in the position to do that. And therefore, they please refrain from making any comments for that. Because for us, all the time, to accounting from, we have to face the market. We're going to have to disseminate the correct information over the time, this is a very basic point, and that's why we have to go back to this starting point to review our operations and the way we work. In addition to that, whether or not to be direct to change the accounting firm from PwC [indiscernible], no intention of such.

Thank you very much regarding the report issued by the third-party Investigation Committee. It's stated the very aggressive comment. Mr. Nagamori, for example, he said that everyone has not motivated at all and I direct all of them to resign the company. And it's way out of the day, that's why Mr. Nagamori [indiscernible] criticized at the power harassment. Now when you Mr. Kishida looked at the comments and the statements of Mr. Nagamori and his business [indiscernible]. Do you think it's a power harassment. And present Kishida, did you have such experiences regarding the divestment, probably it may be regarded as of the harassment, when I look at these actions and behaviors and statements described in the report. They may be regarded as harassment.

I saw some examples in the report. It's not an investigation for harassment. And therefore, please bear with me of not talking about [indiscernible], how about you, yourself? Me, including myself, e-mail correspondence is described in the third-party committee reports. And therefore, I understood that there were such correspondences via e-mail.

Thank you very much. Now the person wearing the tie over there.

I'm Kane from [indiscernible] newspapers. Let me make a follow-up question. In the improvement report issued in generally, it's not down by only 1%. But due to the corporate culture, the [indiscernible] problems were caused and the most important person who has to have ultimate responsibility as Mr. Nagamori. And then President Kishida when we you may frequently see such behaviors and statements. Back then, did you say that Mr. Nagamori, you haven't done too much or what you have done outside out of the time. Did you make such comments to Mr. Nagamori.

Thank you very much for your question. I myself said in the previous similar conferences, regardless of the cause of the pressure how the person perceives those statements and BS it's very important because [indiscernible] strong the pressure would be how the person should proceed it because that person should be able to change it for the positive way and whether we can do that or not. That is a very important basic point. And therefore, we'd like to incorporate it in our improvement plan, and then we can execute it. Actually, as you saw, whether I myself was exported to the pressure including arrestment in daily businesses. I myself did not have such experiences.

And when I look at the history, long history of the company, I now recognize that [indiscernible] petitions have happened. And I can bet by reading the reports. Now going away from Mr. Nagamori's influence regarding this point. internally and externally, there were organizations, institutions that had to [indiscernible] Nagamori. For example, foundation would be totally [indiscernible] to the businesses. However, there are name included the title of the organizations and institutions. And therefore, in this -- this is you cannot eliminate the image of Mr. Nagamori.

Of course, not you alone cannot do [indiscernible]. However, what to do with those names content. Nagamori, for example, Nagamori [indiscernible], Nagamori Institute, do you [indiscernible] change of the names of those institutions and organizations.

I'd like to ask Mr. Minami to respond to that. Thank you very much for your question. Honestly, we have to post them from now on, doing right. That should be the corporate culture we have to pursue. And the split, we needed to identify what way we have to do and included all of the relevant people in the company, we'd like to determine what to do for those organizations and the institutions.

Thank you very much. Now this will be the last question. The person in the back.

I'm Maoka from TV Asahi. Now I'd like to ask a question to Mr. Kishida because this time report said that Mr. Nakamura engagement was so huge, although he has already resigned the company, however, Mr. Nagamori and Mr. Komori are not here because of the company decision, I assume. And therefore, do you think that is the right decision at the company? How about Mr. Kishida.

Thank you very much for your question. Actually, I how to reflect this. And I said this in the similar occasions of [indiscernible] starting in the April of 2024. I have assumed the position of CEO and Presidency. And therefore, what happens at the Nidec, I have to explain it as the CEO representing the company. Furthermore, regard to Mr. Nagamori is totally irrelevant to the company and therefore, based on the result of the third-party investigation committee what the company is going to do. That is the main objective for this press conference. And that's why I have to stand up to explain it. And therefore, what you said or what you recognize is correct?

Last question. Mr. Nagamori has resigned as the Chairperson Emeritus with the statement, and this statement includes his dreams and hopes for the future. However the scandal happened. And because of these big dreams and so on, these statements do not reflect the regret and do you think that it will be risky and dangerous for the company Nidec?

Thank you very much for your point. Once again to the chairperson person Emeritus. This is the last message from Mr. Nagamori, and that's how our company has perceived and that's why we have disclosed his statement externally. That means that there is no modification amendment after receiving his message we perceive that there is a last message from Mr. Nagamori in the capacity of the Chairperson Emeritus. And that's why we have shared that statement.

Thank you very much. With this, we'd like to conclude today's press conference despite its very late at night, but thank you very much for participation and attention. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Thank you very much for waiting. Now we'd like to start the press conference on the results of Nidec Corporation's improvement plan and the statutory report. Nidec's presenters are as follows: Mr. Mitsuya Kishida, Representative Director, President and CEO of Nidec Corporation; Mr. Kazuo Nakagawa, Vice President and Deputy CFO of the company; and Mr. Masayuki Minai, Vice President and Chief Compliance Officer of the company. I'm Keita Watanabe of Nidec Corporation's Corporate Communications Department.

In this press conference, first, Mr. Kishida will deliver his opening remarks, then explain the improvement plan that the company has announced today, then we will entertain questions. Please wait to ask your questions until then.

Now Mr. Kishida, please.

This is Kishida, the company's Representative Director and President. First and foremost, we must deeply apologize to our shareholders and investors, people of the market, including those of the Tokyo Stock Exchange and business partners for having caused tremendous trouble due to the fact that we had to postpone the timing to disclose our earnings report for quarter 3 of fiscal year 2025 as we were unable to properly disclose our earnings information for this fiscal year and also due to the fact that our stock was designated by the Tokyo Stock Exchange as a Security on Special Alert.

Today, we submitted our improvement plan to the Tokyo Stock Exchange. This plan is intended for a fundamental reform of our internal management system and other elements to have our stock Special Alert designation lifted. The investigation by the third-party committee is still ongoing. On the other hand, we must complete our actions to have the Special Alert status lifted by the designated deadline. We must be reborn as a company that always does what is right. This is why we submitted our improvement plan today as we explained that we would in the month of November, even though the third-party committee's investigation is still ongoing.

Not to influence the third-party committee's investigation, the Nidec Corporate Reform Committee, which prepared the improvement plan, does not handle individual matters. Instead, they use our company's systems, rules, organizational culture and other background information to analyze the causes of our problems and prepares to implement the improvement plan. We were informed by the third-party committee that we will likely receive their initial investigation report towards the end of February.

After receiving the initial report, we will promptly release and explain it to the public. In addition, we will reexamine and review our improvement plan based on the third-party committee's investigation report. Nidec's executives and other employees will stay committed to designing an internal management system, reforming our governance and organizational culture and working on other parts of the improvement plan. We would like to thank you in advance for your continued support. Thank you very much.

Now please allow us to sit as we explain the details of our improvement plan. [ Now Mr. Kishida continues to explain the details of the improvement plan. ] From here on, I will explain the background information about this improvement plan and also, I would like to explain the events that have materialized so far. I'd like to give you a schedule going forward as well.

We established a third-party committee on September 3, followed by different events such as the submission of the Securities Report as well as on October 23, revision of the year-end dividend forecast and the forecast of consolidated financial performance. And we have been focused on doing everything we can as promptly as possible. And on November 14, we submitted our policy for our improvement plan, and we submitted our draft of the improvement plan on December 12, and we submitted our improvement plan today, January 28.

And this Nidec Corporate Reform Committee was established on October 30. We will have the highest ethical standards, and we will prioritize doing what is right as a company. This is the purpose of this committee rebuilding Nidec as the company that prioritizes what is right with the highest ethical standards. And we have the next-generation young employees, and we are making a group-wide and global efforts. Please take a look at the middle section of the slide. We are working on systems -- we like to make sure to prevent all the negative incidents from happening.

Corporate culture. The organizational culture has to be improved. Today, we have gone beyond the various borders, and we have the mid-level employees and others leading all the discussions that were taking place in-house. 13 people are the core of the members of these committees, and we have been working on a global basis. We have established multiple working groups to have engaged in active discussions. And we have lacked such a level of enthusiasm about the discussions, and some people were hesitant at the beginning -- in the beginning, but we have taken enough time to have discussions every day to be able to submit this plan today.

When it comes to this investigation, we have interviewed various people to understand the background information to analyze why this has happened -- the problems have happened. And we also discussed how we can prevent the recurrence of those problems. And this is how our plan was made. We have had the group-wide meeting several times a month. We had the entire floor available for all the discussions so that we can have transparent and honest discussions. And then in order to implement that plan, so we are going to do the monitoring as well of the improvement plan.

And this is the improvement plan. The major points are as follows. On November 14, we had explained about that. But as for the system and process and the culture, so those are the challenges that we have. And we said that we will be challenging those barriers and that we would be having the discussions from within the company. And then we would evaluate the challenges and have the analysis for the 6 major causes of the issue. And we still need to have the research from the third-party committee. But then if those doubts are true that we have about the company, then we should need to have the analysis and the root cause of what has been causing that kind of action, so that we should need to prevent the recurrence of such. And then we should need to implement and come up with a plan.

And then for the improvement plan itself, there are several issues that we had already made public, and then we are putting much emphasis on the doubts coming from within the company so that we can have the autonomous kind of improvement and the measures going forward. And what had started this is the FIR issue, improvement measures and status of the FIR. So about the duties, tax, and we are going to prevent the recurrence of such issues as not paying the proper tariffs. And in order to have the measures, to have the questions regarding the improper tax, we can have from A to F of those suspected improper accounting practices. So those are the improvement measures of 6 ones.

And then we are going to go through the accounting and corporate culture and governance, internal audits, whistleblowing and disciplinary measures and lastly, clarification of responsibilities. So this is improvement measures based on suspected improper accounting practices that we have made as concretely as possible.

And in coming up with a plan, we have in the midterm plan, so that we have the evaluation and then "do it in a bottom-up" kind of a way. And the accounting system, those 6 points about the accounting practices, so that should be independent. And the corporate culture, so that we can have a fair, discreet discussion. Then governance, so that we can have the initiative on a medium- to long-term perspective so that we can have the internal audits on an autonomous way. And then the last one is to have the responsibilities based on the results and implement appropriate disciplinary actions on target individuals.

I would go into more depth about A and B for myself. So A is about plan formulation and performance management. And what is most important is the midterm plan. So the process to coming up with a midterm plan must be clarified. And then on fiscal 2026, the plans for fiscal 2026 should be based on this new process to implement the process and then to get the results. So this 2026 plan, after this, so we had the valuation, which is to say just the sales results. No, not just the sales results, but based on that cash flow and ROIC and then to do it in a correct way, so that we can have the qualitative review of the KPI, so that we can have the valuation and base our decisions on the valuations of KPIs and other measures.

So about the accounting measures, so this should be -- accounting functions should be autonomous. So this is also the issue of the system and about the rules in implementing the accounting. And as for the rules, so there has been many reports that requested for the excluding as the extraordinary, but we are going to abolish such kinds of ways to request. And then we're going to have this issue -- setting up of the rules in a transparent manner. And then from A to F, we would incorporate that.

Then today, so there are question about measures. But since we had not been able to be up to par, so we had vulnerability in the system. So that we really seriously acknowledge this fact so that we want to do it in a correct, right way so that we can have that implemented as the structure that can be actually put in place. And we'll be working towards that end to reform that.

And then I talk about the upcoming schedule. So today, we had put the first report of the improvement plan. And then in -- at the end of February, then we would have the reports about the research conducted. And then on the end of February, we would have the certain report by the third-party committee. And to have the results of the current investigation -- will be compiled and received. And then later on, about the concrete numbers that had been affected by those acts. And on October 28, we have the submission of the internal control system confirmation to the TSE. And the third quarter financial results, so we had been gone over 45 days so that we'll be announcing about the related announcement of the financial results of the third quarter.

Then so the circumstances, the business overviews. And under any circumstances, we will continue to do business with our customers and suppliers wholeheartedly without delay with sincerity and continuity. There are several business overview that I'd like to report upon. So order status, order itself remains quite strong, and there have been no major changes to the production plan. As for the operational status and the AI-related growth and the cooling facilities and also the emergency electric power source and batteries. So we want to have those electric measures that is still having quite strong orders. And then based on that and the facilities in place, so that the production bases are operating normally and have maintained supply capacity.

About the IT and system of the cutting-edge facilities and about supply, we have the United States and India, we are going to have the expansion. And for those factories that are going to be expanded overseas, we are right on schedule in expanding our facilities overseas, in United States and India, as I said. And about -- there's no concerns about the availability of borrowing facilities and cash on hand. And there is no hindrance to business operations. No worries about cash flow. And we have ample cash, and we can have smooth operations that I'd like to stress here. And going forward, the third-party committee research investigation report would be made public, and we would be sincerely reflecting that on the further improvement plans, and we'll be swift in implementing those.

And through a series of initiatives, we will strive to restore trust as soon as possible by improving the soundness and effectiveness of internal management systems and working together as a company to ensure the implementation and operation of improvements towards the de-designation of Nidec stock as a Security on Special Alert.

That concludes my announcement.

We'd like to go to the question-and-answer session. If you have any questions, please raise your hand. Please take your organization's name and your name. As we want to answer as many questions as possible, please keep the number of your questions up to 2. Thank you. Also, this is a joint press conference with mass media outlets and analysts, so we'd like to call on you one by one. And we'd like to entertain questions from media outlets first, please. The first person on the front. Thank you.

This is [ Ashar, Kyoto Newspaper ]. Thank you very much. You have talked about the hearing sessions with the Nidec Corporate Reform Committee. Have you had interviewed with -- Mr. Nagamori as well?

Let me report that to you. And Minai-san will have some additional information for you, if any. When it comes to Mr. Nagamori, he was subject to -- he is subject to the investigation by the third-party committee. So Nidec Corporate Reform Committee is not interviewing him, Mr. Nagamori. Yes, the reform committee is about the process, corporate culture and systems. And they are focused on having a deep analysis of these elements, not on who did what, when, et cetera. Even without those instance by -- caused by these people, we -- this corporation, Nidec Corporate Reform Committee, is to check to see if everything has been okay or not. So Mr. Nagamori has not been subject to interviewed by the Nidec Corporate Reform Committee.

Please go back to Slide #5. This is Mr. Minai speaking. When it comes to the interviews by the Nidec Corporate Reform Committee, as has been explained already, we are focusing on systems, corporate culture and systems, as you can see on the slide here. It is these areas where our compliance-related problems tend to occur. And we have done in-depth analysis to identify problems and issues. And as you can see, you have many working groups here. There is a total of 9 working groups. We have governance, is the first one on the left. And in this group, they are focused on finding weaknesses with our system and what can be improved.

And accounting working group, on the other hand, was focused on roles, operational roles, and on understanding if there is any block -- anything blocking this type of efforts for improvement. And on a group-wide basis, they have -- global basis, they have identified issues and problems.

There is one more question from me. When it comes to this improvement plan, there is some statement about Mr. Nagamori's results-oriented policy. Mr. Kishida, how do you see -- how do you assess Mr. Nagamori? Please give me Mr. Nagamori's pros and cons.

Mr. Nagamori has grown Nidec to be this large. About that, I have a huge respect for him. However, back in November 14, as I've said on the date, it's not about the specific individuals, but when it comes to the organization as a whole, there has been excessive pressure constantly. That's one of the reasons for issues that we have had in our organization, and we have been excessively focused on short-term profit generation. Because of that, we have lacked enough attention on long-term investment, research and development, et cetera. That could be the case. That's something that I'm suspicious about.

So in this Nidec Corporate Reform Committee, they have focused on those issues, and they have incorporated those issues as part of the improvement plan.

Yes. So I'd like to call on an analyst, so somebody who's sitting in the front row.

Yes. I'm from Goldman Sachs. My name is Takayama. And initially, the reform plan that you have put forward now is from the third-party committees. They have not grasped the details of that, so that -- you don't have the backgrounds about that. But after the February end, and you're going to have the improvement plan after the report on that, then there's going to be something that's very different. And then you might have to do it all over again? Or is there any kind of consistency or the framework that you have continuing or -- so to the TSE, well, so it's going to be de-designated as the stock on Special Alert, and then you are going to have some kind of a goal. So that you want to have?

And about the third-party committees and the reform plan, how kind of a balancing do you have on that or coordination you have on that?

Thank you for the question. So during this activity with the third-party committee and also the TSE, we are going through the exchange with them. And from the third-party committee, yes, on the end of February and also the numbers report, yes, we are putting forward that after end of February. But after that, well, the real question is how do we acknowledge the challenges that we are facing? And in any case, we are going to be asked about that. And this improvement plan that we have put forward now, so that, of course, we had reported to the third-party committee, and based on that, we are going forward with this.

And as a company, it's not that we will be having a completely different report or plan. But of course, that is going to be based on the third-party committee report. And then we are going to have some additions to that. But this is what we have put together as what we acknowledged.

And as for the TSE and after the October 28, after we had been designated as the Security on Special Alert, we had gone through the draft and the basic plan, we had exchanged with the Tokyo Stock Exchange about that. And now we are in this position today. But about the facts that we had put forward, it's not that it is complete or it is perfect, so that we are going to improve what we should improve.

Yes, if there is anything to add from Mr. Minai?

Yes. What I'd like to supplement on that for myself is that the third-party committee, so the autonomous or the independence, is assured on that. And then after the interviews, we had noticed the issues that we had, and we had already reported to the third-party committee. So that the third-party committee had listened to us and our communication. And it is -- well, finally, how they're going to make a decision is up to the third-party committee to decide. But as President Kishida had said, so the final report, if there are issues that are lacking or the issues that are not complying, well, we would speedily receive that sincerely. And then after implementation, if there are problems that have not been corrected, then we will be having opinions from others so that we can have a better improvement of us.

So the third-party committee, of course, you're having a communication. So maybe you cannot have a very detailed communication, but the issues that you can think about is out on the table. And from the third-party committee, probably, would have a more detailed -- but this is some kind of a best guess that you have put forward. Is that the correct understanding? So is it within the framework?

I don't think I can say that from myself. But at least from us, we had acknowledged what are the issues. Well, we cannot correct what we don't acknowledge as issues. So those things that are in front of our eyes, and we tried to put forward all the kinds of issues that we have, and this is the report that we have come up with, try to incorporate as much as possible.

And another question from the financial industry. So I think it's about the business performance. And second quarter -- up to the second quarter, is the numbers that we say, about JPY 57 billion operating profit. So this time around, and if the business performance goes back to normal, so I think the -- your real business performance does not contradict that or -- that much. But for the corporate bond -- sorry, the automobile vehicle-related business and electronics -- so the electronics, so we can have the JPY 57 billion cash flow. So do you have the actual power? Or -- I don't have the numbers, but I want to confirm your real pillar of performance.

So the road map going forward is going to be the financial reporting at the end of March, and then you have to have -- within 90 days, it means end of June, you have to do reporting. But until that time, so that you have the numbers from the past results. So that you want to go back to the correct advice, so that we can have this accounting for the fiscal results and also to have the guidance for the future performance. So is that the kind of a road map that you have in mind? Is this the correct understanding?

So I think you have 2 questions. So first is about the good parts, so that I had given you several examples, but what about the other businesses and the schedule going forward? So I think I would look to that. And then after, the schedule. So Minai-san and Nakagawa-san will talk about that.

And also the performance of the business, well, the -- including vehicle automotive-related business and also the household electronics. So we have the business plans and the structural reforms. So we are already planning that. And aside from that, we have the schedule on time, yes. And that I'd like to report to you about. And also about the vehicle automotive-related business is a very severe marketing. And not everything is going on schedule.

But -- the structural reform. So structural reform and also to change the structure. So those initiatives that we have carried, yes, we are doing on our plan. So maybe Mr. Nakagawa can tell you about that.

So I want to supplement about the schedule. And so we have the third-party committee, and third-party committee is trying to get at the root cause of the problem, but it's taking much time. But it means that everything that we should have the issues and to have the financial reporting so that we need to have the audit, and it is a very time-consuming process. So that's how we feel about it.

And about the audit, the PwC, that is the auditor, says that the third-party committee results, they would acknowledge. And then we'd have -- we evaluate the risk evaluation. And then they would decide on as to whether they would have to do additional auditing or not. And as for the result, it depends on how it is on the issue, but I think it will take more time. And in any case, the third-party committee, we would need to ask to have the results from them and then look at the issue once again and then to have the results shared with you.

A person in the white dress over there.

This is [ Se of Asahi Newspaper ]. I'd like to give you my first question as follows. When it comes to the analysis of the causes of the problems, you talked about the some business plan was made to expect Mr. Nagamori's expectations, and you were not allowed to deviate from Mr. Nagamori's expectations. You have had some midnight meetings, trying to keep up with Mr. Nagamori's expectations. And when it comes to M&As, Mr. Nagamori and a few people would only know about those upcoming M&As. Those lessons were described, and that's something that I can evaluate positively as a journalist. But back in 2022, I believe you joined Nidec, have been 4 years since then. And over the past 4 years, Mr. Kishida, have you seen this company, this Nidec, as a company? And how do you evaluate the Nidec so far?

And I believe you have been in a very close communication with Mr. Nagamori. But did you realize all those problems? And did you raise those problems to Mr. Nagamori in the past -- over the past 4 years? And can you evaluate yourself?

Thank you very much for the question. Including myself, the third-party committee has been investigating various people. So I would like to wait for the report to be coming from the third-party committee. In order for me to look back my past, over the past 4 years, I myself have been actively engaged in improvement activities, in my opinion, but we would like to have some opinions of the third-party committee about these activities.

So in other words, you cannot answer the question at this moment. Is that right?

I don't think I have been able to experience everything about the Nidec over the past 4 years. I'm not going to make any excuses about it. I, as an executive of this company and over the past 1.5 years as a President, I have been managing this company. Therefore, I'm not going to make any excuses in any area. So I believe including that point, I would like to have third-party committee evaluate everyone and everything, including myself and my job.

Here's my second question. The other day, Mr. Nagamori retired from the office of the Chairman of the Board of Directors, and he issued a handwritten message to the public. The public's evaluation of Mr. Nagamori is that he has been at the top for a longer time. So before the third-party committee came out with a report, he resigned, but he should have explained many different information before he quit. That's, I believe, is public's opinion. Kishida-san, what do you yourself think about Mr. Nagamori's resignation as well about Mr. Nagamori's promoting himself to the position of Chairperson Emeritus. After the report is issued, I believe there is some disciplinary actions to be taking place, including Mr. Nagamori as the Chairperson Emeritus. Would you say that he, Mr. Nagamori, himself will be subject to disciplinary action?

Thank you very much for your question once again. With respect to Mr. Nagamori's resignation, here is my opinion. And when it comes to the third-party committee's report and thereafter, what's going to happen, that's your second question, I believe. When it comes to Mr. Nagamori's resignation, Mr. Nagamori has made some comment upon resignation, including corporate culture, everything is at issue at this moment. Many people are talking about it, and he feels partially responsible for having fostered, nurtured such a corporate culture. And we accepted Mr. Nagamori's offer of resignation as it was submitted to the Board.

When I became President of this company in 2024, we have started taking the responsibility as the management. And Mr. Nagamori is no longer a part of the Board of Directors, and all the responsibilities are now upon our shoulders as the company's management. This Chairperson Emeritus is just honorary position without any responsibility about the management of the company.

Mr. Nagamori, will he be subject to the disciplinary action by the third-party committee? The third-party committee is not going to specify any individual. All the people will be subject to the assessment by the third-party committee. And the actions will be all the people, not just Mr. Nagamori. Nagamori-san is no exception. No exception exists. Everyone is subject to the assessment by the third-party committee.

All right. Next to analysts. Yes. So the person raising hand.

I'm from Morgan Stanley. My name is Sato. And first question is, on September 3, the setting up of the third-party committee. Before that, so the Chairperson Emeritus, Mr. Nagamori had the NKK conference very frequently, I understand. But the third-party committee, after that was set up, then what has happened to that kind of a meeting. And now what is the communication of -- what is the exchange with the Mr. Nagamori after he became the Chairperson Emeritus? So he has 12% of shareholdings since he's founder and as the stockholder, Mr. Nagamori and this -- how do you have the communication with the Chairperson Emeritus, Mr. Nagamori, as Board Directors and the management?

Yes. Okay. So I would be answering the question and if necessary, Mr. Minai would be supplementing that answer. Well, first of all, on September 3, after the third-party committee was set up, so NKK was continued. But then on December 19, after he had retired or stepped down, we had stopped this NKK. And this communication, we have not had this kind of a -- constant kind of a communication.

And then as a large shareholder, how do we go about it as management? Well, Mr. Nagamori, now, in the present day, has no involvement to the management of the company. So he has no power or the responsibility so that we don't communicate to him about the management. But for a very long time, so for all the shareholders, we had been corresponding them. And as a stockholder, yes, of course, we would continue to have relations with him. And for the other stockholders as well. So it's the same kind of a correspondence that we'll be having as one of the shareholders to Mr. Nagamori.

All right. So the second question that I have is about 2015. So the Toshiba had the third-party committee. And then before the report came, 2.5 months had passed since -- until the report came out. And then about the past performance, so it still took 1 more month in order to come up with the financial reporting. In your case, so the third-party committee, the first report until that comes out, so the 6 months, why did it necessitate so many months. So what was the backdrop? What was the background to that?

Okay. So first, Mr. Minai would be talking about that. And then if necessary, I'll be supplementing.

Yes. So I myself, Minai, will be explaining about that and [ in one word ]. So because there was so vast amount and -- vast length of time that had transpired so that we needed time to look over this. And for the global, 300 bases we have and the 300 corporations, we had to evaluate and to look at it as something that needs to be corrected. And then in the past, 5 years -- no, 10 years rather, so that third-party committee said 10 years is going to be the subject of the scope of the investigation. So if there's anything improper going on, they needed to look into it. So in doing so, for the global basis, we have this possibility. So since we have this third-party committee in place, so that we should investigate in detail to all the basis so that we can become accounting that is relied upon reliable, trustworthy to everyone.

Yes. No supplement from myself. Thank you.

Next person from the media outlet, the person right next to the previous speaker.

This is [ Kodai ] of Nihon Keizai newspaper. When it comes to PWC Japan, I would like to ask you a question about it. When it comes to PWC Japan, in securities report for this fiscal year as well as they continue to have the disclaimer of opinion. And [ Minami-san, ] the Chairperson, says and that the -- there is a very heavy comment from the person saying the disclaimer -- about the disclaimer of opinion and PWC cannot express their opinion about Nidec's financial report because Nidec has not been able to provide them with very sufficient opinions. How do you think about the disclaimer of opinion by PWC Japan?

Nakagawa-san will -- Mr. Nakagawa will explain -- answer the question.

We are having the communication with PWC Japan. As an audit firm, they would like to wait for the report to be coming from the third-party committee. And they have -- the PWC Japan has this disclaimer of opinion. We have information disclosed about it. At this moment, we have this third-party committee in place. And that's one of the reasons for the delay. PWC Japan is waiting for the activities to be completed by the PwC Japan.

When it comes to PwC in Japan, we are not in a position to answer any questions regarding PWC Japan.

Here's my second question, which is about Mr. Nagamori, who is the Chairperson of Emeritus. As has been -- the previous speaker asked you, he still have this -- a little more than 8% of the entire share of the Nidec Corporation, and he -- no one thinks that he is totally away from the Nidec's business management. Would it be possible to delegate Mr. Nagamori's voting rights and the shareholding ownership to a third party? Would that be a possibility?

Mr. Nagamori is now no longer a member of the Board of Directors. He is not involved in Nidec Corporation's or Nidec group's business management anymore. He is one of the shareholders of our company. And just like any other shareholders, we will continue to have dialogues with the shareholders, including Mr. Nagamori as a shareholder.

All right. So we'd like to call up on analysts. All right, so please.

I'm from Mizuho Securities. My name is Goto. And one thing I'd like to ask is, well, so that you had analyzed the root causes, so that you had listed the challenges, but at the same time, so the management system that had occurred in the past, there were some benefits from that also. I think that must have been the strength in the past system. So if you're going along with the improvement plan, so how do you treat the parts that were good that were -- and then I think this kind of reform would warrant everything in the past to be changed, but I think there has been some good point from the past practices.

Yes, thank you for the question. Yes. So now in a time like this, in order to do something, then we lose something, but then this is a recurring theme. But first, I'd like to say we want to do everything right, and that should be the focus and that should be the central issue. So if there's anything that can be lost, then that is something that should have been lost. And first and foremost, we have to do things right in a correct manner. And that is the focus of our policy. Thank you.

Person from the media outlet. That person, second from your right, the person there, the fourth row.

This is [ Kanai ] of Yomiuri newspaper. You are having this cause analysis, and we have this very detailed analysis performed already. But among the Japanese companies. And there was a very strong leadership at the beginning of your company's history. And you have showed a very strong profitability growth. And I believe there has been a tendency among very -- many different Japanese companies. And among the Japanese executives in your company, I believe, in your company's executives, many people have been having some issues in my mind -- in their mind, but what is the difference between your company and other companies?

When it comes to corporate culture, corporate culture is different from company to company. So I cannot really overgeneralize about what's good about Nidec and what's not so good about Nidec. I cannot say that.

What we need to do is to launch a fundamental reform as part of the activities to be exercised by this -- the third-party committee. We're going to go into the next phase of our company's history. We, ourselves, are the ones who are going to make changes. And the future Nidec will be created by us. The basis of the future creation has to be studied by us. We need to do everything in the right way all the time. That's the type of new corporate culture we would like to establish.

And there is one more question from me. When it comes to the results of the analysis, I believe everything has started with this suspicious, inappropriate, improper accounting practice. Turnover ratio could be the one issue and relationship with the subsidiaries is another issue, excessively aggressive price negotiations. And there could be various factors like that and there are some opinions expressed about aggressive price negotiations, but what is your opinion on those points?

I cannot give you any specific examples on this occasion, but those things have been a part of our corporate culture, I believe. But at the same time, I would like to say that we like to establish a corporate culture in which anyone can say anything about anything. We would like to improve our whistle-blowing system, so that someone experiencing trouble can report such trouble to other people. That's the part of the basis of fundamental reform that we like to achieve, system and the culture of what we would like to establish as we speak right now.

One more thing that I'd like to check with you. When it comes to the third-party committee, is it focused on accounting issues or is the focus on any other issues at all?

This is Minai. The third party committee is focused on accounting issues only.

Yes, from analysts, anybody? Yes.

Yes, from UB (sic) [ UBS ] Securities, my name is Hirata. You said about the schedule going forward. I think there was a question. And I think I'd like a comment on that. And the audit committee, so for them to give the report, it takes some time. But at end of February, there is going to be a certain report from a third-party committee. And then you are going to have the assessment of the amount of money that's impacted. But then the timing, when is that going to be? When can we assume that to happen? So that the first stage, the February end, is that going to be a press conference style so -- that you'll be releasing?

Yes. Well, as of February end. After that, well, how are we going to cope with that is -- I think that's the question that you're posing, but we still have not -- we are still not prepared to answer that. But based on the February end report, then we would make it public, and then we would have the press conference. So that's something that we have in mind.

All right. The person from mass media, the person wearing glasses.

Yoshida. This is Yoshida from the Market News. I'd like to give you a question from the previous press conference. When it comes to M&A, you have frozen M&A projects at this point, but is the situation remaining unchanged? And what specific conditions? Do you still have the M&As frozen?

Well, when it comes to Slide #25 of the report, which is something that another person has just mentioned, a person has dominating the documenting and there has been insufficient portfolio-based analysis. Mr. Nagamori has been engaged in M&As so far, and he has been leading those efforts. He has led those efforts in the area of M&A. Do you think you should make some reform in the area of M&A? Or are you going to make any slowdown in your pace of M&A going forward? What is your strategy about future M&A as Nidec? Are you going to slow down the pace of M&As? Will we be able to see any changes in your company's M&A strategy?

This is something that I've talked to in previous press conference. When it comes to M&A, dividend has been stopped. It's now down to 0. There is no chance for me to make -- launch any new M&A. The situation remains unchanged. For the time going forward, we haven't decided anything about the future of M&A strategies of Nidec. We will continue to have discussions constantly.

I'd like to make a follow-up question. When it comes to this report, there has been some issues -- seems to be some issues with M&A according to this report. Are you going to make any corrections about the M&A strategy of your company?

Not just M&A, but we would like to cover all the different management-related issues in the meeting called Executive Management Meeting or EMM. And that's the type of change we are going to make, and the way we hold the meeting is going to change going forward. Thank you. Thank you very much.

Anybody else who has any questions? Yes, so that -- the person on the right-hand side, so the second row from the front.

Name is [ Anri ] from TV Tokyo. So first question is to President Kishida, and the improvement plan, looking at that, so it seems that there has been issues in many places. So from the top down or the governance vulnerabilities. So there has been issues in a wide variety of things. So what did you think, honestly, looking at this?

And related to the last question, so about Mr. Nagamori, how is he going to be treated? So about the improvement plan. So it seems the corporate culture kind of a top-down has been an issue. So I guess such kind of background. So Mr. Nagamori, what about the significance of him remaining as the honorary chairperson or the Chairperson Emeritus?

So as for the first point, well, in November, it has been continuing that -- I had been stating this. But the challenges facing us is the system based and the processes in the system. And everything that is surrounding that is the corporate culture. And we had set six issues is system, process and corporate culture. Those can be cumulated as such. And then this kind of root cause, we have to touch on those root causes of the issue. So whether it's time consuming, we have to challenge that. Otherwise, the corporate culture would not change.

And we had been going forth with that. And in this discussion, we have seen those root causes. So how do I feel about it? No, it's not that way, but those are the very basic root causes. So we should grapple with them. So that's the acknowledgment that has not changed from me.

And as for Mr. Nagamori, how are you going to respond with him? So he has retired from the Board of Directors, completely retired from the Board of Directors. So he has no involvement in the management. So it's just an honorary position.

And another question I have is about the midterm plan. How do we go about it? And the improvement plans says the midterm plan, thinking itself should be changed. And then -- so fiscal 2026, yes, we're going to change. But changing the way of thinking. So the midterm plan, so compared to what is now revealed, is it going to be more conservative? So can you talk to us about the thinking itself?

So it's not that I can comment on how the figures would be, but basically speaking, already, we have the conversion 2027. This is the midterm plan, the conversion 2027. And in this midterm plan, what we had planned to grapple with, so we have 200 bases worldwide -- or the more than 300 corporate -- corporations in Nidec. So what kind of governance should we have with them? So this is something. The direction that we are taking is not changed. And what's happening right now, well, we will be talking about the thinking -- way of thinking or the way of corresponding and then the figures can be changed based on that.

So I want to confirm with you about changing, the direction that you'll be taking. Is -- the governance will be more strengthened, but then it seems that the number has to be affected, but how do you think about that?

Well, so about the numbers, should we be more conservative about it or would that we would lower numbers? Well, we are not in a position to be able to comment along those lines, but we want to realize this. So that kind of numbers that can be realized. That's what we want to do.

We would like to entertain questions from the entire audience. The person on your right, the person from the third row from the front, the person in the middle.

This is [ Hiroko ] of Nikkei newspaper. You have talked about the management of the Board of Directors in your presentation. You have some people from academics. You have some people from the administrative organizations. How come you -- these people were selected to be on the Board? And now what has been an issue with the Board of Directors, Mr. Kishida?

Thank you very much for your question. Any organization needs to be improved, reformed, in my opinion. Once you make or create an organization, the organization will not last forever, in my opinion. Then this -- our company's Board of Directors is no exception. The Board of Directors has to be improved constantly as well.

When it comes to the configuration of the current Board of Directors of our company, we have a group of people from academic areas and the mapping, et cetera, has been taken into consideration when it was established. When it comes to the experience in business, we have a very limited number of people on Board with the experience of -- from the business front line. We -- this is part of our reform.

Related to that question, in June this year, you're going to have a shareholders meeting. Are you going to narrow the number of the people to be selected to be the Board of Directors?

I would like to have Minai-san answer the question first, and I'd like to add some information later.

We have a nomination committee in place in our company. And we have outside of members of the Board of Directors, having discussions on that point you have mentioned. And it has -- including in our reform-related document. Towards the June shareholders meeting, we have -- having discussions on those points. I don't have any additional information there. Thank you.

So anybody with a question, please raise your hand. Yes. All right. So the person in front, yes.

From Kyodo press, name is [ Goishi ]. And about Mr. Nagamori, so I'd like to ask you repeatedly about this question. So he is Chairperson Emeritus, but then concretely, what kind of position? So like how many days per week does he come to office or what kind of involvement does he have with the management? Can you tell us about that?

Yes. So December 19, he said, and we announced that he would step down. And then within the year, so he had come to the office. But then after this new year, he has not come to office. Then within the company, he does not have any communications within the company. So he doesn't have the management responsibility. So he is in an honorary position that does not have any responsibilities. So that's the kind of position he is in now.

I understand. And a related question. So you said that somebody else had asked this question, but -- so it's really a sudden resignation. And after that, is there any detailed explanation from Nagamori-san?

No, I don't think so.

So is there going to be occasions that he can give a detailed explanation? But then if he's not going to do explanation, then how do you see it, President Kishida?

From '24, so the management -- well, I'm in the position as the CEO and the leader of the company and after December 19, he had retired from being a Board of Directors. So about the management, so I don't think that there's going to be a comment on the direction or the management of the company. So based on the questions from you, so that we would receive your questions, and then we will be moving forward. I think that's something that we should do.

Person whether -- the person in the back, the person wearing the hat.

This is [ Miyajima ] of [indiscernible] when it comes to this analysis page over here on the page, there are quite a few issues pointed out under the fifth point, I believe. And have you checked the background information? It's not just an interview. Is that right?

Minai-san, can you answer the question?

Yes. With -- this is a result of interviews, hearing sessions interviews. And these results are based on the interviews conducted to our Nidec group employees. The third-party committee is checking the facts about -- related to the issues that we have recognized. To be -- frankly, this is like an absentee court case.

This is a very one-sided communication, and I understand that some kind of [ journey or ] dictatorship has happened in the past in your company. When it comes to Slide 26 is a monthly report where in detail, but from a certain point in time, and it was converted into a quarterly basis. Here, this is a financial actual value. At the time, Mr. Nagamori didn't make any statement and after January 2023, what was written there is about the compliance and the management stopped referring to those issues.

So when it comes to accounting, Mr. Nagamori did not perform any micro management on accounting-related issues. So we have -- you have a window dressing settlement. Mr. Nagamori was there in your company at that time. But there is very -- it's very clear that there is a corporate culture in which there was action to block the management from taking action about this window dressing settlement, et cetera. And the Board of Directors lacked the accounting expert as far as I can see from this document.

And all you did, frankly, was to make sure that -- make sure no one will report any accounting problems to Mr. Nagamori. That's what's written over here in detail. From a certain point in time, in a monthly period -- monthly pace, monthly frequency was changed to quarterly. This is something that I want detailed explanation on. You need to have the backup information, additional information to check everything is right or not. I believe there are people there who explained everything with evidence, Kishida-san, what do you think about the point?

I'm not convinced about everything you have just pointed out, but when it comes to all those business-related numbers, we have management-oriented numbers and accounting numbers. As far as Nidec is concerned, managerial numbers are the numbers we have been focused on. That's the part of the reform according to this improvement plan.

When it comes to interviews with Mr. Nagamori himself, the third-party committee has interviewed him. We would like to wait the results of the interview to come out. I would like to refrain from making any detail answers to the question.

Your explanation does not answer my question. When I say it to be more detail, the frequency has changed from monthly to quarterly, numbers were rounded. Is it correct to say that Mr. Nagamori okayed such an action?

And as you wrote here, compliance issues were stopped to be reported. It is -- this portion, especially, is easy for me to understand. I believe this information was written after someone checked evidence behind those issues. Don't you think that there's some additional information should be taken from Mr. Nagamori?

This is Mr. Minai. Please understand the purpose of this third-party committee's report. It is not to seek who is responsible for what. That's not the purpose of the third-party committee's report. We are -- the third-party committee is focused on corporate culture system of the company to see which area -- which issues needs to be improved or solved. That's the purpose of the third-party committee's report.

As it says, when it comes to internal control, there are some issues with the management of the internal control. It reads as if Mr. Nagamori were to blame about everything, but the truth is that no one knows for sure about that. So this is absentee court case. In other words, I believe we should have Mr. Nagamori. Mr. Nagamori has been represented -- the business leader. Without Mr. Nagamori, it is difficult to say that this meeting itself is a very valid one. It is probably okay to remove Mr. Nagamori. Thank you very much for your question.

When it comes to this improvement report, it is focused on system process rules as well as corporate culture. And those are the focuses of the -- this third-party committee's report to come up with the improvement -- report improvement plan. And the contents of that report is what I'm explaining to you today. That is all from me.

Yes. Anybody else with a question? Yes, so somebody at the back, yes.

From Toyo Kezai [indiscernible]. And then about Mr. Nagamori, you had talked about his frequency of coming to office, but he had stopped coming to your office, but then the top-down culture has been very strong. So there must have been a disruption or the confusion with the managers. So how is it in the actual management and has there been people leaving the company?

Well, about the people leaving the company en masse or not, well, that itself, I have not acknowledged. But as you have said, since -- until now, about the management system has changed drastically. So that is true. And that I do understand. So everybody shares the same opinion. But since that happened, so the reform committee had come up with those issues, actions so that we should have a transparent way of sharing those actions.

So I think that is very valuable. And the system -- those people who are supporting -- the business leaders supporting the system and those people who are working within the system, we should try to build new Nidec and that is the very, very important issue. And that is why we are doing this information sharing and communication at a level that has not been seen in the past, is a very high frequency.

Related questions. So the action plans for the auditors, and that is in the improvement plan. But I think you should change, for example, the designation committee or maybe you should change [ form of ] the company, but you had a very strength as a speedy action company. So how are you going to see that?

Well, we are going to have the subcommittees and the governance. We are changing the governance. That is one way of doing it, but now the auditors and the managers, we have many things that we can do so that within the system, what can we rectify and what can we reform? So that's what we are now doing. I'd like to say that.

Next person, please. The person in front of the previous speaker.

This is [ Takeuchi ] of NHK. I would like to ask you about Mr. Nagamori's resignation. Mr. Nagamori resigned on December 19, according to this schedule over here, when it comes to the events that have taken place so far, you have the submission of the document right before his resignation. And given the situation about at the time, did Mr. Nagamori decide to quit? When resigning, did Mr. Nagamori consult with you, Kishida-san?

Mr. Nagamori has made a decision by himself. It was the morning on the very day he made -- he convened the extraordinary session of the Board of Directors meeting, and we accepted his offer of resignation.

So on the very day on the morning, how did you feel about his offer of resignation?

Mr. Nagamori, himself, was wanting to relay the baton to his successor over long years, I believe. I never had a chance -- I had a very fast chance for me to ask about his will, so I respect his decision. Thank you.

Anybody else? Yes. All right. So person raising hand, yes.

[ Kanzaki ] from [ Facta ] Publishing. And now this issue, so there's a corporate culture issue. I understand, but I think it's a lack of our governance, I think, is the greatest issue. So that you had talked about this in the Q&A, but the outside directors have not functioned at all. So there has been talk about the academia or the government personnel, or the central people. And those central people, I don't think that they have 0 out of 100 about being auditing the company. So if you're going to change the system of the company, then the outside directors -- so maybe the outside Board of Directors should be all totally refreshed.

Well, about the third-party committee, we are looking at the results, and we will be looking at the results. And as a company, we are going to take appropriate actions. That's how I feel about it. Thank you.

Any other person with a question? The person in the back, please.

This is [ Yamamoto ] with [ Nikon ] automobile newspaper -- daily automotive news. This may be too early to ask this question, but when it comes to this growth strategy or business strategy, at a certain point in time, I believe you will be announcing -- making announcement of those strategies at the right timing. It could be M&A-oriented strategy, could be involving some automotive issues. Can you give us some information about those future strategies?

As far as we are concerned, we have this conversion 2027 in place. When we realized it, we have different -- five different pillars in our Nidec group. And each of these pillars, we are going to make active investments. And in some other areas, we're going to be active in making decisions, including decisions to withdraw from some businesses, we need to establish some -- very good basis in some other businesses. Those are the discussions in each of these pillars.

When it comes to the direction, direction remains the same. About this reform that we are launching, and these discussions are improving, evolving in our company. That is our promise. Thank you.

Will I -- will we be able to hear you make announcement on those future strategies?

When it comes to business strategies and our future directions, we'd like to get our figures right first. And at the right point in time, we'd like to share those information with you in the future. It may not be very soon. We are truly apologetic about the kind of situation in which we are unable to share with you such information right away. We would like to go into a very good situation, better situation in the future.

Here's my another question. You may have already talked about this in this occasion on -- this occasion as well, other occasions, but it may be difficult for you to make a statement from auditor's perspective. But can you look back to see if there is any areas of improvement about audit, the way we receive audits...

What do you think Minai-san? Nakagawa-san, what do you think?

We are audited parties, so it's very difficult to make a statement in response to your question, but we have this reliable partner we like to communicate with the auditing party, it's very important. We have learned it's very important to have a very good communication with each other. The three of us over here are having communications with the management of our auditing firm in increasing frequency. We like to do our duties and we like to have these audits based on such an agreement. When it comes to auditing a firm, the management of auditing firm, the way audit is done are not the type of question we are in a position to answer.

Anybody else? Yes. All right, so person sitting at the back.

Yes. Nikkei Asia newspaper, my name is [ Noto ]. Yes, first question is but the issue in order to resolve so that you're going to reform the corporate culture, you say, but corporate culture that has been in place for a top-down kind of culture, I think it's quite difficult to try to change it. So is there anything that you want to drastically change the corporate culture, is there something that you have in mind already, please tell us.

All right, about the corporate culture reform, so that the reason we had come up with that is because this is something that is the new corporate value creation. If you really believe in it, so that if you're going to have a new growth, then this is something that maybe seem very long winding road, but there's no way shortcut to do it so that we have to reform this corporate culture. So we decided to take this course.

Well, I think that you had said at the very beginning that you have to do it right. So that is in the KPI. To do it correctly, I think that's a matter of course, for corporations. But to put into KPI, so how is it going to be affected on KPIs?

So the KPI in order to do it correctly or to do things right, is that currently, the corporate culture should be reformed in a correct way. And how much contribution had come out from that. So that's the kind of understanding I have about it.

And I had explained that in FY 2026, about B, the business brands coming out in 2026. So that is the KPI. For that quite effective evaluation, that's one example of the qualitative evaluation. I hope you can understand it to mean that.

Okay. And then about Mr. Nagamori once again. But -- so he decided to resign and that he has retired from the Board of Directors and the Board of Directors had ruled on that. But Kishida-san and the top managers, don't you think that you should have a press conference? Nobody mentioned that?

So on that day, so Nagamori-san gave his own comment. So I really think that is really in line with what he wanted to say in the comment. So until now, he had not come forth, but well, Nagamori-san's responsibility. So he had acknowledged that he has a responsibility in this comment. But until that, in the press conference, he had talked all by himself. But then after this kind of a situation arose, then he cannot come out in public.

So in having a reform of the corporate culture, would not this be a barrier to you?

Well, Nagamori-san, himself had been for a long time coming out for the press conference from FY 2024. So the ultimate corporate responsibility lies on myself and management. So we are responding to that. And this -- Mr. Nagamori's comment came out on the very day that he resigned.

Any other questions from anyone? Now the person or whether the final person -- this is going to be the final question.

This is my second time to ask a question. This is Takayama of Goldman Sachs. At the beginning of your presentation, you talked about accounting issues, verification and risk assessment would take time according to explanation. But when it comes to the submitting -- until submitting the full-scale securities report, that will be taking time until June. And if you take -- if you have this disclaimer or opinion, for the third time, that will be a situation. Do you think that you will be able to release your earnings report for the fiscal year 2025 by June this fiscal -- this year?

This year, we like to proceed with things that we need to proceed with as soon as possible, as quickly as possible. We are currently waiting for the report to be coming from the third-party committee at the end of February. We would like to share with you the report towards -- after the end of February. Now policy remains unchanged. Thank you very much.

Now we would like to finish today's press conference. Thank you very much for your participation, everyone. Thanks very much. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

I would like to start the presentation for Nidec Corporation's earnings result for the first -- second quarter this fiscal year as well as the business update. I'd like to present to you today's presenters. First, Mr. Kishida, the President and CEO of Nidec Corporation; Mr. [indiscernible], Vice President and Deputy Chief Financial Officer of the company. We have Mr. Masayuki Mina, the VP and Chief Compliance Officer of the company. I am [indiscernible], GM of Nidec Corporation's Corporate Communications department.

I'd like to give you an overall guideline outline of today's conference. Mr. Kishida will give you some opening remarks, followed by Mr. Nakagawa's presentation on the financial update and Mr. Kishida will take the extra part about talking about Nidec's latest business activities. Then before we will open up for a question-and-answer session. Mr. Kishida, please start your presentation.

My name is Ms. Mitsuya Kishida, Representative Director, President and CEO of Nidec Corporation. Today, I would like to talk to you about our business update for the first and second quarter of this fiscal year. And we would like to talk to you about those information, which we have disclosed today. When it comes to the operating profit, we have experienced a significant downward revision from the last time we made a presentation about it. We have a cost concern and trouble to all the shareholders and investors, we deeply apologize for that at our company as well as our group companies. There have been suspected cases of inappropriate accounting transactions, and we have commissioned the investor relations to a third-party committee, which is an independent body. And when it comes to the security report, for this fiscal year, we have received a disclaimer of opinion. Under this circumstance, our share price has been -- our share has been designated as a security on special alert by the Tokyo Stock Exchange.

During this time, we have caused tremendous trouble and anxiety and concern to our shareholders, our investors, people of the Tokyo Stock Exchange, our business suppliers and our business partners. And we truly deeply apologize for having you caused so much trouble.

Regarding the first quarter financial account closing, rating profit was significantly revised downward. And we deeply apologize. We deeply apologize for not being able to have this type of opportunity since July 24, when we had the last presentation about our financial earnings. We deeply apologize. Now I would like to be -- we like to be seated as we met the rest of the presentation. Mr. Nakagawa will present you with Nidec Corporation's financial update.

This is Nakagawa speaking. I'd like to give you a financial update of our company. Here's our net sales over here. Sales increased by JPY 8.5 billion compared to the previous fiscal year. Operating profit was decreased by JPY 99.4 billion, had the financial impairment in our automotive products, including costs related to provision for the contracts lost with our customers. There are specific negative factors, as you can see. These will be explained in detail later. On the other hand, when it comes to cash generation, we remain healthy with cumulative net cash provided by operating activities of JPY 112.3 billion, free cash flow JPY 45.2 billion for the first half of the fiscal year. As you can see on the note, there are 3 points that I'd like to make here.

So when it comes to the third party committee, it is still investigating suspected improper accounting. If there is any special activities, there will be maybe another downward summary revisions to our financial report, and we have received the special designation from the Tokyo Stock Exchange and we received an interim review report containing this criminal opinion from the accounting auditor.

Please go on to the next slide, please. This is a year-on-year changes. The net sales are on the top and the operating properties on the bottom section of the slide. And operating profit, as you can see is here a 21.1 and JPY 120.5 billion last fiscal year, and it's down to JPY 108.8 billion. Now it's JPY 221.1 billion, as you can see for the first half of this fiscal year. There is a [indiscernible] reserves for the items, there will be high possibilities. Break down the profit for the contract loss, income loss and claims for reimbursement, and we have accumulated and recorded the financial impairment over here sales of [indiscernible] JPY 13 billion and based on the settlement with our suppliers, a certain amount, there is a loss of JPY 90.5 billion and JPY 87 billion were recorded and 12.1 of operating profit was recorded in terms of yen. And when it comes to profitable -- profit attributable to owners of the parent, it's actually JPY 45.5 billion.

And please take a look at the next slide over here. The year-on-year change was JPY 664.3 billion, it's a plus JPY 626.3 billion. You can see the JPY 60.1 billion, and you can see JPY 61.5 billion for the preliminary result for the first quarter. And the third one is about causing all the breakdown of significant losses JPY 59.4 billion. And you can see a total other loss of JPY 85.8 billion. And you can see the JPY 26.4 billion in deficit in the red. And you can see the down the decrease in operating profit by JPY 47.5 billion.

In the previous slide, you get -- on this side, JPY 89.5 billion, as you can see, this is based on the result of the differences in cost exchange rates between this and the previous slides. So all the same content. If you go to the chart on the right-hand side, the profit attributes of the parent, minus JPY 9.4 billion.

Next slide, finally, cash flow. Yellow is operating cash flow, green is investment cash flow and red is free cash flow, the line graph. On the right, second bar, the free cash flow, JPY 9.8 billion for this first quarter, second quarter, JPY 35.4 billion free cash flow. Second -- first half free cash flow, JPY 45.2 billion. So you see on the right in the pink. Operating cash flow, JPY 11.2 billion. And then you subtract the investment cash flow, then you have the JPY 45.2 billion cumulative. So compared with JPY 28 billion, it's an increase of JPY 17.2 billion. That was a report from Nakagawa.

Next, Kishida will explain about the history of the incidents and our initiatives. From here, let me explain what has been the history and our determination about dealing with these issues. So let me make that report. On June 27, we had the deadline extension for the securities report since that announcement, several issues have come up. And we have been responding to each one of them and the counter measures well, we have made a determination that we're going to make countermeasures against that. And with that, we announced the establishment of the third-party committee on the third of September. So 3 months after 27th of June, that was the deadline for the submission for the securities support and the internal control report.

And then October 23 because we could not fix the amount available for dividends, we decided no dividends for the interim and outlook for the full fiscal year and the outlook for dividend payment at the year-end, we said we do not have that outlook. And then we were designated security on special alert. And immediately after that, internally as a company, we decided that we're going to fully cooperate -- will continue to cooperate with a third-party committee.

So we renew that determination. And in parallel to that, we considered what we could do thoroughly as a company. So on October 30, we established the [indiscernible] corporate reform committee. And on the course of November, we disclosed that in the form of apology to our partners on the same day from the 2 mega bands. So we were able to have a commitment line totaling JPY 600 billion that we have announced that we've concluded those commitment lines. And today, we are now disclosing the first and second quarter financial results. So we have submitted those financial reports for the quarter and the first half. And also in terms of the policy for developing the improvement plan, we have submitted that to the today, so many incidents in front of us. And what should we do as a company? What is the right thing to do?

Well, the investigation by the third-party committee is continuing. But in parallel to that, I think we felt that we need to take initiatives to work on this. So we have been working on several measures. FIR issue started this chain of events. And with this as a trigger, we're going to make sure that this will never be repeated again. So we have been working on recurrence presential measures. For one thing, we are going to establish compliance first sentiment, and we're going to change the corporate culture. So that is going to be our priority. So from the Board to all of the group companies, we're going to deliver clear messages. And myself, I'm going to communicate to the management all around the world, clear messages more frequently than before. And that's what we have already been doing. And I'm not saying that, that has been sufficient, not at all.

One by one, we should work on the issues based on the findings of the third-party committee. We're going to take every necessary measure to respond to these developments. And in terms restrengthening the legal and compliance department, giving them more authority. Well, we have positioned internal lawyer and we are going to strengthen the whistleblower response and investigation systems. And in terms of strengthening the organization structure, we are strengthening the global governance structure. And we have established a position of the COO, Chief Legal Officer and Murakami is the new CLO. And from the FIR issue, we have seen a series of events. And especially in North America, we felt that it was necessary to have an expert in legal compliance. So Mark Carol has been employed as fellow and he has started work in the U.S.

So we should have a good balance of various businesses and regions should be checked amongst them. And so in order to establish a system that has those checks and balances, we have taken a very important first step. Also in addition to that, we should have had a quote function, and we shouldn't have strengthened regional functions as well, and we're not going to compromise in achieving that.

30th of October, Nidec Corporate Reform Committee was established. So the corporate culture that is in front of us, we have to reform that culture itself. And we need to shift to a more ideal structure. And for that, we have established this kind of committee and effort. So this is in parallel with the investigation by the third-party committee. So we're going to try to reform our corporate culture, organizational culture and that no longer will we have the HR system where people who make short-term revenue will be appreciated. We're going to reform the HR system that rewards those who help to create a long-term healthy organization, and we're going to develop human resources based on that. And in order to overcome the various accounting issues. We're going to have procedures regulations, and we're going to also reform the way the business is operated, including IT systems, and so we will have these subcommittees held globally, and we are now organizing these subcommittees and assigning team leaders.

So the responsible people have already been assigned. They are conducting activities dailies and leading the effort. So we will be continuing to work on improvement on this activity as well. We're going to further enhance transparency and we're going to be reporting about our activities to the third-party committee. So through those measures, we're going to deepen these activities myself. I'll serve as the Chair of this committee. So I'll take the responsibility to start this corporate reform committee. And what comes out of this committee, I'm going to ensure that they are implemented. So that is the effort that I will make.

Today, in terms of the improvement plan development policy, we have submitted that to the [indiscernible] and we've disclosed that. And the content of that is reforming corporate culture, improving the human resource system and have accounting system where there's no interference and also reform of the IT system as well. So the investigation by the third-party committee, we're going to continue to fully cooperate with that and make sure that we have thorough investigation and elucidation of the root causes.

And going forward, we will have a report to [indiscernible] by the third party committee, we will receive it with sincerity. We will make sure to launch and may prepare the improvement actions. When it comes to this corporate reform committee, you will make sure to provide people with instructions on what to do and how to do those actions. Towards the end of January 2026, we will -- and we are planning to submit our improvement plan. And in towards the end of October 2026, we will make a report to confirm the improvement of our internal organizations so that we can have an assessment by the Tokyo Stock Exchange in the end. We have caused various concerns and travels. Once again, we apologize to have [indiscernible] that.

Going forward, Nidec will change. We will eliminate all the bad habits from the past, and we will be reborn as a new Nidec. We will plan ourselves. And on a global basis, we will launch all of these actions. That concludes my presentation for today.

[Operator Instructions]

This is the joint conference for analysts and press people. First, we would like to have questions from the mass media.

Now the person from the right-- second person from the right.

Thank you very much for your presentation. This is Hiroi of the Nikkei Newspaper. At this moment, you have this corporate reform committee in your presentation. When it comes to the inappropriate accounting practices, can you provide us with an background? How do you see the situation that cost you are going to have an internal improvement and what reform will be taking place. But what cost do you think is an appropriate accounting practices if I may.

Here is my second question. When it comes to the schedule going forward and it's very difficult for you to plan submit improvement plan without a specific date, but can you give us an update on some specific data as to submit your improvement.

Well, thank you very much for your questions. I would like to give an answer. And as necessary, [indiscernible] as well as Nakagawa will may give you some additional comments, if that's okay. First of all, to answer your first question, what caused this inappropriate accounting practices. The background about our launching the reform of our corporate culture. As of today, as has been disclosed publicly, there are 5 inappropriate accounting or compliance-related issues we need to review the details of these cases and we need to come up with a reason and the main reason for these issues is first -- is related to corporate culture.

We need to reform the corporate culture that we have in our company. And the third-party committee will provide us with its final report. And based on that, we will have a deeper analysis and a deeper review of the background of this problem. But as of today, we have recognized as facts as well as issues based on which as I've said to you, I can say the reform of our corporate culture, human resources-related issues, accounting process-related issues and accounting system-related issues existed. These are the 3 major reasons for us to have this problem, inappropriate accounting practices. We need to eliminate any and all of these issues going forward. We will first make a review of these items, and we will go forward after solving them. When it comes to our schedule going forward, as you have pointed out, when it comes to the investigations by the third party committee, detailed schedules -- detailed points about the schedule is not yet to be clarified yet. I cannot give you any comment on that. We have received some impact from the third-party committee at least by the end of this year, we'll not be able to receive any report from the third-party committee as far as we have been informed so far.

If there is any update -- if we receive any report from the third party committee, we will make sure to disclose such information in a proper way. As far as we are concerned, we have been designated as a security on a special alert in several weeks ago, and we have already submitted to clarify what we need to do going forward towards the end of October 2026, we will have some issues pointed out by the third-party committee.

Minai-san, do you have anything to say?

This is Minai speaking. I would like to give you some additional comments here. We have this investigating body, the third-party committee, many people must be interested in when the report is going to be out. We have not been able to give you any detailed information about it, and we have caused some anxiety concerns about it because of that situation. I would like to give you some detailed information about it. We need to utilize this opportunity to address and solve any and all accounting-related issues and problems. In that regard, we have spent so much time so far. We definitely need to be focused on solving those issues, eliminating those issues. I let the members of the third-party committee are dedicating very much to service to these activities.

We have more than 130 business places around the world. I'm not saying that all of these bases have any problem, I have a problem, but we need to check all of these business bases thoroughly. That is what's important for us to not related to the current issues, there are -- there could be some issues from the past that could -- that we could uncover during the course of investigations depending on the scale of the business business as well as some of the events that the chronological order of those events, these are the things we need to check, investigate and this is how we like to address and eliminate all of these issues we're going to face, and we are facing that is offer.

The questions from the analyst. In the front row, in the middle?

From Goldman Sachs, this is Takayama. So let's sort out the issues or the facts, including this time, well, you talked about 3 incidents -- 3 issues. So you have uncovered these and there are those that may be undiscovered or there may be cases that you're going to investigate on what kind of companies are included there. So like automotive inverter or [indiscernible] models, are all the [indiscernible] were included or not. So what has come out for which -- what there will not be any more losses?

For what you might have more losses -- I mean have you gone through the 300 locations already. And have you already grasped most of the issues? Are there many places where you have to continue to do more investigation.

Let me respond to that first and then have the 2 people supplement. So JPY 87.7 billion comprising 3 issues. And so contract -- JPY 36.5 billion for contract loss provision. So that would be for our inverter business for life. So that's a provision for the loss that we assume for that. So for the inverter business, going forward, next 10 years, we think that the business will continue. So all of the losses that may come up for the next 10 years, that's included and booked for Nidec [indiscernible], that's the company that was doing this business. So from April this fiscal year, has been integrated and absorbed into the Nidec Corporation. So the company as a whole is working seriously to work on this.

Then the second one -- second item, that was about the fixed assets impairment. Two elements there. One, as I said, for the inverter business, there was some fixed assets total amount of that. And also for the traction motor business. In the past, for 4 years, I have been conducting restructuring for the automotive business conversion. And so what was remaining there? By the end of November, we're going to have communication and we see signs of impairment. So we have taken measures to address the full amount. So that's the impairment for facilities. The third factor that is for the claims for reimbursement. So NPe in France where there's a joint venture that we have with Stellantis and from supplier, we have received claims for reimbursement. And in November, this year. So NPe and the supplier came to an agreement and the full amount that has been agreed has been booked or included in the figures.

So how is it going to be divided by the 2 parent companies. And will there be a negotiation with the changes but NPe is the frontline company, and so the full amount has been booked. So the 4 points for those 3 issues, we think that there will be no more impairment going forward. For the other items, the progress -- Well, for the 350 corporations, how much progress have we made? We have not grasped that progress status fully myself or the company, but the third-party committee taking various methods and conducting investigations on a number of cases and for each one, we are -- it's our mission to respond fully to provide answers to the increase.

So that was the background. So let me make some additional comments, Nakagawa. So the numbers that we announced. So those were based on the facts that occurred until November. And so in terms of the incidence, they have been continuing from the first half. And so there has been treated as adjusted subsequent events. But those events that triggered the impairment, those occurred by November. So from Q1, for example, for the claims reimbursement, we were negotiating. And for the inverter, the loss provision. So impairment check we were doing every time. But this time, the future profit and loss of inverters we booked in a lump summer because this product there's going to be SOP in January next year at that time.

Well, as of now, the current management has estimated the lifetime profit and loss compared with the past, well, at 1 time, we had some outlook. Even if you had that kind of estimate, we don't have a clear evidence to prove that and that is why we made a judgment that it will be impairment loss. So for these 3 items, there are not things that happened for the first time in Q2 like inverter development has been continuing since before.

So according to the investigation by the third-party committee, the we cannot deny the possibility that there will be further revisions in past statements. So I want to get the correct understanding of this. So the loss from what may come in the future, you have already reflected. I mean maybe there are some that hasn't been investigated. But the biggest ones have already been found and included.

So for the past ones, there could be perhaps a retroactive amendment. But going forward, most of the losses have been included, of course, there could be some partial changes because you're just expressing an opinion, but from outside investors that have the fear that you might have this magnitude of loss again in the future. So I want to get a correct understanding there. So this size of loss, will it happen or not. We are not able to accurately tell you whether that will happen. Inclusive of that through the third-party committee will be conducting verification as we move forward. But 1 thing I want to tell you.

So second quarter onwards, we have been working and having deep discussions with the accounting firms. And so in the past, we tended to have this short-term response. And we have discussed what we should do for the long term, what is the right thing to do. And that is going to be the perspective that we're going to take. And that is what I'd like to communicate to you.

Let me supplement with 1 more comment. About the future, I mean, we don't know because we don't know what will happen to the business, especially for the automotive industry. You don't know what will happen tomorrow. That's the situation we are in. And so given those circumstances, I mean, for the assets that we have, would there be an event that would require impairment? Well, if there is, then we're going to firmly work on that. And at that time, if something occurs, that's different from our outlook or results then we have to look at what is actually happening and make decisions accordingly. So that was 1 big question.

The second one. So what's the true strength of your results? For JPY 47.5 billion in Q2. As of Q1, I think that was more than JPY 60 billion. I mean you had that capability to grow JPY 60 billion, and you have come down. So I think maybe you have taken some conservative calculation. So this is your actual capacity to generate results or this is an emergency. And so that will cause confusion. And so your actual capability has come down. So in the second half or the second half quarters, how much can you bring back to the previous state. So for Q2, in our ordinary business for automotive, we have conducted a structural reform. And for machinery, we have conducted restructuring and those expenses have been included in the figures. Inclusive of those, we have made various responses. At the same time, as we have been repeatedly saying for new big business. So we prepare for increased production where there is a strong demand. So we're making the preparations.

So towards the second half, there is no bottleneck that is stopping the business from moving forward as far as we know. Midterm management plan still is alive. It still exists. So conversion 2027, we have presented that as our midterm plan. the numbers in those midterm plan, we are intending to review those numbers. But in terms of the direction of the midterm plan. So 350 corporations and more than 200 plants, we should integrate them and so that we will have 5 efficient businesses. We should have restructuring for that structure.

That policy has not changed, and we're going to strive to transform to that kind of structure. But what has been happening, we're going to put into the process, and we are calculating what will be the accurate numbers.

We'd like to have some questions from the reporting agencies. A third person from your right.

This is [indiscernible] Newspaper. First of all, I'd like to ask you a question, Mr. Kishida. Within your Q&A session, since you talked about a 5 inappropriate accounting practices. You said 5. Can you please tell us what these 5 cases are? You talked about automotive business. Do these 5 include this three automotive business.

Minai-san will give you some details about this.

These automotive issues have not -- really do not have anything to do with the 5 fronts that I've just talked about. That's 1 thing that I want to make sure that you understand. This is Minai speaking, I would like to give you an answer for that. When it comes to these 5 issues that I've just made, we have made -- we have said about the committee checking various matters in addition to that among all the items we have disclosed to the public, there are issues that are the current under investigation. One of them is as follows, which is called FIR. This is one of our subsidiaries in Italy, cheese and they have had a trade-related issue. It's about the exporting and the motors. There was a violation -- some kind of error made in the exportation of motors. The second one is about issues with 1 of our subsidiaries called Nidec Analysis Corporation. This is about the transaction of equipment between China and Japan for product development and estimation of the equipment was wrong. That's the second issue. This issue is still under investigation. The third one is about our swiss subsidiary, export coding related issues. An internal investigation is underway about this issue. The fourth one is about our subsidiary in China. So the understatement of withholding attacks, this issue has started to be investigated. These are the 4 of the 5 issues that are under -- internal investigation by utilizing an outside third-party organization.

The fifth one is about Nidec Techno Motor corporations, Chinese business base. This is about purchasing a temporary payment was back in July that we discovered this issue, and we then started investigating into this matter. From then on, multiple business bases have been revealed to have possibly have the same type of problems. So technomotor and adages are currently being invested by the third-party committee. And the internal investigation is taking place on the issues.

And the other one is about Nidec technomotor issues in China. So technomotor temporary processing of money and Nidec corporation and group companies have some issues that possibly involve executives arbitrary change in prices or data and third party committee is investigating these issues covering approximately 350 business legal entities around the world that is correct. And here's my first question here after taking all these relevant facts. You talked about the amount of approximately JPY 87 billion and third party committee may or may not include some issues and suspicious -- the statement may be described over here on the statement.

Let me give you an answer to the question, followed by some additional information and statements by these 2 people on my side have talked about this determination of financial impairment. We do that on a quarterly basis based on evidence and facts that we have done so far. As I've said already, when it comes to these 3 different sections of issues inverter, traction NPe-related issues by November, we have identified various issues, and we have conducted some termination in financial impairment. It was decided to be incorporated into Q1 data. On that hand, when it comes to these major issues, the third party committee is now trying to determine when house when will be appropriate, when will be the right timing for these issues to be incorporated. We have this gene issues that came later -- came to surface later. There is a possibility that these -- the decision could be made that this should be recorded at other timing. Depending on the determination by the third party committee, you may come to a conclusion that the postponement was made intentionally. That is correct. That is what is written here -- is indicated here. Here is what we have taken ver seriously. [indiscernible] modification, and I don't -- I hope that will -- this is not the case. But if there is any modification of the data, those issues have to be identified and corrected. And that's what we are determined to do. We will go -- we will go through all the issues via the third-party committee. We will be fully cooperative with this committee. Do you have any additional comments from anyone? No [indiscernible] No.

Here's my second question Mac in September, you submitted and disclosed the securities report. And in the report, you said that the financial system wasn't really effective but this is not the first case last time back in 2024, you have had a problem with the Nidec [ Direct ] technology. financial reporting system wasn't really effective, and you have made this type of statement for 3 consecutive fiscal years. This is a weakness about your financial system in your company, and you have some made your dividend over the limit and you have established party committee back then in the past.

Over the past few years, I understand what you're going to do going forward. Over the past few years, what have you done and why those efforts want to roll is successful and why you came to have those current problems. Can you Kishida-san answer this question?

Thank you very much for your question. When it comes to all of these issues -- when it comes to the final assets to these issues, we will first receive the report from the third party committee. And we, as a company, need to decide what to do. That's what's important in my opinion. As of today, my impression is as follows on a case-by-case basis. We will take appropriate required actions. That's what we believe we have done. But these actions themselves may not have been drastic, fundamental, prominent. It is asked as it is a question as to whether these actions have been global effective that's 1 of the issues to be tackled by us and said about [indiscernible] that is our [indiscernible].

Next question from an analyst from the front rows.

Sato from Morgan Stanley Securities. Two questions. First, the third party committee report that it seems difficult that the final report will be issued by the end of the year. But the report from the third-party committee, I mean the original text, would we have no opportunity to see it? And after the report is issued, then the financial results with the appropriate opinion from the audit corporation, how long do you think it's going to take?

So I will respond to the extent of my knowledge. So the report from the third-party committee. They have informed us that they will not have the final report by the end of this year. And the final report itself, I believe, will not be disclosed. However, from the third party committee, there will be some communication, I think, and the findings in the final report, the company side will publicly disclose with transparency. We'll make preparations for that. So on that first point, any additional comments. So from the third-party committee side, there should be a determination and the content will be disclosed based on their determination. I think that's the ordinary way of doing things. So we shall discuss and confirm with the third-party committee members and figure out the appropriate disclosure method.

The second question about the audit opinion. So that will be up to the decision and determination of the auditor. So the amended statements will have asked the auditor to thoroughly go through it. So please accept that is the extent of my response. So as of now, you don't know when. So schedule-wise, not something we will not be able to answer from our perspective.

So understood. Second question, Q2 financial results. Page 20 talks about interim consolidated cash flow statement. So numbers are very detailed, sorry to go through them. But operating cash flow 112.3 billion. Of that, operating liability is increasing. And then there is an increase in provisions. So on those 2 points, the amounts are very large. And compared to the previous year, the amount is larger year-on-year. So explain the background of that, please? That's my second question.

Nakagawa would like to respond to that.

So about operating liability increase, so earlier, we talked about the claim for reimbursement. That has a big impact on that liabilities. That's my understanding. Other provisions that's increasing. That is due to that other factor that you explained. Yes, we explained that is for the provision for the claims for reimbursement.

So excluding those items, in the ordinary business, business is going on as usual is what I would assume. So employees, I think they are very busy responding to the third-party committee investigations. So talk about the impact to your ordinary day-to-day business? Are you starting to see that impact? And can we understand that such impact does not cause any material problem for you?

Thank you for a very important question. So our intent is that the ordinary business operations, there is nothing I'm healthy about it. So we should work to further enhance the health or the integrity of that business. However, the third-party committee has been established, and we have been designated as a security on special alert. Those are facts.

And based on those facts, several customers have indicated concern to us. There have been such developments for that, we, in the management, well, to all the employees around the world, we should communicate the progress of the investigation and the investigation of the Corporate Reform Committee and also that we have secured JPY 600 billion commitment line. So -- and we are explaining to our customers 1 at a time very thoroughly. That is the current situation. So for the customers for the first half results, we have now come to a stage where we could report it. And so in terms of the business, developments and preparation for investment and introduction of new products, we want to make sure that we ensure integrity, and we continue to work on this.

And at the same time, we are going to provide full cooperation to the investigation so that we can fix what needs to be fixed thoroughly. That is our stance about business operations.

Next person from the press, the person, the lady in the white clothes, please?

This is Nagao with TV Tokyo Broadcasting. The first question should be addressed by Mr. Kishida in my opinion. But in your explanation, you talked about improving the corporate culture several times. In your -- from your perspective, I believe this is before the release of the report by therapeutic but where do you think you have problems with your company's corporate culture? Next question is about JPY 600 billion commitment line. JPY 340 billion as of the end of the fiscal year. I believe you have enough cash reserve, but you have this commitment line is as much as JPY 600 billion. You said you talked about this has no effect on your business operation, but what type of risks are you aware of?

Thank you very much for your very important questions. To answer your first question, which is about the corporate culture reform. We need to understand all the issues in our understanding we need -- tend to be focused on short-term profitability. And based on the tendency, we have been -- we have pressured ourselves to achieve a short-term result. And we haven't focused on anything else very much at the first area where we need to start reforming our service when it comes to our corporate culture reform. Many people have said that the Nidec is the company whose motto is do you -- do your job right away without hesitation and never give up, it is until it is done. In addition to these funds, we need to be able to do our job properly right all the time. That's the type of corporate ethics we need to add to our existing corporate model. That's what's very important in reforming our corporate culture. That is the hypothesis that I have as we go forward with our corporate culture reform, we need to brush up the on our corporate culture in this point.

I mean I agree with Kishida-San about this. These points have need extra strength. But in order for us to pursue our strength improvement on a day-to-day basis, we have been probably excessfully focused on securing profitability on a day-to-day basis. This is a very good opportunity for us to make the reform on that point. You talked about previous years, but we need to stop, take a look around and make or to do things right for our future. That's what we need to make sure. We need to make sure every Nidec employee does his or her job that way.

When it comes to this commitment line of JPY 600 billion, as our message from me, Mr. Nakagawa, we have in communication with our banks, and we have been receiving a support from these companies MFG as well as SMBC have given us this contract committed underlying contract for JPY 300 billion each from these 2 banks. We sometimes establish syndicate -- business syndicate, but we made this equal divest commitment with us and these 2 banks especially from suppliers, they gave us questions such as if the payment will be made without any problem. It is in order to eliminate those worries that we decided to have this commitment line agreement that is standing.

We have about a total debt with JPY 600 billion. And we don't have to repay this amount of payment all to us -- this amount of debt all at as that's not now what we have today. At the end of month is [indiscernible] JPY 600 billion in 2 months. That's the type of a view that we have, and we had a match in opinion between us and 2 banks.

So even without using this amount of money, we have enough amount of cash flow, we are in a very good relationships with these banks that we use. So there is no -- so far there is no problem financial with our financial infrastructure.

Person in the right, in the front row.

Akizuki from Nomura Securities. Two questions from me. First, so the big framing of the problem. You have the assets and appropriateness of the market to value where they should have provision or should it go through the impairment test, and there's some arbitrariness for that. That is what was suspected. So that is that at the core, the biggest issue of your problems or are there some other problems. I mean you can ignore the small problems, but you have like off-balance sheet debt liabilities or something that's clearly outside of the framework that you are presenting. Do we have to be concerned about those things. So where is the sort of the center of the problem. So I want to get the big picture conceptually.

Now within management, the appropriateness of assets, I think you continuously evaluate. So whether -- I mean, there could be views about whether that is appropriate. But with senior company, the signs of the business or the sales concerning the asset evaluation, do you need to review each time. I mean if you are profitable, you don't basically need to review any profitable in -- basic all your businesses. So I don't think that there should not be any business where you have to do those checks, but is that understanding correct? That's the first question.

So where is the essence of the problem that we are confronting. That is how I understood your question. What we are facing in front of us. I mean is there going to be something that you've never heard of. And is it going to be like a huge loss it's our understanding that, that is not what lies within the essence of the problem. So there has been points made about the issues from before, like for automotive, and for machinery, some business where profits were not booked properly. And so those were within our sites as our businesses. And appropriate treatment has that been done will going through the books retroactively. And I think that is what we are doing now. That's 1 thing. Now the other thing is, no matter how small a compliance issue, it is the fact that there is a compliance problem existing. We cannot be accepting of that. So the 5 points that we discussed, the value impact. Maybe you can make a judgment about -- well, 1 is bigger 1 is not they are violating compliance in each case. That's the same for all of those cases. So we have to create a corporate culture that absolutely does not allow that to exist. And that kind of corporate culture we all of us here determined to establish and through the Corporate Reform Committee, we're going to establish that, visualize that and take the appropriate measures.

Second question. We talked about the corporate culture, and it's a question about that. It's a very difficult issue. Earlier, you made a comment about it. Corporate culture. I mean, it's also your strengths. And so it's like 2 sides of the same coin. The culture can be your strength and weakness. So your strength is speedy management and aggressive challenging spirit. I think those are your strengths compared to other companies, you have those virtues that other companies don't. And that has led to your growth, but those strengths have the negative side. The intent of the management may be reflected too strongly. So how are you going to try to try to balance there? If you have an idea about that please share.

Yes. Thank you. that it's a very difficult point. And the final decision we'll make after we get the report from the third-party committee. But I've been thinking since before, we have had the the positive side of our corporate culture. And going forward, we're going to make sure that we allow no compliance, and we're going to do everything in the correct way. I don't think those are 2 contradicting things because you do things correctly, is it going to lower our speed or we're going to lose our growth that is not so. We should go back to the basics. Everyone should recognize the importance of that. And we should review and rebuild the operation process. We should not hide or run away from this. We should face it squarely and work to rebuild that process.

If I may say one thing, having 2 short termism, that is something that I'd like to fundamentally transform. So when you pursue short-term profits, there are some negative implications of that. That is clear in the 5 cases. So we have to fix that first or else, we will not be able to achieve the bigger transformation. So with that mindset, we'd like to work on this issue.

The person from the press, second question from the top line on your right.

This is [indiscernible]. I'd like to ask your question, Mr. Kishida. When it comes to how do you feel about the responsibility for the business management? You are the President. Mr. Nagamori is the Executive Chair President. When it comes to these series of issues, how do you feel about your responsibility? How would you like to take your responsibility in your opinion?

When it comes to the management responsibility, I'm the Chief Executive Officer of the company. We will take the responsibility for any and all issues. Now when it comes to the Nidec Corporate Reform Committee, among others, we like to make this company a better, a more global company. That is my largest mission for us to -- for me to fulfill as the leader of this company.

When it comes to the corporate responsibility in other areas, we like to wait for the report to be coming from the third party committee. We will make a decision as required. When it comes to other areas, you're talking about Mr. Nagamori's responsibility as well including my responsibility and all the responsibilities of all the people involved in individual issues.

I believe each of us will be responsible for 1 way or another for these issues 1 way or another. We would like to wait until the report comes out from the third party committee. We will make the proper decision and we will receive the report from the third party committee first.

So instead of resigning from the past, you are determined to focus on reforming Nidec?

That's what I think I have done. I have been doing so far, and I will continue to lead others in the company. I will never run away. I will never deviate from the current direction.

That's my second question. When it comes to you, Mr. Kishida and Mr. Nagamori, when did you first know about these issues you and Mr. Nagamori. Do you -- is there any possibility that you instructed those misconducts.

I believe that's one of our major points you would like to know very much about. But those points and among other points are being investigated by the third party committee. I would like to refrain from making a comment on the point.

Analyst, please, to the far end.

Naito from Citigroup Securities. So I want to ask about the financial results. We provided a summary. And -- so profit was down for the machinery and you talked about the structural reform. So what was the size of that? So is it something that's happening as a onetime thing in Q2. Can you back up with some numbers. Also, in terms of the claims for reimbursement, the MOEN segment, and you talked about NPe. So could you explain what's included and not.

So the first part will be explained by Nakagawa. So NPe is a joint venture company with Stellantis. Internally, we call it NPe. That company is in charge of MOEN or the MOEN organization is in charge of NPe. So we say more MOEN segment compared to the AMEC segment. So that's MOEN is NPe. So talk about the numbers, please.

So the reason for lower profits for machinery, you can see this graph, Q4, JPY 11.9 billion, [ 990 ]. And so from Q1 to Q2, JPY 7 billion decline in the breakdown of that, product mix, JPY 2 billion. And then inventory and provision, there is profit and loss. Q1, Q2, there was a double impact. So JPY 5 billion. And other than machinery, were you asking about something else? For other segments as well, if there are any onetime factors or first for the precision small motors, Q2 to Q4. So nearline profit increase impact is seen, we've seen higher sales and profits.

And for automotive, impairment, excluding impairment and special treatment, that's the dotted line, JPY 3.5 billion and then JPY 100 million in Q1. So from Q1 to Q2, JPY 2.8 billion decline. The reason is that claim for reimbursement JPY 2.1 billion payment made for that. And also overseas operations that was in the [indiscernible] that we're doing restructuring. So restructuring cost is a little less than JPY 1 billion. And then well, price competition is becoming more fierce. So profitability level is declining a bit. And then for ACIm, from JPY 2.5 billion from Q1 to -- down Q1 to Q2. So FIR investigation expenses and the inappropriate accounting and internal control issues that has led to investigation expenses. So that's the biggest factor for the JPY 2.5 billion decline from Q1 to Q2.

Second question, going forward about the funding. What's your thinking? So the bond spread is expanding. So board investors, I think, are anxious, but basically, you carry forward the bonds and some of the braking agencies have lowered 1 notch, but you are asked to investment grade and you have cash flow. So I think you can say that you're -- nothing to worry about. So would you be using more bonds? Or would you be using it finance like the debt, I mean, you established [indiscernible] this time. So you're going to increase that indirect finance.

So about the new issuance of bonds, the spread in the market has risen, but the new bond, we cannot issue because we have filed financial report with a disclaimer of opinion. So with that condition, we cannot issue new bonds. So we will not be relying on bonds. And so as you ask, we will rely on the relationships we have with the financial institutions. So we'll be making borrowings from them.

In the second half there, we need some funds to pay for the bond repayment. So basically, we have some cash flow and some cash on hand. And what is a shortfall. We will borrow from the banks, and we'd like to utilize the commitment line to total bank and others they have agreed and was on commitment line. And so the financial institutions, they will support us. So for the shortage, we will deal with that through debt from the banks.

Person from the press please. Person on the front -- well, the person from first person from the right.

This is Takasawa of [indiscernible] Newspaper. I have 1 question for you. Under discussed circumstance, when the amount of the investment is JPY 140 billion, you have recorded for the equipment investment mainly in India, you have been very active in investing in India. Are you going to make these investments as planned? What is this coming? Or are you planning to have some decrease. And if that's the case, which area is going to be decreased in terms of amount of investment.

Thank you very much for your question. When it comes to this fiscal year and CapEx, the capital expenditure, there is no change in our plan. Even today, for example, we have had the new Indian facility to be operated by MOEN. We have the opening ceremony of this new Indian facility run by MOEN business unit. We have been actively investigating and we will continue so to make active investment in the battery energy storage type of businesses. If this situation is going to continue, above all less, we need to secure a very good cash flow. We are making some decisions on our investment plans. If we can postpone any of these cases, we will try to save as much money as possible by postponing some projects if necessary.

Immediately after this situation occurred. We have -- I have made a cash out saving message to all the executives around the world. That's one thing that I made sure that we all do, we will once again thoroughly examine our investment projects. That's what we are doing or at a deeper level this time.

Here is one thing from me, [indiscernible]. When it comes to saving the cash. We have the third party committee in some activities, and we are accumulating some items on the list. We are listing up some items we are having this 0 dividend to our shareholders. We have made a lot of concerns, troubles among our shareholders because of that we need to disclose what we can do to the public about these money savings. That is up from me.

An analyst next? So member of the press, please, the lady to the edge.

Thank you [indiscernible] from Bloomberg. Two questions to Kishida-San. So after these issues came to like what kind of discussions have you had with Nagamori-San. And what has been -- how has he been receiving these issues? Has he mentioned about his own responsibility, can you share? And Nagamori-san and Samura, CFO. Why are they not present because I wanted to hear directly from the CFO.

So thank you for the question. Before all of this happened with Nagamori have been making thorough communication even after these things came to light. What is our thinking of the executive team, how we're going to move forward, those kinds of things. I have shared openly with him to this day. Nagamori, himself, how does he receive this? I cannot answer honest on his behalf. But the fact that this has happened and every member of the management considers this seriously. And we have to come out of this fundamentally, and we need to take measures. That is my stands on this. And I think all the management agreed. So Nagamori and Samura, the fact that they are not here.

For Nagamori, last year, April onwards he has not attended these kinds of business results meetings. And I am now the Chief Executive Officer, fully responsible for all executive matters. So I don't think it's appropriate for him to be attending this kind of a meeting. As for Samura, well, the main focus of the third-party committee is accounting issues. And during the investigation of the third-party committee. He is released of the role of the CFO and accounting. So Nakagawa is taking over that both during the investigation by the third-party committee. So accounting line as CFO is of that line and Nakagawa is taking his place.

[indiscernible] person there right next to the lady.

This is [indiscernible] Market. This is a -- this may be a next question. You have been very active in M&A now you are going to reform your corporate culture and you're going to have a very thorough reforms but do you have any plan for future M&A? Are you postponing? Or are you continuing with the M&A projects. Are you in negotiations with the -- your counterparts for a few M&As. Can you bring us to update on if you have any suffering from the FX from the current situation on the M&As, what is your future plan or future timing. This designation will be lifted halfway to our stand of October next year, but what will be your timing for your future M&A?

I believe your question is regarding our M&A strategy. One thing that I'd like to say here should be saying here is as follows. As far as our current situation is concerned, we are not in a situation to expand our business territories by via M&A. As has been explained by Mr. Nakagawa, we have even stopped providing our shareholders with dividends. we should be refraining from making spending money those activities outside activities such as M&A. We are not negotiating or not doing any other activities related to M&A. I cannot give you any detailed about this strategy. But first, we need to resume our dividend distribution so that we can be back on a normal state.

That's what we need to do first. And that's our -- my answer to your first and second questions. But when it comes to reports, the resumption of division and that should be made for us to be at -- before you resume M&A activities where they at the appropriate timing, we will come up with the appropriate strategy, and we will make appropriate revision to our strategy at the appropriate timing.

Anyone else with a question? This person over here.

Tom here from Nikkan Koide. One question. So in the financial results, for the automotive, you have a large impairment. So for automotive, you've been trying to move from volume to quality, and you have had very good results. So this large impairment has surprised me. But what about the growth strategy going forward? Any changes there? So talk about the future growth strategy, please.

Thank you for the question. Automotive business. Future growth strategy is what you're asking about, as I understand it. So I as the Head of the Automotive business have been working in the past 4 years for transformation of the automotive business, what we have been able to achieve. There are some things we've been able to achieve. There are some things that we have put on the back burner. So traction business, major direction shift. The reason why we do that is because we have -- we don't have a team that can do large system development. So in China, traction business transformation, we conducted 1.5 years ago.

So we felt that we made the appropriate decision at appropriate timing, and we worked to do what was necessary. This time around, we announced -- 2 major things. One, about inverters. So as Nakagawa said earlier, so we started around 2021. And January '26 is finally going online. So we have really had a concentrated development and now the manufacturing costs of the components have now become clear so that we finally come to a stage where we can make future business decisions. And various optimistic assumptions we have not included in making our discussion. And as for the joint venture with NPe, in terms of the future direction, we like to start consideration.

So since we started from fiscal '25, we've been saying that and based on that, we have been operating until November, and now new facts have come to light. So that's why they have been included. So there were those 2 completely different issues. For the traction business, JPY 6 billion impairment of facilities has been seen and domestic -- other than domestic customers, we have lost some contracts. And we learned that in November. So that's why this was included. And in terms of future growth, so excessive investment leading to impairment. Well, that's what's happened in automotive business how should we go about this business going forward? Is something that we discussed daily. Because we were doing this business, we were able to go deep into the Chinese supply chain. I mean we have been able to supply chain deeply because of this, and we have slowly built up the system development capabilities because of this, and that is going to be a very big asset for our future growth. That's how we see it.

So how are we going to increase the output from that is something that we like to really think strategically. And as soon as we have something to announce, we will report to you in a timely manner. That's all.

This is Kana [indiscernible] Newspaper. I would like to ask you some supplementary questions to what you have just said Kishida-San. You have been short-sighted for when it comes to these 5 different issues, and it's very difficult for you to come up with the conclusion without report to be issued by the third party committee. But when it comes to this improper accounting practices, the people are working on a front line have been -- must have been in pressure to generate a very good short-term profit. there may have been an excess of [indiscernible] on it. And is there any possibility at overseas subsidiaries where these people could have been worked in modification manipulation of the data.

I'd like to give you my overall comment, and I would like to have some supportive comment from [indiscernible] here. excessively shortsighted and pressure. There are 2 same thing on the same side, in my opinion, as part of our corporate culture, such pressure has existed that's an undeniable fact. You cannot deny that. So doing the things in the right way is something we should do as a public company have we should avoid excessive pressure, we shouldn't be shortsighted in pursuing a profit. We need to be constantly monitoring ourselves for that. The type of routes for such pressures to have been generated.

When it comes to that question, we would like to wait until the report comes out from the third-party committee.

This is Mr. Mina speaking. When it comes to pressure, it depends on who you ask about some people probably do feel that way about the pressure. Of course, we would like to wait until the report comes out from the third party committee. The [indiscernible] evaluation day-to-day instructions to [ Nidec ] employees whom you could depend on our consultation when you feel pressured. Those are the elements we need to identify as part of the root causes of the current problem we are facing.

Any other questions? Very good. With that, we'd like to close our press conference. Thank you very much for attending today. Thank you so much. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Now we would like to start Nidec Corporation's preliminary report on performance values for the first quarter of fiscal year 2025.

First, we would like to introduce ourselves. We have Mr. Mitsuya Kishida, the Representative Director, President and CEO of Nidec Corporation; and we have Mr. Akinobu Samura, Chief Financial Officer of the company. Then I am Teruaki Urago, of IR department.

I would like to have Mr. Samura first to give a presentation on the preliminary report, followed by Mr. Kishida's presentation on company's corporate strategy. And we would like to have a question-and-answer session after that. If you have any questions, please wait until then. We would like to finish this conference at 6:00 p.m. today. Thank you very much.

This is Mr. Samura speaking. I'd like to give you an update on our financial results. First of all, I'd like to offer my apologies for the trouble caused by the additional investigation into the FIR's country of origin matter. Since we cannot give you the result of our performance the way we normally do, we decided to have this voluntary disclosure as the preliminary report on financial values, which is something that we would like to explain with the notary remarks after that in this presentation material. And I would truly appreciate your understanding on this.

And when it comes to our consolidated performance compared with the same time last fiscal year, we have had a relatively large fluctuation in currency exchange evaluation. And against the U.S. dollar, the yen has been appreciated by 7.2% in the middle of the quarter and 10.1% towards the end of the fiscal term.

And our net sales was JPY 637.9 billion, which was down by 1.6%, and operating profit was JPY 61.5 billion or 9.6%, with a slight increase by 2.3% from the same time last year. But when it comes to the profit before income tax was JPY 59 billion, which was down by 24.5%. When it comes to the quarterly profit attributable to the owner of the parent was JPY 45. 5 billion, which was down by 18.5%. And the financial forecast for this fiscal year remains unchanged, as you can see on the far right of this table over here.

Next, information by product segment. The Small precision motors, they were able to have this increased profit compared with the prior fiscal term -- fiscal quarter. This is thanks to the expanding demand for the HDD motor for near line and other applications. It is also thanks to the expanding demand for water cooling modules for AI servers, and they were able to convert into the business portfolio that is more profitable than before.

And the next one is about Automotive, which is top right corner. They were able to secure increased profit compared with the prior quarter as well. They were able to have this traction motors business in China, where they were able to continue to have profit. When it comes to NPe, our joint venture in Europe, they were able to progress with the mass production, but their sales were in a struggle and definite remains to be in existence.

When it comes to AMEC organic business, the OEM manufacturers in Europe were in struggle and some improvement actions were taken under the new management. Because of that, there was a temporary cost increase by JPY 2 billion. But still, they were able to keep this increased profit compared with the prior fiscal quarter.

Next segment is about Appliance, commercial and industrial segment. This is the segment most prone to the currency exchange fluctuation. And compared with the prior quarter, there was a decrease by JPY 2 billion. The business was still going very well for BESS business as well as power generator business. But still, the usually highly profitable U.S. motor had a drop due to seasonal factors. And there are some ongoing projects such as the consolidation of business bases in Europe and structural reform cost of JPY 1 billion was recorded as well. And all in all, the situation was rather in the decline.

And the next one is about -- the final one is about this Automation and Machinery they had decreased in sales and operating profit due to the decreased sales. And there were some issues with the profitability of the sales of the businesses as well as the issues regarding the M&A-related cost and profit. These are the temporary issues that are reflective of this final segment's latest performance.

And this chart shows the net fluctuation that excludes currency exchange fluctuation as well as structural reform-related cost. And you can see the -- when it comes to the currency exchange impact on sales was JPY 35.8 billion and the impact on the operating profit is JPY 2.6 billion. We had JPY 2 billion on the impact of the structural reform and JPY 1 billion impact on the Appliance, commercial and industrial. So compared with the last fiscal year, there was an increase of JPY 1.5 billion when it comes to structural reform related cost.

And we -- last fiscal year, we made NPe a wholly-owned subsidiary of Nidec Corporation. Therefore, we had a temporary increase of profit by JPY 10.1 billion. But all in all, without these temporary elements, all the product groups were able to have this increased profit. And all the information related to product groups were exactly the same as the information that I've just given to you.

Next, free cash flow. The level remained low at the plus JPY 9.8 billion for this past first quarter. In order for us to stably generate free cash flow at a level higher than the certain level, we need to be able to properly control the operating capital, including inventory. We will continue to strongly take improvement actions by staying very close to the front line of our businesses. At the same time, we will make sure to spread the use of ROIC as a tool so that we can convert our business portfolio into a more profitable one.

That is all from me. Thank you very much.

From here on, here, I would like to explain to you some major topics, followed by a progress report on our midterm business plan. This Is Mr. Mitsuya Kishida speaking.

Over the past 3 months, I, myself, have been able to and have had to solve immediate issues. We need to become a better and a better global company. This is a very important and necessary steps for us to take. And I was determined to address various issues, including structural reform, business reform, integration and the reform of the global headquarter. All of these things are -- each part of the issues, actions that we need to take, in my opinion. And I would like to work with all the global management executives. That's my personal commitment as well as company's commitment. And that's one thing that I want to share with you today.

First of all, please take a look at the chart over here on this slide. This is the original form of our structural reform. This is about how this could drive business. Quarter-by-quarter, we have been doing a various business, near line server, water cooling business, et cetera. The ratio of these businesses are growing larger and larger. And near line business is approximately more than 80% and quantity-wise, it's over 60% of the entire quantity of this business. These are the major driving forces of this business, Small precision motors.

And please look at this data center-related information. when I -- as I look back over the past year, we have had a problem and issues with NVIDIA chipsets. We have gone through a lot of discussions since then. And we have been able to understand our position in this market. That's what we have done over the past year.

When it comes to the entire market, we have a platform, including software, hyper software, cloud server-related vendors, and we have various leaders in this industry. And there are long-time leaders of this industry as well. We have power generation, power supply business, infrastructure business, emergency switch business and many other different business exist in this industry. That's what we have understood as a group. That's what we have learned over the past year.

Please take a look at the photo here. This is in Chiba Prefecture. MC Digital Realty NRT 12 data center located in Inzai, Chiba Prefecture. The test operation will start in full scale from next month. That's what I made a statement of a press release back in June.

This is Nidec's original specification In-Row type, please take a look at the photos on the right. This requires Nidec's own specifications, unique specifications. We like to appeal these products to a wide range of potential customers. and business partners. And we have had a lot of discussions and specifications. And from now onward, we are going to expand this business in my feeling.

When it comes to this domestic data center, this is not just about that business only. We will target the United States, China, Japan. We are receiving inquiring quick coupling CDUs, rack In-Row type related inquiries are what we are receiving at this moment. And towards the end of second half of this fiscal year, we will establish this business successfully. In order to do that, we need to redevelop our own basic infrastructure.

When it comes to Q1 of this fiscal year, air conditioners compressor business is something we'd like to talk to you about. We have been doing that business for a long time. We have had this new member of the company as part of our business group, scroll compressor manufacturer is the type of business that they do. We have made a press release about this.

When it comes to this compressor, we are going to unify all the products under the Nidec brand. And we are going to target the heat pump for commercial use, data centers, chillers, all of these new and large products will be what we are targeting going forward.

From here on, I would like to explain to you Conversion 2027, which is something we have already made the announcement on before.

This is the overall picture of the Conversion 2027. Towards that fiscal year, we would like to improve our cost structure. We are going to be focused on 5 different business pillars. And thirdly, we will convert to become a truly global system as a company. As I've said, these are -- this is the third one is the major topic for all of us at Nidec.

There are quite a few things we need to do. And comprehensively, we will take action so that we can become a true global company. That's what we are doing at this moment.

And among all these activities, we need to reduce the variable cost by JPY 100 billion. As you can see here, JPY 2.6 trillion, 50% of that is about -- 90% of that is generated by this portion over here. And the remaining 50% are these businesses over here. We have core businesses and non-core businesses. We will review. It may take time a little bit, but we will review all of these.

So as we move forward with the discussion, the JPY 100 billion improvement in variable cost, it will be done in conjunction with our efforts to reduce JPY 50 billion in fixed cost. As we move forward, the non-core business downsizing and also pulling out from the unprofitable businesses. And furthermore, consolidation of the business sites, those are all going to lead us to complete the JPY 50 billion reduction in fixed cost, and we have completed our plan to show the pathway to achieve that in Q1.

Also for the appliance Qingdao business site, we have 2 factories for the home appliances. We have started the operation for this, and the newly built large campus of the factory in Qingdao, we will consolidate the production capability. So we will be doing similar initiatives for each of the 5 business pillars.

And for the 10% of the operating profit, it's -- a lot of that is accounted for by the Automotive Products business. For this from before, our traction business, the JV in China, we are trying to change the direction of that business. And also for the existing businesses, integration with ACIM and conducting business reform and also transforming the NPe business, we are trying to augment our efforts around these initiatives. The structural reform in Europe and U.S. and also transforming the Automotive business. We are doing as part of focusing the business portfolio, and we will continue to make those efforts.

On top of that, as we look beyond for further growth to transform the Conversion business is going to be something that we are going to focus to grow. The pictures you see here are from the Reynosa factory in the U.S., the Lexington factory and Mankato factory.

As you can see from the pictures, you see a big turbine like motor using this, we are manufacturing the power generators. In April this year, I visited the sites and we decided on the ramp-up on the spot, and we are now preparing to ramp-up the production there. And within this 3 months, the customers have mentioned the big potential demand growth over the next 3 years. So I will be there again next month and with big companies like Caterpillar, we will be discussing the plans to expand our siting capacity for their emergency power sources.

We need to graduate from the charismatic business management, which means that we have to have a system in place and also reform the process. So that's what I have been focusing on.

In order to do so, we are going to consolidate the business portfolio into 5 business pillars. And for that, the customer base, our development capability, the production capability and the sales and marketing approaches from many perspectives, we are going to be revisiting the whole operational flow. One example I can share with you is shown on this slide.

For the Technological Chief Officer, we have appointed CTOs for 5 business pillars. And we have launched a CTO Summit to coordinate our global technological capabilities across the group. What we need to have as a technology that will be identified. We will be revisiting our existing technology in order to try to fill in the gap. So we have just commenced this initiative.

Also for R&D, we are going to have a coordinated global system. And for that, we are also introducing a digitalized PLM. These CTOs for 5 business pillars, hopefully the 6 people across different business entities, they have been appointed for those 5 business pillars, and they will go beyond the boundaries of the organization to coordinate from a technological perspective.

Also, the discussion is not just about what we can do with technology, but we will be sharing the information with our global CFOs and also for the HR organizations. And we will simplify our global organizational structure to manage the process and their business.

And in April, we announced the Chief Digital Officer and Chief Human Resource Officer appointment. On top of that, as of July 1, we have appointed Chief Legal Officer as well. As a global headquarter, the CLO will be looking at the legal matters throughout our organization from a global perspective.

The person appointed was Mr. Kazuya Murakami, who had been serving as our Director as well as Auditor. And he will be sorting out the challenges that we confront today from the legal perspective. And Mr. Murakami, the CLO, under him for U.S., which is a critical market, we will have a U.S. lawyer to look at all our business entities within the U.S., who will directly be reporting to me, and that will be included as of September 1.

And also the professional person in supply chain for trade will be appointed as a director candidate and he or she will be part of the management team effective September 1. Also, we have augmented our talent team in order to pursue a pathway to become a global organization.

Nidec will continue to have a huge opportunity and potential to become a great company. To unleash that potential, we need to confront the current challenge of trying to globalize the system and also reform our process. So building the foundation is something that I personally am committed to do. And I hope to continue to enjoy your generous support.

Thank you very much for your attention. This will be the end of my presentation.

Well, thank you, Mr. Kishida. Also now we would like to move on to the Q&A session. [Operator Instructions] First question will be from the securities companies. And then after that, we will get the questions from the media. So would anyone like to kick off? The person in the middle, please.

This is Takayama from Goldman Sachs. I have three questions. My first question is regarding the trade issue and the tariff issue, you had some internal conflicts and you are doing some investigation. But can you elaborate on what exactly the problem was and what the background to this issue was, and what kind of investigation is ongoing? And what are the measures to avoid the recurrence of this? I think this may lead to your new legal structure that you have formed. But can you give us more details?

And can you make sure that there are no further issues from any of your subsidiaries? I think that is a concern that's raised by the investors. So can you elaborate on that point, please?

Yes, I will respond and Samura-san will make additional comments as needed. In this incident we acquired entity from Kinetek in 2012. It's a company called FIR and their country of origin expression to the North American market was not accurate. So that was the starting point of the problem. And to deal with the country of origin issue, we started a specific investigation. This was discovered in the latter part of 2023, the report was submitted. But the measures taken to date where there any deficiencies on our side, and for any of the categories other than FIR. Also as our own resolution and commitment, we said that we want to do a further investigation on any potential issues elsewhere.

Also for FIR, the investigation has already been completed. Also, I can say that the investigation is not complete. But on top of that, we are broadening the scope of the investigation as a show of the rule of company to make sure that there are no other incidents. ACIM, which is overseeing this whole business. We are looking into the whole ACIM to make sure that they are other similar incidents. And because we have this investigation from June end, we have extended the submission date of the financial reporting for 3 months.

At this point, I cannot make any specific comments about the potential outcome, but we are doing the appropriate investigation. And if we find any issues that needs to be dealt with, we will respond immediately and we are preparing for that.

Also, at this point, you have extended the deadline to the latter part of September. And can you make that deadline with your investigation?

For that, on a daily basis, from morning to night, what we have relevant people across different global sites. Also regarding the imports to U.S., they are collecting the evidence and also the people in charge or the business owners are being interviewed. And through all those efforts, we are conducting the investigation. And on a daily basis, we are working on this. And we plan to complete by the extended deadline.

My second question is regarding the variable cost, at the outset of the year, you had mentioned an absolute number for fixed cost, but now you say you have completed the plan to reduce the variable cost. So that said, on the variable cost, in order to cut the variable cost by JPY 100 billion, would you expect some increase in the fixed cost as a one-off? Or would you be able to further reduce the fixed cost? Because you said that these two are correlated.

Yes. Thank you for your question. So addressing this variable cost is not just simply the raw material ratio. Also, we are saying that we want to cut variable costs by JPY 100 billion by selecting and focusing on the businesses that we like to continue. Also we may be pulling out from the underperforming businesses, and we also may be negotiating with the customers to improve the profitability of our business. So our fundamental operation will also be consolidated. Like the example I gave out about the Qingdao new campus. Also we are willing to close some sites to consolidate to a larger base. Also for the fixed cost efforts, we also have a better clarity.

And also my last question is that in the second half, you will have to push up the OP by JPY 70 billion, and you have JPY 65 billion So I think Q2 will be okay. But as you move to the second half and you need to bring up the profit to JPY 70 billion or higher on a Q-on-Q basis, what kind of changes do you need to make? What kind of improvement do you need?

This is Samura speaking. This is part of the midterm plan that we have. I believe your question is related to that plan. As I've said, when it comes to Small precision motors, we have this -- they are becoming highly profitable structure. We have other small motor. That's another segment that we have. There are some nonprofitable businesses. We need to make the business shrink. And we need to say not to any future offers when it comes to those nonprofitable businesses. There are some business where we need to -- which we need to grow alternator power generators. We are having a huge surge in demand.

When it comes to MOEN business unit, our backlog is more than JPY 400 billion already. So when it comes to the business portfolio in Q3 and Q4, we are going to see a significant conversion in Q3 and Q4 this fiscal year. This will become a huge business driver for our business going forward.

When it comes to the JPY 3 billion in Q1, when it comes to this cost reduction, can you elaborate on the quarterly strategy when it comes to fixed cost reduction or temporary cost handling?

We have negative one-timers, and we have positive one-timers as well. We have business consolidations taking place. Real estate-related ones are sometimes what we need to focus on. We have a profit, loss makers and profit makers. We definitely need to make a balance between the two, even though we are not going to be perfect in that effort.

About JPY 3 billion, are you going to say that you will be seeing this type of amount of less and less going forward?

We are having this midterm plan. We have planned structural reform. We need to realize amount of loss as we try to speed up that process of this structural reform. We would like to think -- keep in mind about our pace in Q1. That's what we like to -- thank you very much for that.

Any other questions from anyone? Please go ahead the person on the left.

This is Akizuki of Nomura Securities. I'd like to give you some detailed question, if that's okay with you.

When it comes to Machinery sales, there seems to be a significant decline there. And there is not so much effect from currency exchange fluctuation. You have made some comment on that, can you elaborate on the performance of that business unit, Automation and Machinery?

When it comes to Machinery and Automation, when it comes to tooling machine business, compared with Q4 sales are declining significantly from Q4, when it comes to the machine tool market, sales are -- sales tend to increase towards the end of the fiscal year. So there was a decrease from Q4 to Q1, as you can see when it comes to sales. As I've touched upon a few minutes ago, when it comes to the inquiries and order intake, it was over JPY 35 billion back in Q1. And the sales are as much as JPY 23 billion. So the amount is 5x. So order intake is going smoothly. There are some seasonal factors when it comes to this sudden drop.

My second question is as follows, which is about the power generator business. I believe Kishida-san has made some comment on that a few minutes ago. And can you add some comment to that comment, please?

When it comes to North American power generator business, one idea is to utilize LNG. That's one major trend up there in North America. And Siemens, GE, among other companies are some of those companies in that type of business.

When it comes to your company, Nidec, you have the super large power generator, I believe Caterpillar one of the names. I believe that's one of the suppliers for that production, you have partners, I believe. And into this business. Is that the correct thing to say? Are you going to increase your capacity in that area. But when it comes to the power generation made by liquid to natural gas, backup generators needs will decrease because of the possible redundancy. And you will be making probably fewer and fewer such backup generators in the future.

Thank you very much for the question. When it comes to data center, data power source, and that's not what MOEN is doing. They are in the emergency power source business. We have customers. There are quite a few. There are some customers in this business emergency. And they are all Tier 1 businesses, they are covering pretty much the entire industry there. And there are customers with these Tier 1 customers. And those are the customers that are very famous as the worldwide brands.

We have a large customer base, in my opinion, and fuel will trends may change. The sources for power generation will change, will continue to change. But when it comes to emergency power generation such sources of emergency power generation will not be gone completely. They will stay here in the business. As changes are made, we are making changes. We are going to make -- we are making changes as we try to adapt ourselves -- continue to adapt ourselves to that business.

And the third question is about -- also is related to this area, water cooling data center related question. We have pumps, large pumps at the end of the -- at the foot of data center. I believe you will be using nuance people when it comes -- I believe you have a large market share when it comes to pump in North America. Do you foresee any increase in demand for pumps for these data centers? It could be a Tier 1 to Tier 1 business, but are you going to make or planning to make any access to such area in the business?

Please take a look at the photo over here. It's not that our internally produced pumps are used here. That's not the case. We have quite a few group companies that are producing these pumps. And these pumps are usually mainly for cars. These pumps are produced in the United States and elsewhere. And we are converting this technology to -- for this business over here, as you can see on the slide. We need to make sure that these products are installed in our customers' products. And these are -- we are making progress to make these pumps part of the data center business.

I believe you are talking about huge pumps for the chiller, the water to be coming from chiller that is outside of that center. We're not having those huge comps as part of our product portfolio. Well, when it comes to these pumps that we have just talked about, and we could expect expansion of our product portfolio.

I believe NMC has a large pump business. What we are talking about is the pump for natural gas. It's more like motor rather than a pump, it's a popular equipped product, I believe. Turbine-like product, I believe. Those turbines may be used in this type of business in the future. But as I've said, I'm talking about the scroll-type chiller business. That's one of the new possibilities that we have for our company's future. And this is one of the five major business pillars that we are discussing.

Any other questions from any one? The person at the right, please, in the back.

I'm Naito of Citi Group. I'd like to give you two questions. When it comes to variable cost, I have a question for you. When it comes to this structural reform, sales expansion and sale business is shrink -- withdrawal. OP percentage, 10% or less could be in that category, Automotive, for example, that could be the business with a 10% or as operating profit ratio. If this business fails to reach 10% operating ratio, could this business be subject to this type of policy over here. How about the time line for taking those actions, please?

When it comes to the target of our -- this company-wide policy, there will be no exception. Whether it's our Automotive business, whether it's any other business, there will be no exception, when it comes to this company-wide policy. That's one thing that I want to tell you first.

Now when it comes to the timing, we need to think about our customers. We cannot make decisions alone. That's not something we can do. We need to think about our customers. We have this scenario that we need to make covering up to 2027. And if we need to withdraw from certain business, we need to let the customers know and we need to discuss the timing with our customers.

There are some things, we have some declaration made about some of our that have been cash bleeders. And we have not been able to make a profit more than 10%. And we have been able to convince those customers about the price increase. And we have been able to shake hands with these customers for new business opportunities. So withdrawing from our business is not everything about what we are trying to do. We'd like to increase more profitable businesses in our hands.

Here's my second question. When it comes to this performance back in Q1 and now this Q1 is behind us, behind you. Do you see any changes in the demand regarding the tariff payment in United States? And if you have any opinions regarding Q2, July through September, please let me know.

Significant decrease in demand caused by these tariffs. It's not something we are facing. When it comes to our businesses themselves, we have business taking place in each regions here. We are producing and consuming products locally in individual regions. And regardless of changes in tariffs, we will produce products locally, and we will deliver products locally to our local customers. And these current tariffs not really making any huge impact. That's one thing that I'd like to say, based on our long years of business.

50% from Brazil, several percent from Mexico, et cetera, according to several tariff-related talks. There used to be NAFTA. We have USMCA, which is a new form of a trade agreement. It was established back in a few years ago. And up until 2036, this treatment will be in effect. The products will be protected under this treaty. In 2026, the triple nation talks will be held, and they will be able to decide whether to continue or discontinue this type of policy.

The 50% decision today is not going to be in effect forever. We have this supply chain. We have a long range. We need to think about this type of situation in the long range. 50% tariff ratio for Brazil, Mexico, et cetera. Situation varies from country to country. We're not really suffering any huge impact from these tariffs in place. We have had some impact by JPY 5 billion or JPY 6 billion. We are having this communication -- discussions with our customers, trying to minimize the impact of the tariffs. That's what we have been doing, and we will continue to do it as a manufacturer in order to survive this situation as a manufacturer.

So the next person, please.

My name is Goto from Mizuho Securities. I have two questions. My first one is earlier you said that cash flow level in Q1 was relatively low. Can you give some additional commentary around why that was the case. And you did not disclose the balance sheet information, so we cannot confirm, but are there any material changes to your balance sheet?

Yes. So the cash flow did not grow that much this time is because the working capital reduction did not progress as anticipated. The background to this was mainly in the business segment, it's MOEN. As we discussed earlier, on the energy-related business for that, we had a lot of intermediary inventories. So we had made some upfront preparation for the business. And at this point, we are not at a pace of trying to reduce the inventory. For machine tools, the revenue is above order book. So we are not able to reduce the inventory. So this is a result of a positive business trend in a way.

And my second question is for the organic auto products, our margin improvement is happening for real. What triggered this improvement. The revenue was tough, but why were you able to still improve the profitability. And going forward how much more room do you see for further improvement going forward?

Yes. Thank you for your question. For the organic auto products business, mainly the customers are European, U.S. customers, especially with the European customers. While we are going through some major transformation or the customers are going through the transformation. So we do not see a big growth in sales this quarter. But since last year, we have been trying to transform our business portfolio. And through those initiatives, we have improvements through negotiations with the customers. And this is not a type of business or product where we closed the contract and then get the revenue immediately.

With many customers, we have been able to solve the issue, and this will lead to further expansion of business going in FY '27 or '28. But the current improvement we're seeing is the benefit of the operational improvement and also the result of the structural reform.

Do you have anything to add?

No.

So now we will open up for the Q&A session for the media, please. The person in the middle, please go ahead.

My name is Nitta from Nikkei Newspaper. Looking at the U.S. Japan tariff negotiation, it decided at 15%. And I think there will be some impact to the auto customers. But what are your responses to the tariff that's been or that will going to be implemented?

Looking at the media reports. It's the tariff on what is exported from Japan to U.S. But as the industrial goods, we don't have a lot of goods in our business where we produce in Japan and export to the U.S. The Japanese OEM who ask us to supply in Japan, we manufacture in Japan and supply in Japan.

From our capacity in production. So with the tariff from U.S. to Japan decreasing from 25% to 15%, it will not have a huge impact. And when we deliver our goods to the U.S., it may come from China, Europe, Asia or Latin America and from different origin of country.

How the supplies are being delivered?

Well, in some cases, we may be the importer, we may deliver those to the customers. So we need to grasp the overall view of the supply chain. And after understanding that, have been studying the impact of a tariff since the last fiscal year, so it was not a surprise for us. Maybe this was not a direct answer that you were looking for.

But in order to mitigate such impact, we have been making efforts in the past multiple years to locally manufacture and locally sell. And also through this communication, I think what's been under the attention is the rare earth export restriction in China. The nation has a policy to moderate the export restriction. And I think that is also being reported in the media. But in practice, the volume that we need and the volume that's being exported, there is a gap.

So as a manufacturer, what we would like to be prioritized for those rare earth export. So we are discussing with the government and regulators to closely monitor the situation.

Regarding the tariff, the direct impact maybe just JPY 5 billion, JPY 6 billion. But indirectly, if the customers' business performance deteriorate, how would you assess the indirect impact?

I think your question is coming from Japanese OEMs exporting like 1 million cars to the U.S. And I think you need to raise that question to that particular OEM, but that customer is a global top tier company, and they also have production sites in the U.S., so those are OEMs. Also our customers in the U.S. market for our U.S. business. Also when their production shifts to the U.S., we will also follow suit.

So we do not expect a big drop in the demand in that sense. So we have very close communication, and this is beyond our control. So we continue to collect the information to be able to respond to what is needed by the customers in a flexible way.

Yes. And the other question is regarding the cooling module business, which is improving. So can you explain why the water cooling modules are improving like the GPUs and maybe different methodologies? Or what are the reason for the better performance?

Also, we have Urago-san, who is the doctorate of the water cooling module. So let him explain that.

Yes. So as Mr. Kishida-san mentioned, the AI data center demand, for that, we have two solutions, thermal solution and energy solution. And Nitta-san, I think your question is around what's happening in the improvement of the thermal solution.

It's not just about GPUs, but for the fans and for AC systems, and also on the water cooling modules, and also the pump and the equipment set aside the facilities. So the overall inquiries regarding the data center-related demand, there's a lot of inquiries coming also from China, U.S. and Asia, as Kishida-san mentioned, and also in Japan. So we have a team that's developing this product. And in other site or facility, there are a lot of inquirers and visitors are coming to look at what we can offer. So that's underpinning current sales for the water cooling modules. And I believe that going Q2 and second half, we will continue to see evolution and development for this business.

So last year, the whole decision was around NVIDIA, but GPU, there's going to be more variations, and also depending on the countries, they may choose to use different chipset. So after 12 months, we see more variations and options.

And for ourselves coming into this market and trying to grow in this market, we had multiple entry points. And for each of the entry points, it was important for us to prepare the appropriate product offering. We were able to confirm that, and we had been able to complete the precaution for such products. And with that, the product lineup is expanding or we can expect the product lineup to expand in the latter part of this fiscal year.

So on that note, last year, for the full year, we fell short of our target. Also we did have some hiccups in the past, but we overcame that in this industry will continue to grow is what we are seeing. For the emergency power source, there's a commitment for the next 3 years. So here, we see a very strong demand and we are going to offer the right product to address the robust demand. And we were able to confirm that those are going to be driving our business growth.

Also take the last question, keeping the interest of time, the person in the back.

This is Yoshida of Mergermarket. I have two questions for you. You are talking about this reviewing businesses that are not really profitable. And I believe you talked about before possibly selling some of the businesses. And Automotive business -- there is quite a few business within the Automotive business unit, but are you thinking of any specific businesses to be sold.

And the next question is about M&A tariffs. Do you see any effects of tariffs on the M&A strategy global worldwide?

Well, thank you very much for your question. When it comes to selling, and we will have no exceptions, no, sanctuary or anything, when it comes to selling our businesses. It's sometimes very difficult. There have been hardly any cases for us to sell our existing businesses. And we need to accumulate our knowledge in that regard, but we will have no exceptions or sanctuary about this effort. When it comes to M&A, based on tariffs, tariffs will not change our policy or our strategy. Thank you very much.

Now time has come for us to finish this presentation. Thank you very much for attending. We would like to finish this presentation, preliminary figures for the quarter first -- quarter 1 of fiscal 2025. Thank you very much, everyone, for your participation. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]