Nidec Corporation (6594) Earnings Call Transcript & Summary

Now we will start the press conference on the change of President and accounting closing results. First, I would like to introduce today's attendees and presenters. First, Mr. Michio Kaida, who assumed the position of President on September 29. Also present is Mr. [indiscernible], the Chairperson of the company's Board of Directors meetings, and also present is Mr. Masayuki Minai, who present position Representative Director and Senior Vice President September [ 9, 29 ]; and Mr. Kazuo Nakagawa, Vice President and Acting Chief Financial Officer.

I am Keita Watanabe, of the company's corporate communications development. I will serve as today's moderator. We will later welcome and introduce Mr. Masata, Deputy Chief Executive Officer of PWC Japan LLC, which is responsible for auditing our group and Mr. Yoshida, the Chief Auditing Officer of the same company. First, I will explain today's agenda. For Mr. Minai will deliver the opening remarks. Next, Mr. Minai and Mr. Sakoma will explain the circumstances surrounding the change of President, followed by greetings from the new President, Michio Kaida -- excuse me. After that, Mr. Kubota and Mr. [indiscernible] Japan , will take the stage and explain the disclaimer opinion in the auditor report for the first fiscal year ended March 2026. Then Mr. Nakagawa will explain account closing content. And after that, we would like to have a question and answer session, please ask your question at that time. Now Mr. Minai will give us his remarks.

I am Minai, Representative Director and Senior Vice President. On September 29, we reported a change in the company's President. As Mr. [indiscernible], the former President resigned and Mr. Michio Kaida formally for the Senior Vice President, assumed the position of the President, which means -- and -- while I mean I assume the postion of Director and Senior Vice President. In addition to the fact that while addressing a series of accounting and quality issues and advising reform aimed at the restarting trust, we have once again been placed in a situation where the top management has changed. In the consolidated accounting closing for fiscal year that ended March 2026, we reported an impairment of approximately JPY 632.1 billion, Furthermore, regarding the fact that the old opinion issued by the auditor in the securities report for the fiscal year that ended March 2026 was disclaimer our opinion. We sincerely deeply apologize for causing great concern and inconvenience to our many business partners, including our shareholders, investors and members of the market community as well as our business partners. We truly -- since I apologize, we will explain the details after taking our seats. Thank you. From this point onward, speakers will take their seats and Mr. Minai and Mr [indiscernible] Will explain the background, the change of the company's President, followed by Mr. Kaida's remarks as the new President. Please stay look at [indiscernible]. It was yesterday that we made this announcement as of September 29, we launched a new top management system. Under this new management, we will continue our efforts for our cooperative reform for -- to make a better Nidec. Once again, with respect to the new President, Mr. Michio Kaida is the President, who assumed that position of President. And at the same time, I'm going to be serving as the new Representative Director. With these two of us, we will lead this company's management. I would like to provide you with an explanation. Mr. Sakoma will give an explanation but leading -- the events leading up to the change of the President.

This is Sakoma speaking. I'd like to provide you with an explanation change of the President. As you know, Mr. Kishida, former President was subjected to the investigation by the executive responsibility Investigation Committee. And we, the Board of Directors made necessary preparations for the possible replacement of the present we discussed the emergency measures, including the replacement of the present with a new one. And the Nomination Committee is led by Yamamoto-san, [indiscernible] and I are the members of the Nomination Committee. These are all outside of members of the Board of Directors of this company. And under the leadership of Yamamoto, the Chairperson of the Nomination Committee, we deliberated various relevant issues, as you guess, on the news release, we use the third-party organization to select appropriate candidate to replace Mr. Kishida. It eventually after a series of interviews, we decided on these two people, and we submitted our proposals to the Board of Directors. And on the meeting of the Board of Directors on September 29, we decided on these two people as the top management of the company. It is a very unfortunate event, but during the fiscal year 2025 that ended March 2026, there was an impairment loss that exceeded JPY 600 billion. As you can see in the news release, with respect to financial reporting, there was a report to the Board of Directors about inappropriate speeches and actions by Mr. Kishida, which we discussed. And in the meeting, we asked Mr. Kishida's opinions. And the Board of Directors meeting, Mr. Kishida, the former President, left the meeting room after that we had the discussions on him, and we reached a unanimous decision to replace him with someone else. And we reported back to Mr. Kishida, then he expressed his intention of resignation. Then we conveyed this resignation intention to the Board of Directors, the Nomination Committee. And Mr. Kishida submitted his resignation letter on September 29. And on the same day, we held the Board of Directors meeting to decide a new President and a new Representive of Director. With respect to the sense of presence of legal liabilities, it is up to the decision to be made by -- to be made by the Executive Responsibility Investigation Committee. That is all from me.

Next, we'd like to have some words from Mr. Kaida, and he will give you some highlights from our company's financial performance as well.

This is Michio Kaida, who assumed the position of President on September 29. As we move forward with addressing a series of announcing accounting and quality issues, the situation has risen once again in which the top management has changed. In particular, we take very seriously the fact that our view surrounding our companies having a significant impact in many areas. Having assumed this responsibility, I do understand and take as the fact that kind of situation of this company has cost -- has been causing a lot of anxiety and worry among our stakeholders. In order to regain public trust in Nidec, we will do our very best, which is my mission as President. What is important is we need to go back to the basics as a company. we need to secure a very appropriate financial result. We need to be able to train our people, make quality products. And we need to be -- regarding our [indiscernible] resources as the top best treasure for us as a company. We like to continue to once again make quality products that are trusted by our people, our customers around the world. That's our most priority. In order to do that, we will continue our efforts. And thank you very much in advance for your support. Now allow me to give you and share with you the highlights of the financial results. Allow me to have a seat. I appreciate if we can browse your documents, before you and also has been shared up on a screen. So first of all, let me describe you the -- some of the development. We recorrected the inappropriate accounting practices, and we corrected 2025 fiscal year, the third-party committee was held and launched on the 3rd of September. And after the annual securities report was announced for 2x. This year, the 11th of April Third Party Committee investigation report was sent to sack on the 17th of April and end of 30th of June, that we extended submission due date of Annual Securities Report. And then we -- before that 30th of September, we submitted the annual securities report. But audit firms -- audit of union has a disclaimer of opinion. Fiscal year 2025 financial results. Since last year, our business portfolio needed to be converted and also profitability need to be insured. So what is to be in the future. That's been discussed internally and in structural reform and also conversion area we look at the businesses and we try to review the business portfolio and JPY 632.1 billion for impairment losses we have to recognize as a result. So [ JPY 2,708.7 billion ] of the sales and operating losses were made and ROE declined from 40% to 25-some percent here. As far as the impairment loss is concerned, you see on the right-hand side, mainly that's coming from the home appliances and automotive-related businesses were listed here. However, our free cash flow is around JPY 98 billion. In other words, we have a healthy cash generation capability. Next page, please. Now where we have to come to impairment loss. There are internal environment and also external environment. Internally, there are management practices we followed as we did conventionally. We try to pursue expansion of Motor businesses as we funded the company with a model, and we try to expand an omnidirectional way. And not only that, the uniform performance management, and we solely focus on the short-term performance. That's the practices we have followed in the past. But given the current business environment around us, as you know very well, for automotive, EV started to slow down and SCV started to accelerate now. And that pushed up that intensified the competitive landscape and then cost has increased. And also in Home Appliance businesses, before COVID-19 pandemic, there was very brisk business environment. However, unlike that before, right after COVID-19 pandemic, demand started to [indiscernible] and then that has become a commodity -- has become a commodity and that has intensified competition. Given the environment, we had to go through the excessive CapEx, and that led to the excessive impairment losses we had to recognize. Now this is the guidance for fiscal '26. Let me be brief here. this fiscal year, sales will be JPY 2,800 billion. Operating profit is expected to hit JPY 200 billion. Progress in this first half, JPY 1.4 trillion, as the sales and also JPY 120 billion of the operating profit. That's the progress we made in the first half. Turn the page. Now here's a solution of our management policy going forward. As I touched a little bit of what it had been in the past, pursuing the scale and uniform performance management and so focus on short-term performance -- and we need to pivot ourselves to the future state. We need to change the portfolio. And also, we need to run the businesses with ROIC. And then we turn around the financial footing going forward, especially the huge impairment losses were recognized. So we need to go on the structure reform with no exceptions. Also high level the growth and high profitability, that's where we would like to do. That's a quality change of the company. Under the new management system, we would like to formulate new midterm management plan. Turning page. Now growth area resources need to be shifted. And I would like to talk about how we're going to do that. In Nidec, there are five billers. We call them as a five pillars. Left-side left-hand side, form appliance, energy infrastructure, AI semiconductor and to the right machinery tools. And Last, but not least, automotive. As you can see here, impairment losses appeared in Home Appliance and Automotive, where we see, up on the screen from left to right. So these resources in those areas needs to be reallocated to energy infrastructure, AI semiconductor. Also machinery tools that require a higher level of the precision. We would like to assign and reallocate resources in right fashion. So these management resources need to go to the focused area. That's what we'd like to do in the future. Next page, please. Now one of the -- those core area, this is a high profitable growth area. I'd like to share with you a little bit. Our [indiscernible] is our HDD component business. The growth rate is expected to be 14%. Our share maintains the largest on a global scale. And recently, AI market drives the water cooling module, we expect to see robust demand here. So data center generators and BESS and also power conversion system -- these areas of the businesses maintains a high level of the growth generator the ESS battery storage system. And these are two businesses that enjoy the revenue growth of 40%, very high. So energy-related businesses will be -- aware we would like to reallocate the resources going forward. Next page, please. Now for the sake of obtaining the opinions from audit, we are making efforts. The 30th of September there is a disclaimer of opinion from the audit firm. But we're already -- we work together with while looking at the schedules and some point in October, we try to get opinions of audit and would like to solve the remainder issues. That's what we are working on at the moment. Let me be brief here in reporting video of these performance. Can we move on? Here on, PwC a Kubota and [indiscernible] will come into room, who are in charge of Nidec.

I would like to introduce the speakers. Mr. Masataka Kubota, Deputy Chief Executive Officer of PWC Japan LSC. Mr. [indiscernible], Executive Officer and Chief Audit Service Officer of PwC Japan LLC. You may have seat. Now over have you explained to disclaimer of our opinion on the audit for the fiscal year ending March 2026. Thank you in advance.

Thank you so much. I am Kubota PwC Japan LLC, Deputy Chief Executive Officer. 2026, March financial results and also the report and we chose to have a disclaimer. So regarding that, along with the audit report, I would like to explain. First, so disclaimer of opinion which doesn't determine the mistakes in the report. So our audit firm in the report as a rationale, what is stipulated in the consolidated report, there is an important impact. There could be an important impact. That is why sufficient and proper audit evidence was not gained. So we decided to have a disclaimer. 2025 March and 2026 March did report, both had a disclaimer. And the reasons are not the same. 2025 months, the third-party investigation were not completed. And in appropriate accounting process, so the range of that and also what impact would have to the financial statement. We was not -- we were not able to obtain sufficient evidence. Therefore, financial overall properness we couldn't make a judgment. That's why we had the disclaimer. On the other hand, 2026 March, different situation. the third-party survey and the quality issue and tax issue. So survey is almost complete and we identified the reasons of the disclaim. 2026 months in the audit report the rationale of the disclaimer is stipulated as follows: corporate governance-related topic and impairment losses related to the others. Regarding the corporate governance topic, I want to explain. The company received the third-party report. In that the company and group companies in various regional offices relating managers, there is the allowance booked with less. And then fixed cost was reduced, and the cost was inappropriately booked. Furthermore, company and group associated companies manager or account accounting plan to get the audited agreement for there was an inaccurate or misleading the information provided to the auditor. And the documents were hidden or revised, that was confirmed. And third-party identified the certain facts and inappropriate accounting materials were already revised and the company in terms of the quality management related investigations completed by the company. And test exam record manipulation. So those were confirmed. Also, trade dealing and other issues in save investigations are finished and the expenses and all the items are revised. However, in appropriate accounting those were acknowledged or members who had an untruthful comment to the auditors, we identified those members and company's evaluation and HR treatment, partially not completed as a result. Part of those employees, so as of now, in the company and group company, a consolidated financial report manufacturing process, in that, those are still holding responsible in their positions. Inappropriate accountant treatment and these member needs to be removed. So company looked into it and executed some actions. We're looking at the past five years accounting. So in the limited time to respond with the audit, it requires a lot of time. That is the fact. So for the company to execute this, relented management members who did the appropriate actions, we make sure to have a preventive actions. So we require those members to support the accounting business. However, a long complete compliant cases or there are new cases to determine some in appropriate actions. And as of September, in the financial reporting process, still those members are holding the responsible position. That was determined. In the third party committee, I terms identified was that for many years, company and group companies' governance environment, that unique feature became visible. And there is the risk, which means the rule making and also controlling rules. So those members who had seen a position will overrule the rules. So that risk is not considered, therefore, company accounting, governance and control. So there is the major concerns. This situation shows the management members got engaged in the inappropriate accounting practice and also it is impacting the materials generated. From these management members, we obtained the audit evidence or statement. And with these conditions, we are unable to trust them in terms of the audit. So our audit firm, the revision by the company or the region needs to be done and inappropriate all those actions to be improved, is that exhaustive or not? And due to the risk is the potential major mistakes, whether those exist or not. And if they do exist, the quality and impact the rain impact, we couldn't make a judgment. Now regarding the impairment loss. Audit firm, the amount of the booked impairment loss, and then in what item that would need to be booked, is it appropriate or not? For that, we were unable to obtain the sufficient appropriate evidence. Besides inappropriate accounting practice, so there are management members who could engage in it. The evidence power about the impairment loss. So there is a major impact. Also, financial attainment statement is not of this fiscal year only, but it includes the last year's financial statement. So comparison conditions is revised. So with the inappropriate accounting practice, so in the accounting standard, consolidated financial statement before the impairment. Based on that, the fact and result that happened afterwards should not be used. Specifically speaking, cash flow forecast after the revision. And also the business plan that is the basis for that. So those important items have to be before the region public information. information formally after should not be used. And the necessary explanation was not obtained sufficiently, and we couldn't obtain the appropriate audit evidence therefore, impairment loss booked by the company is following the standard of the accounting -- is that appropriate or not, we couldn't make the judgment. Therefore, comparison information, as I stated in a corporate governance in proper accounting practice. So those management members engaged in that. So stipulated the FY '25 March manufacturing generating process, those members are taking responsible in the position. Therefore 2025, March numbers, and also consolidated finance statement. So those amount is appropriate or not, we couldn't make a judgment. With respect to the consolidated financial statements, we weren't able to obtain enough evidence to prove this contents. And these impact, we determine what was going to be very large. Given the number of those issues in existence we believe that such impact will be over the entire financial statements, consolidated financial statements. Therefore, we weren't able to determine whether to have those -- whether to decide those impacts will be on all of the consolidated statements or not. As I've stated already, with respect to inappropriate accounting practices, the range of reponsibility is yet to be determined and that we weren't able to assess the exact impact of those in appropriate accounting practices on the company's consolidated performance. Therefore, we, the PWC Japan weren't able -- wasn't able to perform sufficient auditing activities. This is why we gave the disclaimer of opinions to Nidec's consolidated financial statements. We needed to express our opinion as the auditing firm regarding -- we are an independent auditing firm. And we are -- we do fulfill the responsibility as such. With respect to this latest studies, NideC's financial's statements, these are our best and applicable rules. We needed to -- but we couldn't obtain -- we were not able to obtain enough comprehensive sufficient evidence about Nidec's financial performance. We, PwC Japan based on our responsibility as an auditing firm made this decision. This concludes our presentation on the reasons for the disclaimer of opinion on Nidec's financial statements. With respect to this disclaimer of opinion, this is for the Nidec's financial situation as of the end of March 2026. We would like to fulfill our responsibility as an auditing firm. We will continue to work and discuss with Nidec as we go forward to discuss and address this issue. That concludes my presentation. Thank you.

Thank you very much for your presentation. Lastly, Mr. Nakagawa will present you with the company's financial performance statements for this fiscal year.

It was yesterday that we listed this financial information, and we'd like to provide you with some main points. First of all, we have covered 5 fiscal years. Starting from 5 years ago until the end of March this year, we have disclosed our information up to Q2 second quarter of this fiscal year. And the third party mitigation period is from 2020 fiscal year until the [ October 1st ] of 2025 fiscal year. So there is a gap between our period and their period. But our period has covered 5 fiscal years. Please make necessary adjustments. I believe that way all the figures will make sense to you. First of all, with respect to the amount over here, the net asset has decreased by JPY 476.9 billion. With that amount, the amount coming from the inappropriate accounting practices is JPY 208.0 billion. We have some impact of JPY 288 billion. Back on May 13, we have made a presentation to you all. And third party's opinion was JPY 160 billion. We will explain to you the gap using the chart. It is based on the difference of the periods on -- between the two sides. JPY 288 million, is the amount of impairment losses incurred. This is the breakdown of the corrections we have made. Prior to the corrections, the amount was JPY [ 819.9 billion ], and we have had some points pointed out by the third body committee. And that amount pointed out was JPY 174.2 billion, and impairment losses was JPY 288 billion, and amortization and repreciation was plus JPY 123 billion. And we have had some reinspection of the accounting process, plus JPY 373 million and you can see a corrected amount is minus JPY 382.6 million -- billion, and operating profit after the corrections were made as JPY 473.3 billion. There is no major impact on our financial performance. And you can see the accumulative amount. And you can see the cumulative total on the far right of the chart of the year. And you can see the breakdown of the amount that I have just mentioned. JPY 288 billion is the amount of the impairment losses and the majority of which comes from the Automotive business, JPY 4.2 billion. JPY 76.9 billion, which is something that I'd like to explain later in detail. Next page is about our balance sheet. You can see the comparison between before and after corrections were made. On the right-hand side, you can see the final amount of money impact. You can see the JPY 1.7436 trillion for the net assets before the corrections. And after the corrections, the number is negative [ JPY 404.769 trillion ] and net assets after the correction is at [ JPY 12,667 billion ] as you can see. And you can see the major causes for the impairment loss Automotive business is the top 1 that I mentioned. JPY 204.2 billion, this business is concerning the electronic power steering, electric brake, pump and other products. We have made capital expenditures to expand our business there. But with respect to -- there have been some changes in the EV market, and we have emergence of Chinese manufacturers as our rivals. And there has been a demand from our customers and Chinese suppliers became increasingly competitive. And because of that, our competitiveness declined. And such circumstances, we would increase our share according to our plan, but there was a mismatch whose gap has increased with reality. And our competitiveness was going to become less and less because based on that decision, we recorded impairment loss. The next one is about Nidec Drive Technology Group, which is handling reducers press machines among other products. As a latecomer into the market, we were very active in the business activities. But due to the [indiscernible] competition with our Chinese rival manufacturers, we have an increase in the cost regarding our European businesses, we started struggling in this business. We have the press machine business, as you can see, we have an increase in the inventory of our products in the business. In fiscal year performance, some struggles were became clear. Therefore, we decided to have this adjustment, as you can see on the bottom right-hand side, bottom right-hand side of the slide. On to the next slide, you can see the net assets for Nidec Corporation alone. With respect to Nidec Group companies you can see some impairment loss cost figures. And you can see the reserve and due to impairment losses, we have had excessive debt of some of our group companies. You can see some reserves, JPY 58.6 billion. And you can see the correction related impact is JPY 1.361 billion negative. And you can see the distributions related figures there. As you can see on the slide, since 2021 fiscal year, you can see the increase in the numbers from minus [indiscernible]. And unfortunately, for all these 5 fiscal years, we exceeded the distributable amount. Next, we would like to talk about the financial performance for this fiscal year. As Kaida-san said, [indiscernible] of the revenues and operating profit, you see because of the partially driven by the impairment losses, operating losses were JPY 519 billion. Some of the highlights for revenues which includes appliances and commercial industrials, there was a brisk demand for data center in North America and the alternator is leading the revenues, which is very robust. So 3.9% growth from the previous year. Operating profit, as I've repeatedly said, there are significant payment losses booked. So JPY 519 billion of the operating losses. Other topics on the right. As a consolidated subsidiary, need to needed to recognize a huge amount of the impairment losses. Therefore, parent company, Nidec need to recognize a huge impairment losses. As we talked about the year -- March year, year ending in March 2025, but the same applies to this fiscal year, too. Here, this is a comparison, you see variables in each item. As I touched free cash flow, the year ending in March 2025, it was JPY 136.8 billion, a decline. But still, we are able to ensure JPY 98 billion of the free cash flow. That's part of the [indiscernible] you might want to pay attention. And then I would like to spare a few minutes talking about what are the major impairment losses. JPY 600 billion plus of the impairment losses and which ACIM which includes home appliance, commercial, industrial, commenced a lot. As Kaida-san already reported, home appliances polluted to supply capacity we're excessive. So utilization ratio and supplying capacity have been down to 50%. And also, there is excessive competition going on in China. And Industrial Motor businesses, there is a huge fixed cost given the fiscal year '25, as of the March 2026, the future profitability and future cash flow outlook have been a basis on the need to go for the special reform, including production. That's why we needed to called major impairment losses. 13 of May, the portfolio review has been discussed was discussed. And as you see, the product lineup, but you see here up on the screen. Turning the page, NPE and PSA IMO. This sits in Europe and EXL for EVs have been provided. This is a joint venture, by the way. In the first place, EV market, high level of the growth, and there are major clients are expanding their production. So we were making upfront investment for development and production facilities. However, the growth of the EV market is well below what we are expecting them to be. And we are not able to secure significant shipments that we had expected to get, and that sets our profitability significantly. And we have studied a lot but the worsening performance and for the year ending in March, 2027 budget declines. So we decided to recognize the major impairment losses and all the fixed assets and the goodwill, both of them needed to be booked as impairment losses. Next one, in MOJ, this is a part of the automotive market, automotive ECU and interior switch, DC converter and OBC power equipment have been handled in this part of the segment. Specific products in overseas businesses have confronted with operational challenges. The impact in the overall company-wide segment or business-wide profitability. We try to pivot ourselves for automotive electronics business. Therefore, we are making development investment before its too late and that does have an impact on the profitability. And we already articulated structural reform based on business portfolio conversion. But based on the business reform that we had at the moment after review, we decided to recognize impairment losses. Goodwill and tangible fixed assets, almost all of them have to be recognized as impairment losses. We'll go on to the next one, which is a little busy, sorry. fiscal '24, '25 comparison. After correction, operating profit, fiscal '24, you see the operating profit, it does include huge impairment losses. You need to add that up to JPY 221 billion, which does exclude nonrecurring factors. However, fiscal '25, we have the negative JPY 519 billion over JPY 600 billion of the impairment losses needed to be added to this. So excluding nonrecurring factors, it says JPY 150 billion. So you see the variance in comparison between JPY 221 billion in fiscal '24 and JPY 150 billion in fiscal '25, you see the comparison and factors in [ 87 ] Unfortunately, the automotive and home appliance and machinery equipment segment, even though you exclude the one-off factors, the profits decline, revenue decline. And for SPMS, there was an increase of the profit by JPY 4.4 billion, but JPY 4.2 billion of the cost across company-wide. This is a comparison of the balance sheet between the year ending in March '25 and '26. Highlights here are the total assets unchanged. However, as you see on the left-hand side, the huge impairment losses were made. So fixed assets declined by JPY 500 billion. But the cash on hands need to be insured, need to be secured. So JPY 850 billion, some of cash were recognized here. So that's why JPY 600 billion increase. So total assets increased by [ JPY 187.9 billion ] to hit JPY 317.6 billion. But as you see on the right, the net assets after correction and after impairment losses and so forth, JPY 1,266.8 billion, and our equity ratio of 42.5%, and that has been corrected though net assets of JPY 764 billion and an equity ratio down to 25.6%. And as you see, net debt bearing interest rates for the year ending in March 2025, JPY 392.9 billion. And in the year ending in March 2026, JPY 261.2 billion, it is net debt, but increase. I mean, it's decreased by JPY 131.7 billion, so it improved. So turning the page. As I already explained, year-ending in March 2026, JPY 100 billion, that's the free cash flow. This is also one of the factors included as a net debt improvement of the JPY 131.7 billion, and you see the -- you see the cash flow. It declined versus fiscal '23. But still, we have a great free cash flow of the JPY 98 billion, still robust. Moving on to internal control assessment response adds to financial reporting. You can see the slides of -- I appreciate you refer to them later. Anyhow, Recurrence measures for internal control has been considered and responded across the company and the improvement planning we're about to be published. On the confirmation letter for internal control, to be published on 28th of October, we would like to include those factors as you see up on the screen. And we are trying to study and incorporate that into action. And after, we are going to get audit from audit firm after that. 2027 March. So this period business forecast. Sales amount increased revenue and we aim for the JPY 2.078 billion and sales profit is the JPY 200 billion. And the beginning half JPY 120 billion, and another half JPY 80 billion. And profit before income taxes, JPY 180 billion and the profit attributable to owners of the parent JPY 100 billion. And this is a forecast dividend. It is to be discussed, that was announced yesterday. This shows sales and operating profit. In the sales there is nonbooked items. So this is the plus JPY 91.8 billion revenue. And likewise previous table from the published numbers, amended numbers are mentioned here. FY '25 minus loss of the JPY 500 billion and impairment loss impact. And those are added back, JPY 150 billion. On the other hand, sales profit of JPY 200 billion, there is no regular ones. And those are excluded. And FY '26 forecast is JPY 160 billion. These are the -- excluding the nonregular items, these are the most recent. So JPY 2.8 trillion is the FY '26 forecast and JPY 160 billion, this is the sales profit.

Now do you have questions? [Operator Instructions] And we have time for online -- to accept online questions as well. Okay, left-hand side, male in front.

I am [indiscernible] Question to President Mr. Kaida. So in this report -- security report, there is the disclaimer of opinion. So to maintain the listing, what is the situation? It's becoming very severe. What is your understanding about this? Could you please share that with us?

By September 30, PWC, together with them every day, we had a discussion and what is happening. So we've been tracing the situation, screening the situation. As I explained before, we would like to maintain our business and what must be done in fully understood. So we have a deadline in mind and we would like to proceed forward so that we can gain the audit report. So opinion you want to obtain that? And is that unexpected that there is this disclaimer for you, management people. Well, not sorry, we were taking time. And what is the difference of the way of thinking? So eventually, as explained by PwC members, our understanding -- and then PwC understanding, and there was a little bit of a difference, and we are trying to align our understanding the way you're thinking. So by the end of October, that is the deadline, and time is limited.

So during this one month, what are you going to particularly work on?

So as PwC members previously explained what is lacking from our side. We fully understand that. So one by one, we will clear that out.

[Operator Instructions] Next person. The third from the left, male in front.

Morgan Stanley, I'm Sato. First question. Yesterday, internal control report was issued. In that 2026 March as of the end of that period, internal control was not working. So that was the judgment. So this one, as of October 1, what will that be? So internal control is not taking effect as of now. So where it is -- there is no internal control. So how would that be rectified by October 1? And you mentioned PWC pointed out about the HR-related correction. Is that already completed, the rectification is already completed or not?

Minai, I would like to answer to this question.

In the internal control report. So whether we can do this or not. So this time, trade compliance misconduct, and other point, we are working on the improvement. And then internal control confirmation report, so we will submit that on October 1. With that, we will proceed to improve fully to complete the improvement. Besides this time, in the internal control report the disclaimer was issued. And the reason for that is that people who engage in the miss practice and who is impacting the improper accounting practices. So about that, as explained by PWC, we will eliminate those practices and financial results together and internal control report together, we would like to obtain the audit opinion. We are starting to take concrete actions. So what exactly we are going to do now we are communicating and clarifying those items, we will work on improving each one of them, one by one.

Second question regarding the schedule going forward. By October 28, the Tokyo Stock Exchange, you will submit the internal control confirmation report. And as of the September 3 press conference, by November 13, the latter half accounting result. And in December, 5 years interim plan will be presented. That's how you explained it. So will this schedule be maintained? Or is there going to be a change in the schedule?

Minai speaking. In conclusion, no change in this schedule. We would like to follow this time line. We are focusing on the time line and preparing for that. How about the main rectification measures. So that will be completed by December. The person on the right, please.

This is [indiscernible]. I would like to ask a question to Mr. Kubata, from PWC Japan. You, as the auditor said that you will fulfill your responsibility as an auditing firm. But the deadline is at the end of October. Is there going to be any other opinion other than in addition to other than disclaimer of opinion please?

First of all, as I've said before, our responsibility as an auditing firm is to obtain an appropriate evidence for auditing activities. And we will provide an appropriate opinion as an audit firm. Of course, this is related to internal management, and our preparations are underway at this company. And based on the result of the activities, we will provide our opinion as an auditing firm.

According to your explanation, there have been some cases, some issues that have been identified in the process. Do you think you will -- do you think everything will be possible to be done [indiscernible]. You're talking about the last month, you start with this month.

There have been some issues identified during the last month of September. And because of that, we weren't able to express our qualified opinion. And as has been explained by Mr. Minai a few minutes ago, the progression including a scheduled coordination.

Here's my final question. With respect to PWC, do you think you won't be able to -- when is the right timing for you to -- when did you decide that you wouldn't be able to provide Nidec with the qualified opinion? And with respect to the communication between your firm and Nidec, you stay related to the resignation of Mr. Kishida?

This is Minai speaking. Once again, I would like to provide you with an answer to the question. As in certain countries our auditing process -- the accounting process became stagnant because of these issues. We confirmed and checked those issues until the very last minute in a form of a discussion. We will try to solve those issues to the best extent possible. Until the very deadline of September 30, we did our very best, but we couldn't solve all of these issues, and that is the reality. Plus, with respect to Mr. Kishida, we has had issues with his recognition. That has nothing to do with these issues, That I've just mentioned. Thank you. Please next. The person over there, the person, the second person from the right.

This is [indiscernible] newspaper. I would like to ask you about the resignation of Mr. Kishida, the former President, there has been some inappropriate activities speeches by Mr. Kishida about the financial reporting. Mr. Kishida would mention that everything will be up to the decision made by the executive responsibility Investigation Committee. And without waiting for such addition to be made by the committee, Mr. Kishida must have resigned at this time. And contrary to the explanation that have been provided to [indiscernible] what type of statement was made by Mr. Kishida? I believe this is something that your company's employees are very truly interested in. Please be detailed as much as possible?

Thank you very much for your question. This is the Sakoma, Board of Directors speaking. As I've explained before, we have the Nomination Committee and the Board of Directors. And we decided the resignation of the President, Kishida will be necessary. It's truly unfortunate as a result. During the course of fiscal 2025 fiscal year, there was a huge amount of impairment losses incurred. That's one thing. Then this is something that we explained already as well. And as we expressed in new -- with respect to the some inappropriate speeches and actions made by Mr. Kishida, which was reported to -- which were reported to the Board of Directors. Based on that fact, we had a discussion among the members of the Board of Directors. With respect to the latest decision, it's not -- it doesn't have to do with the legal responsibility at all. As expressed by one of your in the media, it is our best on the decision made by the executive responsibility investigation committee. This factor remains unchanged. And Mr. Kishida's decision of resignation has been decided independent of those other issues. With respect to the impairment loss of more than JPY 600 billion Mr. Kishida asked the Chief Executive Officer, needed to decide the fate of himself. As far as Mr. Kishida is concerned. Of course, this decision is made partially based on his past inappropriate actions and behavior, but it's not nearly about legal responsibility or liabilities but this has to do with the internal management system. And based on that and other relevant factors, Mr. Kishida must have made a decision to resign from office. With respect to impairment losses regardless of the amount, it was to some extent clear that there is going to be a certain massive amount of impairment loss.

What type of problems were there with the actions od Mr. Kishida actions or behavior? Can you elaborate on those points?

I would like to answer the question. With respect to the impairment loss that exceeded more than JPY 600 billion, in [indiscernible] this is one of the factors to be considered during the middle of September. So this amount was a surprise to us the Board of Directors. Thank you. That is all.

At today, we need to have an [indiscernible] from Mr. Kishida behavior and actions that were inappropriate?

This is Minai speaking. I would like to answer the question. With respect to Mr. Kishida's speech, that was inappropriate, it is regarding the content of accounting reports. And his behavior was not really necessarily appropriate. As has been explained by Sakoma-san, a few minutes ago, assessment is being made by the Executive Responsibility Investigation Committee.

So aside from the legal activities, he resigned from office for other reasons. Isn't that a contradiction? -- with respect to it, the same actions, behavior? You have to think about the legal activities.

That's not the basis of our decision about Mr. Kishida. We decided made a decision based on the [indiscernible] standards that we have in place. And based on the standards we decided that these actions or behavior were not appropriate. Of course, going forward, the legal actions could be determined to [indiscernible] by the best on the investigation by the Executive Risk Stability Management Committee. We are not in a position to make the statement at this moment.

We have people attending online as well. Next, the person over there, the lady over there, second row from the left.

This is [indiscernible] of Bloomberg News. Explanation today, have led us to ask two questions. First of all, going forward, what is going to be your company's management policy? You talked about the concentration and selection. What type of businesses are you planning to sell your businesses? Also with respect to a sale to a third party and in addition to that and will the NPA be going to be sold as well?

Okay. I'd like to have Kaida answer that question. Thank you for your question.

Before I come into this in come into this session and prior to the presentation page, we said we're going to take stock of the businesses and ROIC management of the businesses. That's what I said. And as you know, ROIC needs to be in function of our the ROIC and WACC and the value spread need to be as positive as possible. Otherwise, that undermines business. Even though with the same business and profits, if the value spread is negative, continue to be negative, and that might lead to conglomeration of our company. That's a basic stance. However, turning the page. It's not that we can exit all businesses that are negative. But there are some of the businesses, we can't stop because of the clients, because of the relationship with a client and there are some long-term agreement, we have striking with them. We can solve those businesses overnight. So we have a 3-year, 5-year planning and within which we try to review the portfolio of the businesses. And then first, we need to run the business with ROIC, as I said. How and what to be remaining in our portfolio. That's the perspective we want to value.

Okay. Moving on to the second part of the question. the dialogue with the shareholders, including Oasis and major shareholders and investors, what kind of communication and dialogue have you had at the moment? -- because it's governance and accounting issues on these matters, whether are the requests or request to improve from the investors and shareholders? What kind of the messages we have you received?

I'd like to have Minai answer the question.

Thank you. On a regular basis, we have a communication with the investors. In June, governance system organization were changed and the new management structure and systems were launched here. So with this updated situation, we would like to have a more capital communication with them going forward. What kind of dialogue that are requested, what kind of dialogue we need to satisfy, there are some of the requests that we might have to receive from investors and shareholders. So based on that, we'll like engaging in [indiscernible] and spoke dialogue with them. On the right, the second row from the front.

This is [indiscernible] I'd like to ask about the resignation of the former, Kishida. And you said the [indiscernible], you hold back any comments. But what are the developments like? How exactly were you aware of this words and deeds? And with this impairment losses recognition and so on and forth, you said, but before you announced the financial results, do you think that there is a need to resign? If he needed to resign because of the responsibility you need to be accountable for and probably he can be here and explain the financial results. And after that, he can step out. [indiscernible]

This is Minai, answering your question. As far as the development is concerned, this is the issue, and this is a process related to accounting. So in financial results processes, we are so aware of these [indiscernible]. With these specific words and deeds in the BOD meeting and others, the discussions took place. And then this time, we started with everything into our perspective. And obviously, we have discussions with Mr. Kishida. And then we decided that he will step down at this point. That's all.

Is it Mr. Kishida, who wanted to resign before financial results announcement?

Well, 29th of September, there was a BOD meeting and the change -- there is a need -- there will be need to change the President. That's a communication I made. And it was on 25th, we communicate that to him. And then as a result of that, he submitted the resignation letter on 29. Okay. We'll move on to the next question. On the right, the third column from the right, that the man sitting on the front.

This is [indiscernible]. I've got two questions for you. First one, I would like to ask of the [indiscernible] from PWC Japan. You announced a disclaimer of opinion. And there were some executives if we were engaging the incorrect reporting. There is no finished work. And as far as the Minai-san's announcements are concerned, and there were some words and deeds of -- improper words and deeds by Mr. Kishida, as Minai-san said. And as evidence, the incorrect reporting or improper accounting practices and that has been involving some of the executives. Does it include Mr. Kishida? If it does include Mr. Kishida, he already resigned, but in order to obtain the opinion from audit, what are the challenges what you think -- do you think that they have to overcome?

30th of September effective, we put out the disclaimer of opinion and 29th that Mr. Kishida was designed. So that was not included in the review.

What are the challenges? Do you think that they have to overcome, so that they cannot obtain opinion?

Well, we already announced that in the audit reporting.

Okay. Can I get an answer from Nidec, Kuboto-san doesn't give us any specifics, but in order to get a qualified opinion, what are the corrective measures do you think that you need to do? Or I think that there is a need to submit the sufficient evidence for the auditing. How would you like -- how exactly would you like to proceed?

Well, in specific countries, there are some of the impacts on financials from specific code of the people. We try to identify those people and we have to review the positions and roles and those assignments. By doing that, we would like to get the audit opinion. That's what we are trying to do right now.

Thank you. We'll move on. On the on the right, at the end in the final row, the woman raising hand.

Aven from Nikkan Kogyo Newspaper. I also have two questions. I would like to have the questions of Mr. Kaida. First one is maintaining the listing status and also additional impairment loss risks. Now the first one, you want to be -- you want to maintain your listing status? Is that what you want to do? If that is the guys, why do you want to maintain your listing status? Can you give us the reasoning behind that?

Well, thank you for your question. Well, as I said, the new Nidec committee was launched. And then I was the Vice Chair and the improvement planning, I check that significantly, and that includes a substantial volume of my opinion. We're needing to make it into execution, not only here in Japan, on a global basis. We need to execute them and we need to penetrate that improvement. In February, improvement plan was submitted. And since then, in Japan and overseas, we directly -- I directly visit those base, overseas space, and we try to communicate -- I try to communicate this significance of the planning of this improvement. The end of October, this confirmation letter be out and after that assessment goes on. So after that, the real activities go on. So in order to maintain -- I mean, maintaining the leasing status serves us a very high level of the value from the public perspective. So maintaining the leasing status is one of the missions we have to attain.

Regarding the risk of additional impairment loss. So JPY 100 billion scale of the impairment loss was booked. So is this completed or to a certain extent, continuously are you verifying the asset value. And is there any risk remaining to have additional implement loss. In everything, would there be the additional impairment loss in future? That is the question.

I believe there are risks in everything. However, in mid long term, we are looking at the market situation and how to offset the risk that matters. And as I stated, to have the accurate understanding of the market. And recently, we can obtain a lot of market data. And Lloyd WACC, as I mentioned. So properly, we will look at the parameters and allocate the resources properly. And we are having the gate assessment. And in projects, we are having the gate verification and assessment to make sure that to trace the proper progress to reduce the risks. That's what we are going to do.

Okay. Second row from the left, second from the front.

[indiscernible] on the company. I am Murai. I have two questions. First, Mr. Kishida resignment. I want to ask a question to Mr. [indiscernible] So financial statement related in proper words and needs. So regarding that, previously, Mr. Minai mentioned about this time of the financial report. But my question is that in the third-party committee, there is the improper accounting. And Mr. Kishida was imposed was newly identified or there is other problem in appropriate account deed and goods were identified relating to the financial statement? So would there be the reinvestigation? And at that occasion, more than these will be clarified? And also, without the judgment of the management committee, this resignment was made. So is that issue that scale of the significance. What did Mr. Kishida said about this? Could you please answer to this question?

Thank you for your question. I would like to answer to this. So in the committee, third party committee and the Board meeting. So there is the impairment loss with the substantial amount. So with that, the highest management responsibility as a President, seriously took the situation. So as a result, Mr. Kashida resigned. In that process, the all of you are mentioning in the financial statement, there was improper words and deed. So those are included in the report. But regarding this, the third-party committee. So legal connotation about that, we didn't investigate that. As I said, the management responsibility Investigation Committee in that, Mr. Kishida is a subject of the investigation and we received a report. It's not the only judgment, there was the exhaustive investigation happening from the before and legal responsibility, accountability will be considered. And about the details, we are not informed at all. So we just need to wait for the report.

So what is Mr. Kishida perspective?

In the Board meeting resignation is required. So all Board members agreed and adopted. As a result, Mr. Kishida showed the intention of the resigning. Second question Mr. Kishida resignation. So the impairment loss, the scale of the amount was unexpected totally unexpected. So by -- up until September 4, Mr. Kishida had the press conference, and it was a way bigger amount. So NP, Nidec Mobility and [indiscernible] is the past goodwill impairment loss is done. So there's an expensive impairment loss, with we -- I feel there is a strong intention for that. So on September 3, well, is there any policy or strong intention to strengthen the impairment loss.

What is the course of this major impairment loss generated? So is there the business policy change towards the impairment loss being booked? Should I ask this to Mr. Kaida or Mr. Minai, could you answer to this?

About the company policy regarding the impairment loss, basically, there was no change. That's my understanding. As you know for -- based on the future business plan, we will forecast the cash flow and then we compare with the existing asset. And that is the principle of the impairment loss. So this basically stayed the same. However, the future forecast in each business -- every year, it changes. Therefore, the management business plan. So next year, next, next year forecast, so what is the business plan we should build? We will test calculate. And as a result, in some areas, we cannot help but book the impairment loss. But anyhow, the major reason of this time impairment loss as presented, that is the very challenging business environment. That is the reason for that. So test method or anything, so nothing has been changed.

A supplementary comment, the Sakomata, Chairman, said it was way bigger than expected. It was a surprise. So regarding that, management members, did you expect the impairment loss of this scale? Or was that a surprise to you?

With respect to the large amount of impairment losses, we are truly sorry about the amount. It's very difficult to say exactly when it started to take place, but it all depends on the timing Six months ago, for example, unfortunately, we weren't really able to predict such a huge amount of impairment losses. What I'd like to say is that we must not repeat this type of mistakes ever again in the future. We need to manage the future risks as the top management of this company. We would like to better analyze our future course of actions. In that way, we like to mitigate our risks in the future. With respect to capital investment going forward, we need to have a gateway management, so to speak. And we like to have a very accurate market forecast for better prediction of what's going to happen, and that's what we need to do in a better way. Thank you very much. Next person. The person on the far left.

This is [indiscernible] Auto newspaper. With respect to the corporate rebuilding, you talked about the growth areas. I would like to ask you a question about the Automotive business of your company. Here, as a power spot, and there are quite -- the three areas of concentration as far as I can see. With respect to Automotive Component business, what top of the schedule that you have in mind? What type of categories are you going to be focused on? And what type of categories are you planning to discontinue? Well, what type of categories of businesses are you going to plan to continue or discontinue? Can you be specifically possible about your concentration and selection of your businesses?

Thank you very much for your question. This is Kaida speaking. I'd like to answer the question. With respect to our Automotive business, sales accounts for approximately 25% of the entire Nidec Group sales and the sales, 25% of our entire business sales, we would like to have this business generate so much profit, just like the opinions for our shareholders and other stakeholders. With respect to the Automotive business, it's a huge market we are talking about. Business opportunities or various business opportunities are there. We have suffered some impairment losses, but does not mean we have lost our technological capabilities there. Please take a look at the bottom right section of the aerospace. We are having a joint venture with the Brazilian company. The answer is not going to be coming to us of night. This is going to be our new mobility business. We can utilize our knowledge and expertise from the Automotive business into this Aerospace business. And the part of our business has been already reported by the media, but it is what I'm talking about. This is having some -- we are applying our existing technologies to this automotive [indiscernible] business. There are some quite a few differences in requirements that are needed in this aerospace business compared with the Automotive business. But we like to apply our existing automotive technologies to this new emerging aerospace business. With respect to the Automotive business, we have nearly 2 million units of our products shipped all over the world. Cost-wise, we are actually struggling, but does not mean that we have lost our competitiveness. We have [indiscernible] project as well. We would like to remain in this business for our future business opportunities. That's the type of efforts we like to make on a steady basis. This is just an example that I've just given you.

If I may add, including those examples, Mr. Kaida has just mentioned, we like to think how we can utilize our respective technologies in other areas. And how we can utilize our existing technologies and capabilities in different businesses. That's what I I'd like you to know based on the explanation, based on this presentation material. Next person, please. Person from a third line from your side.

I would like to ask you a question. The people at PwC, Japan. With respect to the third party Committee's report, it says Nidec executives think that PLC Japan personnel are easy to convince according to various pieces of evidence. Do you think that stance of Nidec Corporation lead to the [indiscernible] scheme or tendency of covering things up? What is PwC Japan's response to such tenders or such a tendency of Nidec Corporation? That's the first question that I have for you.

Thank you very much for your question. First of all, with respect to the company audit [indiscernible] convince that's the opinion of Nidec Corporation. We are not in a position to make any comment on that. With respect to past audits, we will deliberate our performance in the past. And we like to learn lessons from the past for our future audit activities. What do you think about being a call a company or the audit firm is easy to convince. That's not what we said. We are a position to make any comment on that.

Wherever -- did you ever think about this company regarding you as easy to congress audit firm?

Nidec wants at least one thought PWC Japan as an audit firm easy to convince. Well, back then, with respect to the past information, we did not recognize Nidec Company thinking regarding our firm as easy to convince as an audit firm.

Kaida-san, here's my second question. With respect to the financial reporting, there were some inappropriate comments and behavior on Kashida-san's part because of which he resigned from office as President. And some people think that he resigned from office due to accounting and appropriate practice-related reasons. Does Mr. Kishida think he has never been involved in countertactics? He has long been a Nidec Technology. And since 2024, he has become the CEO. With respect to the third party committees, report, there is no mention of [indiscernible] Technology. If there were some issues with the [indiscernible] Technology. It could be that Mr. Kishida may have been involved in the [indiscernible] activities at [indiscernible].

Thank you very much for your question. This is Mr. Kaida speaking. After the launch of the third party committee, the committee last interviews and hearing sessions with many of Nidec employees. I have never had such a hearing session or an interview. So there was no suspected activity.

Person second row from the front.

This is Mismo Nippon newspaper. I'm not sure who should be the right person to ask this question. But [indiscernible] PwC was saying that the people respond positions. Is there going to be just one person or are there more than one person? And does [indiscernible] about those risks for people or person individuals or individual?

Well, as introduced across various countries or some countries or multiple countries still have some people who have not have been involved in this case. There are various cases. You mean those people work in multiple countries? Sorry, can you say it again? You said those people work in various countries. So does that mean multiple countries, -- more than more than two people?

Yes.

Okay. I'd like to drill down. From Nidec perspective, having known that you allocate those people into those roles and positions if they are executives, some of the responsibility have to live with the Board of Directors meeting. What do you think Yes. Thank you. As PwC presented healthy accounting practices need to be done, so -- which requires some preventive measures. We have taken this process. But -- from the operational perspective, there some cases haven't worked. That's what the PwC pointed out as a common and as we treat those as we go through the accounting practices. There are some other people that are deemed suspicious. And we need to do something about it, which took some time.

Okay, we move on. Far right and the people -- the person sitting on the front.

This is [indiscernible]. You limit your all questions to two. So I'd like to single question to one person. I'd like to ask question, respectively, for Nidec and PwC. So first, Kuboto-san, you submit this audit opinion. And you said you want to fulfill the responsibilities at the audit firm in charge of Nidec. That sounds like you intend to put out the opinion of audit. Why do you sound like that? Because as far as I read the audit report, it sounds like you need to swipe out all the executives sitting on the Board at the moment. Otherwise, we can't opinions. What kind of the ranks of the people, how many people you need to cut out so that you are satisfied? What are the requirements do you think you want to impose on Nidec? As a responsibility, I mean, in order to fulfill the responsibilities at audit firm, you want to fulfill our responsibility. But what are the requirements? Now from Nidec perspective, I think there are some of the things that you are ready to take steps like how many people you want to replace and including managers and executives, you are ready to switch everyone who deemed suspicious. Again, I want to ask about the requirements from PwC perspective. I'd like to see comments and also take away from Nidec perspective.

Okay. So should I go first? So from PWC perspective. As an audit firm, as I said, we will continue this auditing contract. As a firm, we continue to strike in the contracts with Nidec, internal control needs to be put in place. And this company has a will to put up the proper financial reporting. And we need to get the auditing evidence. And that part, yes, we are responsible for that. What will it take? As I already said many times, we need to have a dialogue with the company and proceed. So we continue to be engaging dialogue, and we would like to make it clear what exactly to be done. That's what I meant.

Okay. So from Nidec perspective, you received his opinions, but what are the -- your readiness to get it rolling?

Okay. So once again, I think I've already explained that, but -- as you pointed out, there are some of the challenges you need to surmount, which is very clear. So wanted to overcome those difficulties and challenges and receive the audit opinion from auto firm, and we want to have the people and parties concerned feel relieved.

Okay. Let me move on to my second question. What led to current management organizations? Kaida-san is just a corporate officer, and not involved in VOD, but Minai-san has representative Director. And Kaida-san is not a Director even today. Minas will support Kaida-san. And then you're having a press conference today. And then I think this is the first time for Kaida-san to [indiscernible] here. And this is a great opportunity for you to share the direction for the General Republic -- maybe this has nothing to do with your future, but there from Nidec perspective, there is a founder, Nagamori-san and also the former President, Kishida-san. But as someone who leaves this company, other comments would you like to give, including impression you got from Nagamori-san? What are the development that led you to your assignment? And then is there any additional expectations that PwC has? Is there anything that you witnessed that there are some changes because of this shakeup of the leadership? That's my second question.

Well, I think as you saw my CV I just became 70 years old. 50 years of some, I've been just working, working, working, and I'm approaching to the very end of this career. And then do I want to contribute to something big? Or do I decline? Yes, there could be some options you could take. But this is a company who took care me a lot and society as a whole, supports me a lot. So I want to revert and return it back somehow. So on an emergency, and we have thousands of thousands of people employed here in this company. I don't know how far we can go and how far I can deliver. I don't know how far I can actually be contributing to this company's performance. But the Nomination Committee of the Board of Directors meeting asked me to serve and be ready to take this office. And I thought that it's been 50 years since I started to work. And this is a very final stage. And I just simply wished I wanted to contribute. That's why I nodded and said yes.

Okay. What led to this shakeup of this organization? What are the impression you get from the Nagamori-san and Kishida-San? And you said you were told, you were asked with BOD meeting to take office is as President, when was it?

Well, that's related to internal events. So I don't think I should comment for that. But as Chair said, always, I need to take on this job as an emergency response. So this company needed someone who is capable of responding to emergency. And I'm surely was one of the people who who are responding, who are capable of the responding to the emergencies.

Can you make comments on the impression you got from [indiscernible]

Well, in comparison to the old organization, top management team. But when we encountered Nagamori that was back 1997. Ever since then, I was in a subsidiary of Nidec. And I have been involved in the going public in Tokyo Stock Exchange. And what kind of relationship did I have with him? Well, a very small company, he gave us a stream and 3 years out, we went to public. Nidec Advanced Technologies were private company. But there is only one -- there was only one company who went public. So he gave us dreams, including employees, I think he gave us dreams. So in that, I appreciate his contribution.

The next question, the third person from the right from your side. The person on the third row.

I am in a free analyst. So Mr. Kishida, regarding his inappropriate words and deeds, in the third-party committee report, Mr. Kishida give the direction of the improper accounting. So that was -- didn't happen. But rather for the healthy accounting of Nidec, Mr. Kishida made efforts. That is the evaluation that is in the report. So this management person. So why do you understand Mr. Kishida as the person who did the in improper words and deeds? Did you ask him this question? Why do you evaluate in this way? How do you elaborate the situation? Next question, PwC question to PWC, this is not about the disclaimer. However, the representative of PWC is here. So in the past, I've been interviewing Nidec for many years. So when I talk to them, PwC Japan, [indiscernible] got together, it's a new company. So representative of [indiscernible] internally, what we very much listening to Nagamori opinion. When we do the interview, we hear that from many people, what does that mean? So this person created the financial report to be favorable to Mr. NangMori. So you just let him do what he want. Do you have this understanding? That's my question.

First point, from Nidec. Nidec will answer. So as the Chairperson, Mr. Sacoma explained before, the third-party committee evaluation. So this time around, we have a different perspective regarding the improper words and deeds, as a Board members, we looked into this. So overall, there is a topic of impairment loss. And accounting-related words and deeds. So overall, comprehensively, we looked into this and the judgment by the board members were made. So words and deeds in the financial report the criteria or standards we looked at is that under the new governance system with the higher level of ethics, we want to have a leadership. That's what we expect. So as the Board members, this is something we need to verify in a solid manner. So that was a major factor of this decision. So this is the answer to the first question. Now regarding the second question, PwC will answer Mr. [indiscernible] Former Kito, former Arata, before the integration, he resigned. So we would like to refrain from making comment for this individual.

Okay. Next question. The third person from the left, from the audience side. And then the third from the front row.

[indiscernible]. Question to Mr. Sakoma. In the beginning of August 5, in the temporary Board meeting, you had the agent -- emergent or urgent response and [indiscernible] was leading the renovation of the company, change of the coming. And from the August 5, some emergency initiatives needed to be taken. So is there any behavior by Mr. Kishida that you sensed some risks. Why did you take this emergency actions?

Thank you for your question. Sorry, where are you -- as I mentioned, Mr. Kishida was the subject. It's the subject of the survey investigation. And also, he was the CEO. The President Therefore, Naturally, as a result of the investigation, he could be held accountable legally. That is -- well as the corporate balance code goes we need to consider the plan for the successor. At the same time, with the situation, we need to prepare for the emergency. So that is a judgment made for this time.

And as of August, we did not assume that this could happen. Second question, question to PwC. In the audit report, there were four executive offices. And among that, three have been changed from the November members. And then these three have been changed. Is that with the intention to change the system, change the structure. And these three were from the former Koto members, is that part of the reasons that these people were replaced?

Thank you for your question. With the complexity and uncertainty of this situation, we looked into the experience and capabilities, we chose these four members for the best structure can be accumulated, that's why.

Okay. Lady on the right.

[indiscernible] Past year's accounting statement was revised total loss I would like to confirm the total amount of the loss. Past 2 years, impairment loss JPY 288 billion and FY '26 JPY 632 billion. And then total is about JPY 900 billion plus net revenue was revised. So this -- in total in the past two years of the loss, the amount is JPY 100 billion plus. Is that correct?

Naga, I would like to explain. Let me show you the slide on the screen. So this is based on the PL and the impairment loss. Past 5 years cumulative sales profit, operating profit total was JPY 382.6 billion. This is the breakdown of the past revision. And the third committee pointed out JPY 174.2 billion. And after the revision, we did a test, as a result, JPY 288 billion, plus extra and the result is JPY 382.6 billion. So this is the loss of the operating profit. And next on to this slide over here forget this 2025 fiscal year. We had a loss of JPY [indiscernible] billion. And you can see the amount from the past. And for the latest we close the fiscal year, you can see the net impairment loss JPY 632.1 billion, which is an increase by 425.4% from -- on a year-on-year basis. I believe this is -- this answers your question.

A total of financial impairment is something that I want to ask you on the OP basis, I believe you have a certain amount of operating profit. Do you think there's going to be any impact on the net assets?

With respect to the impact on our net assets over the past 5 fiscal years, please take a look at this slide. JPY 476.9 billion negative. That's the correct amount and that's the amount of loss we have incurred for the fiscal year 2025 that ended in March 2026. Slide #27. You can see the impact on the net assets compared with the past fiscal of JPY 502.2 billion. And you can add these two numbers to come up with a total. And you can see the amount from the past fiscal year and the latest amount of impairment losses that has incurred.

Next person, please. From you -- the person from the third row.

This is [indiscernible]. I would like to ask your question, Mr. Kaida. With respect to PWCs audit opinion, you will have the opinion to be released by at the end of October. Do you think the opinion is going to be disclaimer of opinion or qualified opinion? Do you think such -- do you think the such opinion from PWC Japan, will directly affect your company's possible delisting from the stock exchange market?

This is something that I've been repeating many times. With respect to PWC, between them and we have been sharing issues with each other. We are closely monitoring what we -- how we are doing things currently towards the deadline. And we are going to make adjustments between each other.

What is your possible action if you received another disclaimer of opinion.

That's not what we are thinking of currently at all.

Here's my second question. and you have this new report released today needed sale of new components and among other issues, you are trying to make a shift toward growth areas based on this presentation material here. You are going to go through a selection and concentration process over ACIM and other businesses. Are you going to be very active in this process of selection and concentration? Can I ask your company's business strategy here?

This is Mr. Kaida speaking. Once again, as I've said already, at this moment, we have this ROIC as one of the elements for us to utilize in order for us to be in a positive territory in our corporate value, we like to utilize the ROIC as part of our strategy. we need to concentrate our resources on growing businesses. We have suffered from impairment losses with respect to businesses related to cost, related to this impairment losses, we need to handle. We need to treat those [indiscernible] losing the business accordingly. With respect to profitability, generating businesses, we have many of them, a lot of them. In the future, this business could become part of our core competence or not, that's what we need determine with respect to these prospective businesses, potential businesses. Just like the near components, we may decide to look for best owner other than us with respect to some businesses that we have at this moment. If you take a look at these five business pillars right behind you on the slide, are you going to be focused on ACIM as well as AMC appliances and automotive businesses, that's going to be our focus. That is correct.

Next question. The person from in the back, the lady over there.