NIDEC Stock

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.

This is [indiscernible] I would like to ask a question, Mr. Kaida. With respect to appropriate practices, you said you have not been subject to the investigation by the third-party committee. But what are the causes inappropriate practices is that there was a corporate culture to have not just about to follow Mr. Nagamori instructions? What is your response to such a comment? How have you able to handle those pressure from Mr. Nagamori?

In the improvement plan, there are quite a few matters related to what you have just pointed out. As a person involved in businesses, I believe, at any company, in any company, there is some extent of pressure from above over on any business. This is more like a qualitative issue. So it depends on the interpretation of such instructions coming from the top. Within the entire Nidec Group in that regard, even if there have been a same amount of pressure on everyone, quite a few business entities had done their jobs properly. Of course, we need to avoid a situation in pressure applying situation in the future.

Here's my second question. At the beginning of your presentation, you talked about submitting the written confirmation of internal management system. And what do you need to do as a company in order to be prior to submitting the written confirmation of internal management system?

This is something that is described in detail in the improvement report, from this April based on improvement plan. We have this horizontal access as well as vertical access. We are trying to connect these accesses. We have this CX line in place. We have a CEO, CHO, CTO, et cetera. We have this firm ties among these. So that we can have this very streamlined communication line based of this vertical communication process. This is what we like to spread to our approximately 35 usage spaces all over the world.

For example, recently, I remain working as a CTO, Chief Technology Officer. We have a CTO at every legal entity. And we have had a global Board member of CTOs in place as an organization. We have had this -- we have started activities to enhance these horizontal ties among their CTOs in our Nidec Group. That's the type of activities that are currently already taking place. That's the type of governance we like to enhance and strength. And that's the type of common understanding we have among ourselves.

I'd like to take next question. On that row, the man sitting in the front.

This is [indiscernible]. Could you please show me the Page 20, the change, potential change on the distributable amount. The very end distributable amount? That was excess for 5 fiscal years. But this could violate company or corporate law. Has there any measures needed I mean, obviously, you can't return those money back from shareholders? But is there any work that you have to be involved because you're exceeding this distributable amount?

Okay. This is Minai speaking. Let me answer your question. Yes, from the perspective how better we should assess this matter, including the legal issue assessment, that's the work underway.

Okay. Can I ask the question of Kubota-san from PwC? I mean you're going to have a higher level of the audit work. And today, you've got up the disclaimer of opinion. But you were not unable to identify the improper accounting practices but still strike the contracts with the Nidec's audit firm. How do you see accountability of an audit firm?

Thank you for your question. As I said, currently, we need to proceed the recent -- the most recent auditing, but internal study, internal discussion goes on at the moment for the past audit. And shouldn't serve would like to take actions.

Okay. I'd like to take next questions. Second row from the right, and the man sitting on the second row.

This is [indiscernible] from TV Tokyo. I'd like to ask a question about the culture -- corporate culture of Kaida-san. And there are some of the business you need to get things right, even though there is a pressure. But through a series of improper accounting practices, what other causes that's driving the current state? In case there were issues around the corporate cultures, what are the Nidec corporate cultures like? And where do those issues lie, you think?

Well, that's a good question. whether it's pressure corporate culture. On engineer, so I prefer to quantify things. And there is a qualitative things and quantified topic, right? It's a corporate culture and pressure. We can't necessarily quantify, right? So it's not necessarily easy to tell you what it is. And especially corporate culture wise, it's a culture, right. In one company, for example, as I browse the group companies, especially overseas, over the past two years, I visit those overseas footprint. There are many companies like 100 years history that has been proud of in those companies.

And then after 100 years, you have a brand or an established brand. And then we try to respect for these distinctive brands of these companies. Is it a bad thing? No, not necessarily. I mean, producting branding and ensuring governance, that's a totally different discussion. So while ensuring brand, you need to build a governance. That's a new mission so that we are able to build a new additional corporate culture in Nidec. So in that sense, I said CXO line.

Very frequently, on a day-to-day basis, we try to exchange opinions for the people globally. And also, we try to invite the foreign walkers from group companies here and headquarters and then engage in discussions on a day-to-day basis. And then there is a program called culture transformation. So we try to trouble and visit those global footprint. It's not easy to us to change and transform the corporate culture overnight, but we need to overcome one by one, wanted to physically visit those places, you need to be independent in visiting those places. And so you're able to build the corporate culture that's necessary, I think.

For the sake, I continue to make -- I will devote my efforts forward.

Okay. The former Kishida to extend a stage in is transformation in those reformers marketers, highly appreciate. And then I think that you were involved in this new Nidec reform committee. And how do your system? And do you think that you'd like to carry on this direction of the reform? Or would you like to tinker of where we would like to go as a company?

While new Nidec Committee was launched, I was a Vice Chair and Mr. Kishida was the Chair in the committee. So in that sense, we are in the same boat. So obviously, we are aligned. And then as I touched, as we create the plan, we need to pivot into execution. We need to implement that. obviously, you need to execute on your plan. And sometimes you need to change yourself. You need to change what's been here for long, but we are not in a stage of implementation yet. So as we are going to get implementation right, need to correct what has to be corrected. That should be the best way forward.

Okay. Any other questions? Okay. I've had the people on the waiting list for online. So I would like to get the questions from the 5 people from the floor, and then we would like to move on to the people online. Look, second row from the left and the person raising hand.

This is Takayama from Kita Newspaper. So Sakoma-san Chair, can you ask your question? Can you be honest why you chose kaida-san?

Kaida-san is someone who worked in Nidec for many years and this time, you need to turn this company around.

And then how do you see his credentials?

Well, thank you for your question. In terms of the process of choosing him starting [indiscernible], we started preparation and then the Chair of Nomination Committee Yamamoto-san and under which very careful and deliberate deliberation were taking place utilizing third-party institutions. We have spent enough time. We try to go through assessment of candidates trying to get reference, for example, a very, very careful approach we're taking.

As a result of that, we got to the final conclusion to choose Mr. Kaida. Obviously, we try to look at the game from [indiscernible] perspective. From my perspective, we are in a very extremely difficult situation. And we need to change our company into more sustainable manufacturer. And he is the one who is capable of turns company around this day. That's why I asked him to take office as President. It sounds easy, but the Chair [indiscernible] and members of Nomination Committee and the Board of Directors and everyone make decision and they count on him. That's all.

Okay. Can I ask you one more question? The members of the Board of Directors were changed, including outside directors, you set up a new -- the Board of Directors members at the moment. At this juncture, how would you like to face the pace for this company? Or how would you like to change this company forward? And how do you see the vibe around discussions internally?

Well, if I result to the words I said, the healthy sustainable growth. That's the growth we want to attain with the internal control strategy in place. substantially improvement has been -- actually, we were able to witness the substantial change in improvement. But unfortunately, fiscal year '26. Fiscal '25, we already announced the performance, unfortunately, the fiscal '26, the year ending in March 2027, we can expect a little bit more.

And regarding the internal control, this is an internal effort there is no sufficient effort to be taken. We want to continue to improve with the management members and employees. We want to work on the enhancement of the corporate value. And I'm afraid that as the Chief of the Board members, I asked for your support. I ask for your understanding.

Okay. Now next question. The third from the left, 2 rows from the front.

I am [indiscernible] from NHK. Board members Investigation Committee -- is there a schedule? Maybe this is an independent one, so you might not know, but is there a schedule that you ...

Thank you for your question. We launched this committee in April. And the third party committee report after that, this organization has been launched. So it's about 6 months. Regarding the time line. We would like to get the conclusion as early as possible. We are longing for it. As for the current status, Well, we have independent experts, so it's up to them. We don't know. That's all. Thank you.

Regarding today's press conference, so Nidec and [ PW ] together, we are having the press conference and which doesn't happen often. What is the intention?

Thank you for your question. At this timing, and it's such an unfortunate thing that the disclaimer was the result. So we would like to convey as much as possible in a correct accurate way, and we consulted with the PwC. And that's how we are having this first conference together.

Thank you. Anybody? Any questions? Thank you. Second from the right at the very back, thank you for raising your hands.

[indiscernible] newspaper, [indiscernible]. So this might be the question to Mr. Kaida or Mr. Minai. The reason for the disclaimer, so there's this person remaining in the management who reported to the audit team. And the preventative measures were setup, but sometimes it was not -- there is no compliance. There is the internal risk of the management team. Is this because of the I mean, renovation or change of the organization was not truly achieved. That is the reason why this happened. So what is your understanding? Could you let me know.

Minai will answer this question.

Preventive [indiscernible]. So a person who is related to the improper accounting, so it should not be involved in this accounting practice. That's how we started this. However, in some countries, actually, there was some involvement from the audit perspective, the reliability of the process, it's quite difficult to make a judgment. Those are the reasons. And those were identified in several countries. We are trying to set up a healthy structure and practice, but these are facts were identified, so we would like to improve the situation for the audit.

Besides that, specifically for the future, for example, financial report, a responsible person, who didn't tell the truth. So all these people will be removed? Or are you going to strengthen the preventive measures? What preventive measures exactly are you going to take?

Thank you. We started to take actions. Those who are skeptical of taking such actions, we are replacing these members.

Which means preventive measures didn't function well. So physically, you are removing these people? Is that the measures you are taking? Is this understanding correct?

Yes. That is correct. And it's this initiative is already starting.

Okay. Next question, man in front of that person.

[indiscernible]. If my question overlaps from the previous one, so I apologize. Question to Nidec, [indiscernible] from PwC mentioned that the disclaimer reason is that there is no HR control, internal control. And Mr. [ Kishida ] is not the subject for that. However, Mr. [ Kishida ] inappropriate involvement, Mr. [ Kishida ] doesn't apply to these members who had the inappropriate report to the audit or -- but still, there are some management who's remaining or from the beginning, Mr. Kishida was not engaged in those in proper report to the audit, which is it?

Mr. Kishida is irrelevant with this reason for the disclaimer. That's our understanding.

Okay. Last person.

[ Nikkei ] newspaper, I'm [ Masuda]. Regarding the preventive [ measures ], I also -- my question might overlap but just a little bit. I appreciate your understanding question to [ Kubota ] -- Mr. [ Kubota ]. Preventive measures in appropriate accounting. So suspicious people who's engaged in that.

Well, this structure is complete. If that's the case, there was no issue. However, in reality, it was not complete. Is that the case? Or is it a different scenario? Is there a drastic change of the reform of the structure that was required to have the disclaimer of the opinion. Is that it?

Well, thank you for your question. As I explained, there are some part that we wanted to take the preventive measures, but it didn't work out. And also those who were not subject about this in appropriate actions turned out to be the subject as well.

Now a question to the Nidec. If that's the case, people engaged in the improper behaviors. So we'll be removed from that position. So going forward, like how many people needs to be replaced to different positions. If you can share that with us, please that we know. These members have the relative expert knowledge. So it's difficult to replace, I believe, but you are removing them and in coming 1 month, you are going to streamline your structure revisit the numbers. and you try to obtain the opinion. So time line is very tight. What do you think about that?

This is Minai speaking. Thank you very much for your question. With respect to the number of such people, as I've said before, we have certain countries that I'm thinking. We are checking the number of people. It will be 20 or so in total. With respect to our methodology, we have already had this discussion nearly complete. We will reestablish our system to conduct audits. That's how we like to things going forward.

Thank you very much for waiting people participating online. We like to entertain questions from you. [Operator Instructions]. Yes, first of [indiscernible] Mr. Hirata with UBS Securities, please.

This is Hirata of UBS Securities. With respect to the investment of during the year of fiscal year 2025 that ended in March 2026. It will be an increase by JPY 10 billion. In total, can you break the amount down? And do you expect this type of growth to continue in the second half of the fiscal year -- this fiscal year? And what is the meaningful factors in first and second halves of this fiscal year?

This is Nakagawa speaking. I'd like to have a [indiscernible] answer the question actually. This is Nakagawa speaking. With respect to JPY 150 billion, JPY 160 billion, as you can see, there are some differences among these companies, [indiscernible] the leading business unit of the [indiscernible] and profitability, as you can see here, is approximately profitability between '25 and '26 fiscal year, JPY 150 billion or so, in [indiscernible], which is part of the ANC business between '25 and '26 fiscal year comparison.

So approximately minus JPY 6 billion, and that's the major figures that we can talk to you tell you with respect to meaningful difference, that's our internal terminology here. Between last and this fiscal year, we have had a third-party committee we have relevant cost expenses and cost for correcting, making corrections and the auditing fees.

If you add all of these elements between '25 and '26 fiscal years, we are going to -- we are expecting a huge amount -- a large amount of cost to be incurred or recorded. On the [ POP ] basis, meaningful difference for the fiscal year '26, JPY 75 billion, JPY 40 billion in the first half and [ JPY 35 billion ] in the second half.

These costs include costs for strengthening our weaknesses in our internal management system. This is something that we have announced already but we have an IT system that needs improvement as well as we have the second line of improvement with respect to the improvement of 6 functions. Please keep that in mind that I believe I answered your question.

[indiscernible], can you hear us? With respect to this a meaningful gap in differences. I believe you are talking about fiscal year 202 -- are you -- do you see the continuation into fiscal year 2027?

There is a certain level of costs to be incurred in the 2027 fiscal year. We need to strengthen the head offices of functions. For that, we need more people, and we need to improve our existing systems. For these costs, back in 2020 compared with the system and people in fiscal year prior to 2024 or 6, for fiscal year 2027 and thereafter, there will be a certain level of cost to be incurred in my understanding.

So with respect to the second half of the fiscal year, you are expecting a reduction in decline in profitability? Why is that?

Well costs are all incurred in the meaningful emergence of meaningful costs. We have developed inverter system on our own that caused a huge amount of impairment losses, and we have a huge amount of reserves for the business. Based on the conventional contracts, the calculation is expecting us to produce [ 2 million ] units or so because of that huge amount, we have had a huge amount of impairment loss incurred.

We cannot continue to incur such amount of impairment losses. We have reserved amount of money, and we have repeated negotiations. With respect to this number of 2 million units for which we have had a reservation, 250,000 to 300,000 is the new number we have been able to reach after negotiations. And with the decline in the number of the units we have to produce going forward. And we are planning to incur the amount of cost, which has been signed in the first half of this fiscal year.

So the emergency related costs may differ from timing to timing. But you can see the difference between first and second half of this fiscal year. With respect to invert change in number of inverters to be produced, we have some reversal of reserve. You can see the effect related to depreciation due to a huge amount of impairment loss, the assets, the amortization depreciation cost will be down.

So you'll be 50-50 between the first and second half of the fiscal year. As analysts have already been or we have a depreciation cost of JPY 130 billion or so for the first half of the fiscal year. And that amount will be reduced by half in our forecast. And based on the number of years for the depreciation of fixed assets of our company, this situation will continue after the fiscal year 2026. As you can see on the slide, we have a nonrecurrent nonincurred expenses. And that is included in this slide. we are expecting to reduce in the amount of depreciation and amortization. That is all from me.

Here's my second question. With respect to your business portfolio Mr. [ Kishida ] has mentioned [ e-Axle ] business and its future policy. He talked about something like withdrawing the strong from the business. Can you possibly ask for your opinion on the future policy for this business?

With respect to the [indiscernible], you are talking about the business portfolio.

Yes, this is one.

Yes, we try to be selective in allocating resources and we continue to study how this business should look like and there are some other businesses operating overseas and how that should be and where should be the focus. That's what we are currently studying while formulating the next midterm measurement plan. We try to flesh out details of what kind of actions we should take at the moment. Okay. Let's move on.

Thank you so much for some substantial amount of time that you are with us. There are currently people -- 8 people raising hand and then that's the end he would like to take up the 8 questions from the floor. A major market, [indiscernible].

This is [ Yoshida ] one of the reporters in major market. Maybe my question my overlap, how do you consider the divestiture? And you said you talked about ROIC. You said -- you talk about ROIC. But if you look at a time line, how should I understand Share prices tanked and critical that you try to regain trust and credibility from the shareholders and investors. I think you have considered the various options to take the substantial volume of divestitures or on the review at the moment.

And I guess you're currently focusing concentrating discussions on the maintaining the listing status until you're able to resolve those difficulties you are going to put them on the back burner, what's the time line like? I know it's pretty difficult to give us specifics, but give us a comment.

Well, thank you for the question. This is [ Kara ] speaking. I'd like to be brief in answering your question. As I explained a few minutes ago, whether it's a home appliance or automotive, there are some of the businesses we can stop right now, orders and businesses we can't stop overnight because of the relations with our client.

And then in a short space of time, some unit might be carved out or we might have to integrate or split the businesses, we need to spend 2 to 3 years to do the actions. That's kind of the horizon and time line. You might want to be ready.

Okay. So 2 to 3 years, in order to respond to the long-term challenges you're going to work on it, not necessarily solving the current challenge?

Well, again, as we are going to announce the midterm management plan, and we are going to announce it by the end of December this year. And then I believe that we are able to come up with the new ideas in discussions, who knows? But we can't give you any specifics on which unit is to be why or this.

Okay. Let me move on. [ Tital Kassan ] from [indiscernible].

[indiscernible], I'd like to ask a question. Since you took off as of the President, give us a comment on the welcome of the company, we would like to transform this Nidec because the founder, the [ Morrison ] said, this was to be #1 right now or until you're able to achieve, we definitely will absolutely do this. It's very clear cut instruction. That might have been some problematic, but this has enabled you to achieve the significant growth. But you said ROIC management or being selective in allocating management resources. As a major company, I wouldn't say it's normal, but you oftentimes hear those comments is not necessarily exceptional. But as you take an office, what kind of the sales side, what kind of profitability you want to obtain? Give us a comment. That's my first question.

Well, thank you for your question. First things first, we need to lift ourselves of the securities under surveillance. We are a manufacturer and we need to be a company -- a competitive company with technologies that we have. And technology is time tested and skill tested. It is really all about how many car competence you have to enable you to grow your business. That's a critical part. You need to sell technology.

Once again, we need to renew ourselves to the commitment that we need to focus ourselves to that mission. And without a [indiscernible] technology-specific technology, the world will fail. And the world is desperate for the very specific technology we offer. That's the kind of the company we have to offer. It's not to say that we have to attain some trillion yen, but we have to offer the value proposition so that we are proud of who we are and why we are here. That's the kind of company we want to change.

Okay. I mean that doesn't answer your question. I mean, obviously, without technology, you can't be a manufacturer. You already have a cutting-edge technology, you are able to achieve revenue and profit is not what I wanted to hear. As you took office, how better can you achieve growth of Nidec? That's what I want to hear.

Yes. I have been engineer for many years, myself. I'm still concurrent CTO. And organically, we need to combine technologies we have scattered across Nidec. And we created -- I created [ CTO Summit ] globally scattered technologies need to be applied horizontally across the globe. That's the kind of program and activity I just launched. So technologies across -- technologies that we have as a Nidec scattered across the globe or not necessarily shared. So one thing I want to make sure is to turn this technology into the usable technologies so that we can make any roads into a new market. There is a new [ Giga ] market, but -- we look to go into a market where the growth is set high.

Okay. From the employees' perspective, while you're in a very difficult situation, especially the engineers are the younger generations, might change their jobs for using increasing number of engineers, including mid-carrier and fresh graduate. In terms of the recruitment, you see or you feel or you might be worried that potential risk of the recruitment.

Okay. This is Minai, who is in charge of HR. Well, thankfully, back to your first part of the question. Even though we are in an extremely difficult situation, not necessarily only on engineers, but some employees, obviously, yes, have left us, but quite a lot of people still stay and try to work on to turn this company around. And it's not that our turnover ratio goes up. We haven't confirmed those change of those numbers on paper. So that's why I'd like to really appreciate for our employees.

And then you asked a question of the recruitment. Yes, we do struggle with recruiting new fresh graduates, but we see some new graduates, and we have an out-official approval ceremony, there are quite some number of people who are coming to our company. So as soon as possible, we need to turn this company around. And then I would like to make sure that those people can have a drain -- by transforming ourselves into the state, I just hope that many more people just wish for coming to this company and working for us.

Next, Citi Group Securities, Mr. Naito. Go ahead. Thank you.

This is Naito, Citigroup Securities. Let me ask some questions. I have 2 questions. First just double checking with the previous person's comment. So in the beginning half, there is this allowance or provision? And then is that emerging expenses included, and that was the JPY 160 billion. Is this understanding correct? And in the future growing area, spinout motor, I think it's in good trend. Could you give us any clue of the future forecast of your product?

Nakagawa speaking. So confirmation of the previous point, JPY 160 billion and the breakdown of it. So unbooked part. So there is a plus and minus. But basically, in the beginning half and other half together, just a moment, please. I appreciate your patience. Business operating revenue it was about -- it will be about JPY 80 billion each. So a breakdown of JPY 160 billion once again. Business revenue, JPY 80 billion each and [indiscernible] the breakdown of JPY 40 billion. So beginning half, latter half the return of the allowance is JPY 36 billion each. And emergency expenses beginning half JPY 40 billion, the latter half 35 billion, inverter unit number change and the allowance return profit is JPY 45 billion. So that is the breakdown.

As for the future forecast, in our current portfolio, the growth area and revenue area, we have pillars as presented. Those are data-related business and the motor business CTD related business. So they are the major source of our revenue. and not limiting to that, we have to expand. So we want to grow further with the other business areas as well.

I have one more question. So there was a major impairment loss and your asset ratio went down significantly. So regarding -- in terms of the growth, are you thinking of the -- any measures? So with the cash flow? And are you going to improve the overall accounting? So regarding the cash flow, what is the challenge? Or what should we be mindful of? Would you please comment on that?

Well, our asset ratio company went down to about 25%. In mid long term, we would like to aim for 40% or so. To bring it back to 50%, that is the original ratio, but we need to accumulate a lot of amount, and we aim to be 40% some, that's the current thinking. And then cumulative, the impairment, we would like to build upon the business operating revenue and we will proceed with the restructure, restructuring. And there are some expenses along with it.

But we will sell out some of the businesses divestiture. With that, we can gain certain cash. But the basis is the operating revenue. So our net profit and cash, we want to build up. Regarding this, internally, we are looking into the midterm business plan. We will be having these numbers in mind. And the pillars are as Mr. [ Keyner ] mentioned, ROIC is a very basis. We will make ROIC for something to be taken for granted and feasibility as well. With that, we will incorporate that into the plan. That's all.

Next person, [indiscernible] Company, [indiscernible].

I'm [indiscernible] from Diamond. Two questions. First sorry, it overlaps. But one second, regarding the resignation of Mr. Kishida, just let me double check. Question to [indiscernible]. So JPY 600 billion plus impairment loss, besides Mr. Kishida words wrong, improper words and deeds regarding the accounting report. So these 2 are the causes and at the Board meeting, you identified some facts. And those 2 are the reasons for the resignation of Mr. Kishida. Is my understanding correct? It is in the minutes of Board meeting, so that's the first question.

Second question. It's simple. Regarding the impairment, Mr. -- question to Minai-san or Nakagawa-san. So JPY 600 billion plus impairment was generated. So this test -- so this is calculated in the future cash flow. And going forward, I mean, depending on the forecast that could change. But impairment test, did you conduct that internally or PwC or other external audit firm got engaged in this calculation? So if you have the outside firm, what kind of role do they play to look at this in a very strict side or what is the role of them? So this impairment test and the result of that, so who approved that and to issue this conclusion? So I have these 2 questions.

Thank you for your question. Mr. [ Kishida ] resignation, so what was discussed in the Board meeting? And how did that decision made? So let me reiterate. FY 2026 March, there is the JPY 200 billion plus impairment loss was confirmed. And now FX standard is higher and as stipulated in the press release, improper words and [indiscernible] by Mr. Kishida about accounting was additionally reported. So we comprehensively made the decision, the resignation of the President is required.

So both are the reason. Is that correct?

Both are related. So Board meeting confirmed both issues, both elements. That's correct. Both elements were considered and discussed in the Board meeting and now Mr. Nakagawa will reply to the question about the impairment loss.

Regarding the accounting treatment of the impairment loss, based on the accounting principle, we treat this. So fixed asset, impairment test. And also there is the impairment of goodwill. But this time around, we have this major impairment loss. In terms of checking the goodwill impairment, so business unit, we did the impairment test [ CMMT ] and [ MG]. So in that unit, we did the check. So this is the annual one.

So midterm plan or confirming the business loss situation, the most recent ones. So with that, we conduct the test. And regarding the result, we had PWC to check that. We explained and gain the understanding Eventually, that will lead to the [ accountment ] process. And regarding the plan, we had a very severe difficult plan, and we have the major impairment loss. And in the internal management meeting that is approved, and we have this accounting treatment.

Eventually, the [indiscernible], I understand that because it is stipulated in the details. However, in the impairment test, are you using the outside firm? With respect to the U.S. of an external adviser, right. Is it any different from the usual investment investigation?

We didn't use any external adviser. Our company's accounting department is home to a group of people with expertise in accounting area. We utilized their expertise because the only calculations were performed by our internal resources. It's the same usual -- same the usual calculate impairment calculation, loss calculation. For the future policies, the situation differs from time to time, but the [indiscernible] remains unchanged from the previous time at this time.

Thank you very much. Next person up, [indiscernible].

This is [indiscernible] speaking. I would like to ask a question, [indiscernible]. You talked about coming from an engineering background. You have been involved in the development of [indiscernible] technologies and products. From your perspective, what are your thoughts and your passion about making things are producing things? This company has been subjected to some product quality-related issues [indiscernible] practices. But what is your passion about engineering producing things?

Thank you very much for your question. I have -- I come from an engineering background, I used to be an engineer for a period of 10 years or so after graduating from school, I was focused on product development. For the following 30 years, I was involved in company management to be able to appeal our products and services to the entire award.

For the purpose we wanted to make sure to understand how valuable our technologies are and how competitive our products and technologies were in comparison to those of other companies, we -- I was involved in various technological competitions to train our service, improve our service.

In that regard, we want to foster nurture technologies. Technology cannot be achieved overnight, of course. Because making things is about making people as all the same goals, we need to go back to basics in that regard. We're going to utilize AI and many other different technologies going forward. But basically, it's all about people. we need to polish people's skills technologies. That's one of our critical important base is infrastructure as a company.

Okay. [indiscernible] my next question. [indiscernible] this is about Kishida, the previous president. How about appropriate actions behavior you have mentioned in your report. Is there any specific statement by Kishida San, is there any specific behavior in profit behavior by [indiscernible] on multiple occasions. Is that the correct understanding? About the [indiscernible]. That is my second question.

Thank you very much for your question. With respect to the financial report, we have had a communication with the people of the financial group and they have reported some multiple cases of Mr. Kishida inappropriate behavior or language.

Next person, please. Mr. [indiscernible].

This is [indiscernible] newspaper. First of all, here's my first question. Were there the person with [indiscernible], -- you talked about the issues remaining in [indiscernible] related organizations. What type of -- did you request any specific compression to be removed? That was done on September 28, which was on Monday. I believe this is a very important point with respect to the management plan of the company. Despite the ongoing auditing activities, why did you have to -- failed to take appropriate actions until 2 days before the deadline. Did you have enough communications? And did you [indiscernible] relationship of trust between [ PC Japan ] and Nidec communication? And going forward, how are you going to improve the level of communications between the 2 entities?

Thanks very much for your question. It's not just September 28. This was an ongoing issue that we have discussed with Nidec Corporation and sense of trust is still between us and distance [indiscernible] continues to be -- remains unchanged, remains in existence. As we speak, it's not just a September 28.

Nidec failed to make improvement because of which you could not make any report? Is that what you're saying?

Well, there are some issues that could be improved quickly. Not everything was solved until by the deadline of September 30.

How about the Nidec executives you have this list of more than 70 people subject to transfer. It's a huge long list. And it was submitted only 2 days before the deadline. Were Nidec executives convinced about the list of such a long number of many people. Do you feel any -- do you feel there's any issues with [indiscernible]?

With respect to this is a list of submitted on September 28, I do not know exactly what you are referring to. We have been constantly discussing various risks to address this particular issue. That is our understanding. The request from PWC came all of a sudden to Nidec and do you realize no particular problems -- we are having a very firm, strong close communications with as we try to solve issues one after another.

Here's my second question. Sorry to be repeating the same question, but with respect to the recognition of Mr. Kishida, there have been some problems with Mr. [indiscernible] behavior and language [indiscernible] within the range of investigation by the third-party committee. The Board of Directors check such behavior or language. Were there a request given to submitted to the Board of Directors regarding Mr. Kishida behavior or language.

Mr. Kishida was approved at the rate of 90% or so in the latest shareholders' meeting in June. Did you check everything about this behavior or language? How come Mr. Kishida has yet to express his opinion about his resignation himself? Do you think -- don't you think it -- it was necessary for Mr. Kishida to come up on stage and express his stance about his departure from Nidec?

I would like to give you an explanation. This is Mr. Minai speaking. We have received similar questions from everyone here today in this press conference. And as we have explained already with respect to Mr. Kishida inappropriate actions and behavior, this does -- these do not have to do with the [indiscernible] investigation. This is -- our conclusion decision is based on the decision criteria of the Board of Directors of the company.

With respect to legal liabilities, that's the subject of discussion by the executive responsibility Investigation Committee. With respect to the third-party committee, they are focused on accounting-related appropriate practices and people who should be tech as the person responsible for those issues, and that's how we organize our issues, respectively.

With respect to Mr. Kishida, he is not here with us today. But as of September 29, he has already -- he already left this company. I'm not sure about what his intentions were. But as Nidec we have a responsibility to explain about his resignation. That is all from me.

I appreciate again [indiscernible] your question to 2. Well, I'd like to just follow up. You haven't asked any questions of the third party committee at all?

Well, let me answer. There was an investigation report put out by the third-party committee, so that's something we read and we browsed. And in this time, we published a financial report. And over which there were improper communication.

Yes. But on the account, also, I read that too. We read that too. And on the point, I -- and we check with the former President, Kishida. Then do we need to? Did we need to hear that again from third-party investigation committee again?

We didn't think so because third-party investigation committee finished their task. And then in terms of the legal responsibility that's exactly under discussion, in the executive responsibility investigation committee, and we are just waiting for the report to come out.

Okay. So that means that you judge you didn't need to refer to the third-party investigation committee?

Yes.

[indiscernible] from [ Toyo Keizai ] newspaper.

Do you hear me? Yes, we do. This is [ Yamada ] from [ Toyo Kezai]. My first question, as an assumption, you corrected the past financial results. How rigorous did you correct is? Is this just the thing that you did as just normal business as usual thing as normal other companies. And I think the JPY 600 billion was impairment losses that were based on planning you had. So whatever -- how do you position -- how do you position this correction?

Why I ask this question is that there is excess of distributable amount, I mean, the reported from [ Nikkei ] already asked this. When we think about it, this is just a violation of the corporate law. And there is a compensation duty you need to incur as the member of the Board of Directors. And I think that you said you will study that you would consider that. Do you think that the correction of the past financial results is exceptional as you think?

Well, based on improper accounting practices, the past executives' responsibility needs to be judged. So including that case, include [indiscernible], the executive responsibility Investigation Committee will discuss that. But explicitly, this is the violation of the corporate law. This is just beyond the executive responsibility Investigation Committee. It's not that you have decided that you would charge for the compensation for the member of the Board of Directors. Well, we would like to wait and here, they want this executive investigation committee has to say and would like to make a decision as a company.

Okay. I would like to ask a question of the [indiscernible] on Somebody asked you about the impression of [indiscernible] on, and he gave you the dream of being listed or going public and you say you appreciate him. Even though with this case, it's good to hear that you appreciate for him. Even though there were pressure, there are some companies that got things right. But depend upon how you hear, how you interpret your worse.

It sounds like you sound like you were affirmative of the business management model of [ Nagamori-san]. How would you like to -- how should I understand the separate -- being separate or being disconnected from [ Nagamori-san ] style of the businesses? How should I understand that? And how should the stance vis-a-vis [indiscernible] change? Some reporters asked you before that, how do you see the need to give accounts on the need to have [indiscernible], to have him answer to media outlets, but how do you see them once again?

Well, thank you for your questions. I'm trying to find and searching words, but 30 some years ago, I encountered for the first time in [indiscernible]. And we were a very small company, and we just employ 40 people. We wanted to be going public and we were confident that we could do it. And that's the kind of confidence he gave us is a dream. It's not anything that you see on a day-to-day basis in the business environment. But the memory had and appreciation for him at the time and the [indiscernible] on him is not necessarily connected.

Well, I don't think you answered my question. Yes, you're right. Your memory 30 years ago and going public, yes, those ambitious, that was great. And it's not that we negate everything that he did. And there were some problems that [ Nagamori ] offer, but you don't necessarily make comments on the problems he wrote about.

Well, last year, new Nidec Committee was launched as of last year. There was a report put out by the committee. And obviously, as a buyer, I read them. And I also submitted my opinions and views to be compiled as a report. It's not that we are going back to where it used to be. So we try to advocate to be a company to be in a stage for the second phase of the funding. So we need to take a group, we need to take on a new chapter for turning this company around. That's what I meant.

Okay. Okay. I would like to take questions from the final reporter [ Uchida-san ] from Nikkan Automotive Newspaper. I'd like to take questions. Thank you for your waiting.

This is [ Ueda ] from [ Nikon Automotive ] Newspaper. I got 2 questions, too. First, on automotive business. [ NPE Zelante ] joint venture or joint venture with the Chinese companies in order to dissolve this joint venture company, I guess you're going to be fully engaging discussions. And I guess this is a part of the engagement and commitment that the former President [ Kishida ] had. Is there any change that you have in the directions as you have the new leadership? The ones change in the management [ NPAs ] business direction itself will remain unchanged? Do you have any receive any reactions from the joint ventures not yet so far?

Here's my next question. With respect to the approval of Mr. [indiscernible], the new President. Is it going to be a so-called one point refund [indiscernible] in case of an emergency or are you going to talked about another -- to another successor sometime in the near future. Why are you going to be long involved in company's preparations for the midterm or long-term business plan? Kaida san, what is your personal opinion about your tenure as President? How -- and also how we're going to train people to become President in the future of this company? And I would appreciate your opinions from Sakuma san, as the Chair President of the Committee.

The first, we need to establish this midterm, long-term business plan for the next 3 to 5 years first. We need to establish a very good team, group, a team of people. That's my critical mission as President of the company. And also, we need to train people. We have this, of course, succession plan that we are going to need for the entire group as well as for the people outside this group so that we can further improve the value of this company. And that's part of my mission too. I would like to have from someone better than me succeed as President of this company, that's a part of the company's policy. We like to select someone who can improve this company's corporate value. And that's what we need to do, and that's what I believe I need to do -- we need to do.

This is Sakuma speaking in response to your question. Thank you very much for your question. First of all, with respect to Mr. Kaida, we're going to have external ordinary session of shareholder meeting scheduled for December. We are planning to submit our proposal regarding Mr. Kaida. This is just a plan at this moment. And after the shareholders' meeting, we are going to have a Board of Directors meeting to select Mr. Kaida as a member of the Board of Directors of the company. In the next shareholders' meeting, which is going to take place next year, what we need to do is to discuss going forward.

As I've been explaining during this press conference, as an emergency measure, we started looking for candidates as the Nomination Committee. Nominations Committee mission is to identify property candidates, and we will continue to search for future candidates. That's what we need to do. That's what we need to propose to the members of the Nomination Committee.

Have you already made -- have you or not made any list of candidates at this moment?

As of now, if I may go into details, we are examining some passport candidates, but we do not have any specific plan for these candidates at this moment.

Thank you very much. This concludes today's press conference. Thank you very much, everyone, for your attendance today. Thanks very much. Thank you.

Now the press conference by the Investigation Committee will start with its own moderator. I will excuse myself. Thank you.

Good afternoon. We would like to start the press conference by the Investigation Committee. My name is [ Sugiye Atoni ]. Thank you very much.

The 3 presenters of our press conference are as follows. Please welcome them. And these are our presenters today. Chairperson, Mr. Toshihiko Itami. The next person, a member of the committee, Mr. Kenji Kawai [ Anatani ]. And here is an assistant of the Investigation Committee, Mr. [ Yunese Atani ]. They would like to remain seated during the rest of the press conference.

First, we would like to have the Chairperson explain the overview of the presentation. And after that, we'd like to have a question-and-answer session. Itami-san, please start your presentation.

I'm the Itami [ Anatani ], I serve as the Chairperson of this committee. Thank you very much. Nice to meet you. And has been -- I believe you have already received a copy of the investigation report issued by us. And you can see the digested version of the document, as well as we have -- we would like to use the PowerPoint material for our presentation. I would like to put up each page of the presentation material as we present our information. And please make sure to check this information for your reference. Now I would like to sit down as I give you my presentation. Thank you.

First, I'd like to give you the background and the structure of the investigation. Please take a look at the first page of this presentation material. Nidec Corporation established a third-party committee on September 3, 2025, following the emergence of suspicions regarding improper accounting practices at Nidec and its group companies. In parallel, Nidec established the Nidec Corporate Reform Committee on October 30, 2025, with the aim of restoring trust and strengthening its internal control system. And beginning January 8, 2026, the company commenced an internal investigation, so-called the comprehensive quality inspections covering the production and development sites of the Nidec Group.

During the course of a comprehensive quality review, suspicions of inappropriate conduct related to quality and inappropriate conduct related to product, country of origin labeling, among others, were identified at multiple locations of the Nidec Group. Accordingly, Nidec determined that an objective investigation by external experts was necessary, and at the Board of Directors meeting held on May 13, 2026, established an investigative committee composed of external experts. The committee conducted its investigation from the date through September 2, 2026.

Next, regarding the purpose and scope of the investigation. Please take a look at the first page of the summary version of the document. The purposes of the committee's investigations were: to clarify the facts concerning suspicions of inappropriate quality related to conduct and other matters; second, to analyze the causes and recommend improvement measures; and third, to address matters that the committee deemed necessary.

In the investigation report, inappropriate quality related to conduct refers, for example, to violation of application and approval procedures for customers, so-called [ climate changes ], violations related to customer use, failure to conduct tests and inspections, falsification or fabrication of test or inspection records and similar acts. In addition, in our proper conduct concerning country of origin labeling refers, for example, to displaying or stating a country of origin different from the actual country origin of a product, declaring false information or failing to make a declaration when importing or exporting and stating false information or failing to state required information in customers' documents and similar documents.

Next, regarding the selection of subjects for the investigation, please take a look at the second page of the summary version of the document. In this investigation, in selecting the subjects of the survey, we first identified and selected candidate cases to be surveyed, and second, conducted supplementary research, and third, selected the subjects of the survey. After that, subjects and the merits of the survey were determined through the procedure of number four, deciding the entity responsible for the survey and the depth of the survey.

Next, I would like to explain identification of candidate cases to be surveyed. First, our committee designated as candidate cases for investigation: a, matters reported by each BU or site through activities such as comprehensive review hearing during the comprehensive survey; b, matters among reports submitted to the quality suggestion box, for which our committee took over the investigation from Nidec; c, matters among reports submitted to the internal [indiscernible] channel for which our committee took over the investigation because of suspected inappropriate quality-related conduct; and d, matters identified through visits to key sites conducted by Nidec's Global Quality Management Division or GQM.

The committee made the remaining matters, excluding: a, matters identified through the processes described above and the like that were limited to violations or deviations from the internal standards and the like with no violation of customer agreements or the like or laws, regulations, certifications or the like being found; b, among matters involving violations of foreign changes, those in which the customer was subsequently informed of the details of the relevant change and consent to the changes that was obtained from the customer; and c, matters that although involving different products or customers, were carried out at the same BU and site in the same or substantially the same manner as another matter were, therefore, consolidated and organized under the matter, the subjects of the investigation. Cases that were found after the commencement of investigation to fall under any of these categories were also excluded from the scope of the investigation.

Next, regarding the conducting a supplementary investigation. Next, our committee conducted a questionnaire survey, an AI [ avatar ] survey and a forensics investigation because there was a risk that the investigation subjects selected through the process just explained lack of comprehensiveness to broadly identify case that have not been identified and to confirm, among other things, that there were any discrepancies between the information provided by the BU business locations, the clearance and other actual situation.

The questionnaire survey was conducted among all of the 97,663 officers and employees belonging to 305 production development sites, and responses were received from 89,973 individuals, a response rate of 92.1%. Of these, responses reporting specific quality misconducts were carefully reviewed for their content and severity, and cases deemed to require investigations were added to the scope of investigation. A total of 12 cases and composed 7 major quality cases and 5 general quality cases were identified through the questionnaire surveys.

In addition, the AI avatar survey displayed on the dedicated system instead of a human interviewer presented questionnaire concerning awareness of quality misconduct and other matters, the actual state of quality management, organizational culture and so forth. And the participants responded by voice or by text input. The survey was conducted at 16 locations. And as a result, 2 cases involving suspected new quality misconduct were identified and added to the scope of the investigation.

The forensics investigation reviewed data concerning 31 current and former officers and other executives of Nidec with the primary objective of determining whether Nidec's officers or vice presidents had instructed or be involved in inappropriate quality-related conduct or similar matters. As a result, no cases involving suspicions of new inappropriate quality-related conduct were identified, nor was it confirmed that any officers or other executives had instructed or possibly approved specific inappropriate quality-related conduct.

Next, I'd like to explain the investigation methods and classification of the cases. Please take a look at Pages 3 through 4 of the summary version. For the cases in which inappropriate quality-related conduct was identified through the investigation just described, the committee further classified them as either material quality cases or general quality cases and determined that the entity responsible for the investigation and the depth of the investigation.

The following cases were classified as significant quality cases: one, cases involving organizational involvement, involvement by an officer or site manager of Nidec Group; two, cases in which the final product is intended for an overseas public institution; three, cases involving suspected violation of laws, regulations, authentication, authentication and all the like; four, cases assessed by the reporter or others as having the possibility of a recall for the product in question; and five, cases assessed as having a high technical risk, risks affecting safety related to the product in question. All the other cases were classified as general quality cases.

Furthermore, for cases deemed highly likely to fall under the improvement quality standards, this committee took the lead in scrutinizing objective documentation and conducting interviews with the relevant parties, as well as visiting sites as necessary to inspect the workplaces and verify records, among other activities. For general quality cases, Nidec investigated the facts based on this committee's instructions. And the committee reviewed and investigation results and related the documents requesting the submission of additional material factual verification or supplementary investigations as necessary.

Next, I would like to give you an overview, overall picture of the investigation results. Please see Pages 5 through 6 of the summary version of the document. A total of 844 instances of inappropriate quality-related conduct were identified in this investigation, including 60 important quality cases and 784 general quality cases. For specific distribution by BU, we have Nidec Insurance at the top, 585 cases; Nidec Mobility Corporation, 125 cases; Nidec Techno Motor Corporation, 57 cases, among others. And please take a look at this chart for more details. For abbreviation of each company, please refer to Page 5 of the summary version.

By type of conduct, there were 805 violations involving [indiscernible] changes made without prior notification or due approval from customers, accounting for approximately 95.4% of the total. In addition, there were 22 cases, 2.6% of qualification, fabrication of test and inspection results and 11 cases or 1.3% of violation of inspection of manufacturing conditions, while remaining category accounted for 6 cases. The number of cases by BU was concentrated in the 3 BUs of Nidec Instruments, Nidec Mobility and Nidec Techno Motor, which together accounted for approximately 90.9% of the total.

Furthermore, regarding the 844 cases of the inappropriate quality [indiscernible], the company explained on May 13 that it had confirmed suspicions of more than 1,000 cases of inappropriate quality-related issues. This figure of over 1,000 cases understood to refer to the number of suspected improper acts counted by the company prior to the commencement of this committee's investigation based on the number of reports received from its offices and at the time.

On the other hand, the committee's figure of 844 cases includes matters newly identified after May 13 and was calculated based on the number of the cases determined to constitute improper acts after screening the matters subject to investigations, including elimination of the duplicates and the figures, therefore, are defined because of the premise for calculating the number of cases are defined.

Next, well, this is an overview of the result of the investigation into the important quality matters. Please take a look at Page 5 of the summary report. In general quality cases, [ foreign ] changes accounted for 95.4%. However, in the distribution of 60 critical quality cases by type of conduct violations involving changes accounted for 28 cases, qualifications of fabrication of the test and inspection result for 22 cases, inspection and manufacturing conditions for 5 cases and other contracts for 5 cases. The concentration of [ vibration ] involving [ foreign ] changes is lower than in the overall distributions.

So the [indiscernible] of the [indiscernible], Nidec's instruments and small products business units and the automotive existing business units accounted for 38 cases. About [ 16 cases ], we already explained earlier. So we have some suspect. Please note that the example of critical quality of cases involving our inappropriate quality practice included on Page 6 of summary version and Page 67 to 77 of the published versions.

And about the safety issues that I understand the company will investigate in relation to the relationship with the customers. About safety, the product with the safety issues and the product with the reps are not identified. This is what we heard from the company.

Next, well, this is an overview of the investigation result concerning representative example in inappropriate quality related conduct. Please take a look at Page 6 of the updated version. Example include a case in the small motor business unit, in which shipment inspection data for [ fresh ] products for IT equipment was [indiscernible] different from the actual measured values and the case in the automotive existing business unit in which the work was performed by using some nonconforming parts without obtaining the customers' approval. For other cases, please take a look at the Pages 67 to 77 of the [ first version ].

Next, I'd like to talk about the concerns and the method of the investigation into inappropriate conduct related to the indication, the production origin and other matters. Please take a look at Page 67 of the version of the summary report. The subject investigation were cases suspected involving inappropriate quality related conduct identified through the Nidec quality inspection and other means and cases suspected of the involving inappropriate conduct concerning indication of origin and other matters.

As a result, the -- so the 6 cases were the firm involved in appropriate conduct concerning indication of origin and other matters. Of these, in 2 cases, this committee subsequently verified the result of the existing investigation conducted by the external law firms to confirm there were no unreasonable aspects. Furthermore, the 3 of these cases were matters for which the investigation by external law firms has not been completed. So this committee took the lead in investigating them through the [ matures ], including detailed examination of the objective materials, interviews with the relevant persons and review of the e-mail data. The remaining case was newly identified through the questionnaire surveys and other means.

Next, I'd like to talk about the overview of the result of the investigation into inappropriate practices, such as improper indication of the place of origin. Please take a look at Page 67 of the summary version of the report. So representatives the examples listed here at the Nidec Technology Corporation. There was a case in which machine parts had undergone [ process overseas labor ] Japan on the [ place ] and also the automotive motor electronic control business. There was also a case in which even after some processes had been transferred to another country. The determination of the place of the origin was not reviewed, and the supplier certificate stating the product originated in Japan were submitted. Please take a look at Page 78 of the published version.

Next is a summary that is the structure analysis. So that structure analysis was conducted. So we will -- we have looked into the reasons why an [ analysis ] state was formed [ became main trained ]. And please take a look at Page 7 to 11 of the report. The inappropriate quality related practices and other issues identified in this investigation varied widely in their forms and other aspects. The causes are not uniform either. Companies must analyze and address the risks of fraud and inappropriate conduct as risks to the system as a whole. [indiscernible] organization system and processes are intertwined.

Accordingly, this committee evaluate the condition of an organization that influence the judgments and actions of its officers and employees allow inappropriate treatment to occur and continue as an unhealthy condition. Based on this view, it analyzes the manner of the business operations, other factors that led to the formation and infringement of such conditions and structural problems. So in this case, the unhealthy condition identified with respect to the management situation in which the unreasonable and [indiscernible] nature of the top-down target has been postponed the views at the site without ensuring transparency to asserting the actual conditions of the business and our front line.

At the corporate level, the functions for the monitoring and the like were not operating adequately as the actual circumstances of order acceptance, manufacturing and quality assurance at the HBU and site were not sufficiently understood. And the BU and site levels, under pressure to achieve performance targets and reduce costs, comply with the appointed way of delivery and maintain supply continuity. Compliance with the customer agreements, the applicable laws and authentication requirements as well as parts of the quality assurance processes were subordinated to the demand to achieve performance targets.

The formation and entrenchment of this unhealthy situation resulted, for example, from the structural problems at the management level, such as a failure to establish an organizational structure commensurate with the group's rapid expansion. For structural issues concerning the other matters, please take a look at the Page 7 to 11 of the summary report. And also please take a look at Page 79 to 120 of the coverage version of the report.

So now I'd like to talk about the concerns and transformation from an unhealthy state to the desired state and measures for the improvement. Please take a look at the Page 11 to 19 for the summary report. To realize the state of each layer, it is necessary to implement in parallel with mutual alignment soft measures that influence the values, judgments and actions of officers and employees and hard measures that develop management and control, organizational structure, the authority and procedure, information infrastructure and modeling and auditing.

The desire [indiscernible] of the Nidec management is to approach this not only short-term early perspectives, but also midterm to long-term horizon, to define the organization's form and the direction it should pursue, share the important values, including an attitude to quality and continuously engage in organizational learning and emphasize making high-quality decisions as a team rather than as individuals. Therefore, the more so that the desired state to which Nidec's corporate function is to support the business divisions proactively and across organizational boundaries toward achieving total optimization while sharing goals and other objectives with management.

The desired state at the BU and site level is one in which all officers and employees of the business division share the principle while continuing to take sound challenges toward achieving ambitious goals. To realize this desired state, it is necessary to implement measures in both the soft and hard aspect. For details, please refer to the page of -- Page 11 to 19 of the summary version of the report.

With this, I'd like to just complete the explanation about the investigation report. So I'd like to give my own perspective. So as a result of this investigation, the group said that in multiple BU and sites, there are several types of the inappropriate quality instances were found, and some of them continued for some time. So they are very involved in the operations, and they have been repeated. They have been operated in [indiscernible], in addition to the inappropriate accounting. Well, this quality is related with the core of the manufacturing operations. This level of inappropriate quality control [indiscernible] program.

So -- well, the company should take this investigation result seriously. And I hope that the company is going to refer to the proposed improvement. I hope they are going to take the serious read into the improvement of the operations.

This is the end of my presentation. Thank you. So from now on, we'd like to entertain your questions.

[Operator Instructions] Second from the right-hand side.

My name is [ Hiroko ] from Nikkei Newspaper. So at multiple sites, the number of the inappropriate quality issues have been found. Well, did you find out when those instances happened? Back in 2012, so I found some instances. But even before that, did you find any inappropriate quality issues?

Yes, I'd like to answer your questions. So that in the report, ever since 2012, yes. So inappropriate committee issues, we pick up those. But we don't have any objectives to pick up how many numbers of the quality issues. So as you mentioned that the -- well, we don't know whether any quality issues were found prior to this year, 2012. At this moment, we have [ the well confirms ] that at least ever since 2012, we have evidence of inappropriate quality issues.

This is my second question. Regarding important quality issues such as violation of laws and regulations or violation of safety standards, those are taken as criteria. In the investigation committee, you refrained from certifying as such. But of the 50, how many raised suspicions of violations of laws and regulations to -- if you could answer that question to the extent possible, that would be appreciated.

Well, I think this is related to Slide 4. So for the purpose of efficient investigation, we came up with certain criteria. And you were asking about the breakdown of the number for each categories. It is not our position to certify, recall or safety or evaluation. So in that sense, even though you asked the question, the suspicions of violations, since we did not certify or recognize any violations, we are unable to give you the number of cases of violation. For your information, the material quality cases overlap or go over several criteria. Thank you very much. We will take the next question. Please raise your hand if you have any questions. To your left, second from the front wearing polo shirt.

This is [ Mori ] from [ Toyo Kai ]. So 60 material quality cases and general quality issues. Could you indicate how many customers were affected?

Thank you for your question. So the scope of the investigation from our perspective is whether certain quality cases would fall under material quality cases or general quality cases. And it was not a direct scope of the investigation as to which clients or which customers are affected.

The suspicions of violations of laws and regulations, it's mentioned on the slide, but what laws and regulations in particular and what certifications and et cetera, the word et cetera, is used, but what is meant by that exactly?

Thank you very much. So regarding laws and regulations, sorry to generalize, but as a result of the inspection and if the data is altered and if it is recorded on the sheet and is submitted to the customer, supposing that this happened, then depending on the -- on what was exactly done, it could be a violation of unfair competition law.

In the investigation regarding quality misconduct, I am aware that there are such cases in the past. And as for certification, that has to do with overseas certification. And what about the term, et cetera, or others? Including modern regulations and certifications, certifications vary in nature. So we use the term et cetera as an inclusive term. So by modern regulations, you meant violation of unfair competition act. I decided as an example.

Next question, please. If you have any questions, please raise your hand. So to your right, the one sitting in the third row wearing light blue shirt.

This is [ Skaupa ] of Nikkei [ Cross ]. So in the end, who should be held responsible? Who is to be blamed the most? Could you tell us that? Because in the forensic investigation, officers did not make specific instructions that's mentioned on this report. So reading that, those on the ground engaged in misconduct, or that's how this can be interpreted. So is -- do you have any thoughts on that aspect?

Thank you for your question. So regarding this matter, who should take responsibility, I think that was the gist of your question. So on that point, Mr. Kawai, a member of the Investigation Committee, will offer the answer.

This is Kawai speaking. Let me answer that question. There are differences across different BUs and sites. So I cannot make any generalized statement. However, looking at several sites across the board, the rapid expansion of the company together with that, the quality control structure should have been established, but there was a delay in putting such a structure in place. And there is strong pressure for -- from the top management to achieve certain targeted goals. So in that sense, there was distortion in the management policies.

But the cause was -- whether the cause was only attributable to the management -- top management layer or not, it's mentioned in the analysis, but the management layer, BU and site layer, corporate layer, each had its own issues. So regarding Nidec or Nidec's issue, there are structural issues. So that is the crux of the matter for this issue.

So by structural issue, it turns out that no one will be held responsible for or will be held accountable for. Well, we are not in a position to determine the responsibility, but each layer, the management layer, corporate layer, BU and site layer, there are issues associated with each layer. So the managers, supervisors had experience and excelled in their work. And that is why they became managers. And those managers would have stayed with the company over a long period of time.

So what was done on the ground, the fact that the misconduct was done, they must have been aware. And when they became managers or officers, I wonder if there was no trace of them giving instructions or giving specific instructions. As far as we confirmed, that is not the case.

So let me ask another question. Rather than who should be held responsible for within the company, what process did not work well, resulting in this kind of issue or this misconduct took place? Where was the problem in the process?

Let me answer that question. I am repeating myself, but at the management level, management layer, the corporate layer and BU and sites, there are detailed description in the detailed report. There were interlinkages across those layers that resulted in these issues.

We'll take the next question. Please raise your hand if you have any questions. To your left, second row from -- and wearing a navy jacket, wearing glasses.

My name is [ Kanai ] from [ Yomiuri Simon ]. Thank you very much. So in the report, there was micro management, the expression of micro management by Mr. Nagamori or Chairman Nagamori was used several times. So micro management in general means exerting pressure, managing down to the detail. But in the investigation, what kind of conduct was seen? For instance, would Mr. Nagamori and others go to the plant and demand certain actions? What actions were taken?

So Mr. Nagamori's way of thinking and the pressure and achieving of the target in the accounting report, there was a description of what Nagamori -- Mr. Nagamori's thinking. And there's a mention of the relationship with the pressure on the target on Page 83. If you could look at that, Mr. Nagamori's thinking and what was missing or was insufficient that is pointed out on that page.

And against such thinking, was there anything that was found in terms of actual actions or conduct behavior?

So against high target or the fact that high levels of targets were set, that was recognized in the report. So something that was not in line with the actual state of business, the profit targets, the short-term targets were set or cost reduction targets were demanded and continue to demand such cost reductions. That was mentioned in the report.

Related to that, you mentioned the accounting report, and there were some parts that are quoted from the accounting-related report. So once again, perhaps the root causes are the same for the quality issue and the accounting issue. So those on the ground in financial and accounting department and those on the ground for manufacturing, do you have any opinions about the relationship between the two?

Let me answer that question first, and perhaps Mr. Kawai can add his thoughts. So in terms of profit target that was not in line with the actual state of business and short-term goal and also demanding cost reduction, there is a similar issue that is also related to accounting issue. But the accounting fraud and the quality issue, they should not be seen as exactly the same. The quality -- inappropriate conduct regarding quality, there are certain intrinsic issues related to quality there. For instance, the sufficient independence of quality assurance division is one reason. So it is similar, but there are certain specific aspects that are related to quality-related issues. So Mr. Kawai can add a few more comments.

This is Kawai. Let me offer some additional comments. As the Chairperson just mentioned, there are similar rules just as with the accounting fraud issues as we recognized. But as for inappropriate conduct regarding quality, it's not limited to that.

At each BU and site, they have their own issues. As the Chairperson mentioned earlier, the quality assurance department independence was insufficient. In addition to that, at the time of technical verification before going into mass production, that was insufficient. Also within the BU, the sharing of the responsibility or procedures were insufficient.

And in terms of controlling or managing the transfer of production, that was insufficient as well. And as for quality, compliance and risk assessment, monitoring insufficiencies at different level, the management level, corporate layer, BU layer, each layer had its own issues. And that resulted in this particular issue as we understand.

We will move on to the next question. Please raise your hand if you have any questions. The person on the front close to the entrance/exit, the person in the blue.

This is [ Hawai ] of [ Diamond ] Corporation. Thank you very much for your presentation today. First of all, here's my first question. If you take a look at the report in the middle of it, says Mr. Nagamori and other executive management team have these instructions, et cetera, and no such case was found, according to the report.

I would like to ask you some additional questions on that point. With respect to Mr. Nagamori-san, Mr. Nagamori and the executive management team, how many people or who actually are included in this, Executive Vice President or Senior Vice President? Or who are actually included in the executive management team? Can you specify any specific individuals?

And within that executive management team, did you conduct any hearing or interviews with these -- any of these individuals? As far as I can see from the report, you did not seem to have any one-on-one interview with Mr. Nagamori himself. If that's the case, why? Was it not really necessary to interview Mr. Nagamori? Can you provide me with the answer with those -- regarding those questions?

I believe you're referring to the result of the forensics. With respect to the executive management team, 31 people are the people included in this term, executive management team. That includes Mr. Nagamori himself. The current President and the current executive members are included in the 31 people.

With respect to Mr. Nagamori, you said that you -- we didn't seem to have an interview with the person. We did have an interview with Mr. Nagamori. Please take a look at Page 83 of the document for the result of the contents of the interview with Mr. Nagamori. With respect to the interviews and researches into executive management team members, the members of our committee had interviews with these executive members as deemed necessary, and we launched necessary investigation regarding these individuals as necessary.

With respect to interviews with Mr. Nagamori, when it comes to his possible involvement in the quality practices, problematic practices, how many times did you interview Mr. Nagamori regarding the possible suspicious quality misconduct practices? And how did you come to the conclusion that Mr. Nagamori was not directly involved in those quality-related issues?

Thank you very much for your question. With respect to Mr. Nagamori, please take a look at Page 83 of our document. This is the result of our investigation regarding Mr. Nagamori, we have had one interview with Mr. Nagamori. In this interview, Mr. Nagamori stated that as the company grew larger and larger, it became -- we were unable to provide enough number of resources, human resources regarding the pace of the growth of the company. Please take a look at Page 83 of the document once again.

Here's my second question. With respect to Mr. Nagamori and the members of the executive management's possible involvement as well as instructions from these people, do you have any -- please -- you didn't seem to -- please tell us the difference between -- you didn't find any evidence, or there was no -- and there was no involvement. And there are some interesting descriptions over here. And as far as these descriptions are concerned, they may look as if they -- the executive management team members were actually involved in those quality instance, possible instance.

Thank you very much for your question. The meaning of the involvement is in question here. As I understand, specific illegal instructions or illegal acts were not really found in our investigation. No -- so could I possibly understand that there was no such instance found? As far as our investigation is concerned, we couldn't find -- identify any involvement. It could be either 0 or 100. We don't use such clear expressions. As far as our investigation is concerned, we couldn't -- we didn't find any involvement of such activities.

[Operator Instructions] Thank you. Let me check once again.

If the targets were made by the executive management, couldn't that mean that the executive management teams were involved in those quality-related issues?

As far as performance management is concerned, there was a very strong pressure. That is for sure, as you can see on our report, that type of pressure is something we recognize.

Next question. [Operator Instructions] Please go to the person right next to the previous speaker, the person we have in glasses.

This is [ Sei ] of [ Asihimbo ] newspaper. Itami-san, you're the Chairperson of the committee. And at the end of your explanation, you talked about -- there was a repetition of some appropriate -- possibly inappropriate practices. And in the investigation report, it says the misconducts were transferred from one place to another as time went by. Could it possibly appropriate to understand that there was a systematic misconduct? You didn't confirm any involvement instructions of executive management team members as a fact. But still, at individual business basis, there were some inappropriate activities taking place. Is that the correct understanding?

There was no top-down instructions. I believe that is the primary part of your question. Kawai-san, please answer the question.

This is Kawai speaking. Let me answer the question. As has been explained by Mr. Itami already, we do not confirm any involvement or instruction coming from the top management about these inappropriate practices. But at individual BUs or business units, some BUs, there were some inappropriate practices.

Please take a look at Section 5 of the investigation report. Here, if you take a look at the one, there are some examples of inappropriate practices. So SPMS business unit over here. If you go to the next slide, you can see the details of the information there at the group companies, presidents, factory managers and R&D leaders of corrected revised data in our report. With respect to such cases, at group company level, we believe inevitable that we have to say that there were some systematic involvement in those issues at individual basis.

These instances account for almost all the cases described in your report?

As far as we could confirm, group companies' executives as well as other executives, including the one that I've explained, there was a total of 20 cases involving those group company executives.

You have 844 cases in total. And only in 20 cases, top executives are involved in those cases, those acts. With respect to the 844 cases, many of them are general cases, quality-related cases. With respect to material quality-related cases, the number is not so large. So you only have only 20 cases, and you have the remaining number of cases. Those cases were incurred because of the pressure from the top management, is that personnel type issues? It's not just the top personnel-related personnel issues caused by individuals. There are 20 cases that involve the top management of group companies and other businesses. How about the GMs and section managers? I believe if they are involved in the cases, there will be systematic cases. If you involve -- if you include these people, would it be correct to understand?

It's all really depend on how to define the systematic as a word. We're not going -- we didn't go into that detail in our report. That is all from me.

Next question, please. From your right, second from the right, the person wearing a white shirt.

This is [ Nomoto ] of [ Nikon ] newspaper. With respect to the inappropriate practices, we have numbers by BU. The numbers vary from BU to BU. Nidec Instrument seems to be occupying a large portion of the total number of such cases. And everybody was very urgently trying to desperately reduce cost, I believe. Under such a circumstance, why do you think we have so much -- so much difference among these BUs? I believe some BUs were very clean, free of such conducts. How do you take a look at this fact, data results?

Please go to Slide #5. I believe that answers -- best answers your question. And there are quite a few differences, as you said, with respect to the number of these cases by BU. Mr. [ Yuasa ] will provide you with additional information and answer.

I'm a member of -- I was a member of the Secretariat. This is [ Yuasa ] speaking. With respect to numbers by BU, the scale of the businesses, the number of products, number of customers all affect these final numbers here. Just because we have a large number for one of the companies does not necessarily mean it's not inappropriate. It does not necessarily mean that the particular deal is to blame.

With respect to Nidec Instruments, they have a large number, 585 cases in total. There are quite a few form changes that occupies a large majority of their cases. And quite a few products and components are handled by -- produced by this company. So they have to go through so many form of changes. So in other words, there are some concentration with practices where they have so many products come to them for changes, the change controls. So if they have more products, more clients subject to the change control, we have seen that the valuation of changes.

Okay. I think in relation to my first question, second question is about the changes. Many of the practices are related with for changes. So that your clients, to where you supply to, perhaps you have a kind of misconduct. And that you have [indiscernible] against your clients. Therefore, what is the reason why we have so many changes, misconduct about the changes?

Yes. [indiscernible] changes, there are different other types of the changes as you go through the well stream learnings, there are more cases for the change control to the [indiscernible]. That is one of the reasons why.

I would like to go to the next question. [Operator Instructions] Yes, right from the top.

My name is [indiscernible] from [ Sonoma One ]. This is the evidence you got. Is my understanding correct?

Thank you for your questions. The reason why [indiscernible] is that -- well, we identified a practice in 2012, but we didn't have any investigation prior to this year. That is why we cannot give you the correct -- a different answer.

844 cases. Out of those, the oldest one was conducted in 2012. Am I right?

Yes.

I have another question. So about the contents of the practices for the quality issues, earlier, you mentioned, so for example, inspection result falsification is against the law of the unfair trade to avoid the falsification of the test data. So in other words, that they lose the trust to the other customers?

This is just a general -- well, explanations about the quality issues. So in the past, there were some quality issues which had violations of the fair trade uniform so that -- well, for example, for ligation. So for example, [indiscernible], so for example, that you change the numbers, which is not correct. And if you just face such a way, if you submit such a way to the clients, you may lose that credit. So this is not allowed because of the regulations and low. That is why, in some cases, we can say there were some breaks at a variation of the other regulations. Unfair that the Competition Act.

[indiscernible] about the certifications. So what is the certification are you talking about?

So therefore our certifications. So these all means that Mr. Yuasa is going to answer questions.

Income certifications that quality management, we have some certification protocol the quality control, but the actual IRD certifications. We didn't have any assessment that any other practices against this kind of the certification note.

Okay. I'd like to go on to the next question. Please raise your hand if you have any questions. So the person riding hand.

My name is [indiscernible] from the Monthly Fact. I'd like to raise 1 question on Page 8. So you can do the question here, over about 100,000 people. You received the responses from the 90s that people so the over 30% say further pressure. And also the -- perhaps some 40% or 46,000 people said they were broadly in the malpractice. Why they were cornered. So the to what extent did you have our investigations. So you -- we just talked about whether we resin instruction from the management or not? There are some possibility about 36,000 employees said yes. So what is your [indiscernible] will assessment about these situations? So normally, we can expect as many of the 36,000 employees are involved in the malpractice. So why that the -- were they involved in such malpractice? For example, that perhaps they are concerned with that the well HL issues and also that the well issue did investigate to that extent. So that this is -- that's something we need to investigate in terms of the instruction that whether we have instruction from the top management or not. So I think you're asking the background why that there so many people are involved in a practices.

So Mr. Kawai is going to explain to you, is it going to answer your questions.

Well, so that the 36,000 people said they were improved in buttress. So that the -- well, perhaps I wonder to how many people digital conductor interviews. So perhaps at the perhaps, I don't know whether they talked honestly or not. People could have been involved in demand process. This is a result of the questionnaire -- our questions. Therefore, it is not possible as to have interview with all the people. We put some aside for some business unit. Our subsidiaries, we visited such companies to conduct hearings and interviews. So well have a detailed investigation to each individual. So perhaps in the questionnaire, you have a role data to do how many people did you either conduct interviews. Well, we have some details on the duration in the report.

I'd like to give you some additional information and the banks come to the question here, 36,000 people. Within the group's -- so in Apache issues are found. So what is the reason of those plants, we try to solicit information from those people so that they choose that the cancers that they were under pressure to achieve the goals. So in other words, we cannot say the 36,000 people are involved in the practice. But I don't quite understand your conclusions. So that the well resource allocations and also that the -- and also at a stretch to go the pressures because of the elements intertwine with each other, leading to that quality in my practice. I think this is a very examples of the -- [indiscernible] or execute given by the top management, so this kind of interaction at should not take price because the top management that they created [indiscernible], for the EBITDA environment, so that the interactions. So in this case, the introduction of the sites and HBU, it seems that you don't blame that the anybody for those growth issues. I don't quite understand this count well the interconnections with each other of several elements.

Well, I'd like to answer your questions. Well, we don't say that the top management are not at all are involved in the discount of quote issues. Because we found so much pressure from the top management in trying to achieve the targets. So this is a pressure that the people and employees have failed actually. That is why that the individuals -- sorry, that the employees actually were a cone that you are going to conduct the practice. So that the conclusion here is -- the conclusion of this well, malpractice is the interactions with each other. So I don't understand this. When we are defeated in the last quarter, we didn't say something like other inductions. Because of the top management, to style of communication, I guess, perhaps that those parties were invited, so perhaps this is a conclusion -- I don't quite understand your conclusion. Your conclusion is the just interaction of several elements, I don't think this is quite correct.

Well, about the -- perhaps it is up to the definition of interactions with each other. Well, we don't say that you are that were we don't -- we didn't say that there isn't any pressure from the [indiscernible]. We believe that the pressure from the [indiscernible] is 1 of the reasons, good reasons why this kind of the quote issue happened so far.

Well, I would like to limit the question up 2 to persons.

So that the under the pressure by the top management -- so there were some injections to some extent. However, that well, you said that the reason for the map practice, they all the issues are the inductions, I don't quite understand why. So the gross pressure that well, that of course, the employees while at were forced to have some misconduct. It's up to that the well interpretations. So as a result of our cost analysis, as I have mentioned earlier, as a whole, we do see the structural program behind the issues of the qualities. You and corporate and sort of management, each of them has the well structured program. Therefore, of course, emphasize, there is a strong -- there is a service program at the level of the corporate management.

Thank you very much for your questions. In the report, we already stated in detail the top management was Intelisys structural programs on Page 81 to Page 83, please refer to those sections. At HBU is that perhaps top management, they placed the very stretched to goal, so they apply so much pressure, severe pressure over the business units. So this is the structural program held by the top management. That is why -- we didn't have any assessment that the management was not the 1 which blame. We said actually that the top management was also a responsible for these kind of issues.

So another question. So the person in the black chart are close to the entrance.

My name is Tokuda from Toyo Kansai. So I'd like to read 1 confirmation about our quality material got from #1 to #5 so able so that those 844 cases actually, comprises of those 5 that are got issues. So we have 5 items for the material quality if we fit 1 of those 5, this is regarded the word material quality. So you have a classification and the 5 categories. So if we hit 1 of those 5 quality -- sorry, a clarification, so you can delude such problem as material quality issues.

Are you asking whether we have [indiscernible], we don't have any involvement connections with any of those out of 5. We don't have any assessment about the valuations. The number one, the organizational environment, yes, we have some. That is 20 cases, yes. And about the well and also the issues for the public cases, there is no.

Okay. Then about the -- could you disclose that now? So classifications and also the certifications, I think I wonder whether you could give us a kind of the other hint.

Sorry that -- so possibility and suspect, variation of the regulations and recall and safety, we don't have such a investment at all. That is why that well, if we answer this question in detail, where we may invite necessarily our aspect. That is why we'd like to withhold that answering this question. Please understand.

Okay. Let me ask my 2 -- my second question. So more than 800 issues that arose since 2012 from the oldest case. And for a long time, it never came to light. And have you seen any intentional cover-up of inappropriate behaviors?

Mr. Kawai will answer that question.

So this is Kawai. So customer requirements to respond to customer requirements and I think there was a weakness to reconcile against the actual state. And monitoring and quality assurance did not function properly. That is another cost. And there is no issue with the functionality and safety. They had such assessment internally. And over a long period of time there were no issues. So that experience of not resulting in issue, that served as a justification for misconduct. And that is the reason why it was not discovered for many years. That's how we assess the situation.

Please raise your hand if you have any questions. Due to the schedule for the later day, I'd like to limit to 2 last questions, 2 more persons to ask questions.

This is Yamada from Toyo Keizai. I have 2 questions. I was reading the report and I was unable to digest the information. And so I was not paying attention to the question. So apologies if the questions were already asked. So there was a special mission general management cover up or concealment took place. So not just concealing. There was a team or a person that will take measures against possible discovery. Was there any cases or not? That is my first question.

Anonymous person came forth in the case of accounting fraud. But in the case of quality issues, there are no such equivalent person that came forth anonymously.

Understood. My second question, there was no instruction from the manager's level, lives of the management or the executives you mentioned. But some of the issues may have resulted in trouble with the customers, as I imagine. So to the management level, was there anything that was reported? So the head of the division that was engaged in misconduct. -- perhaps connivance of such act, but to management level, including Mr. Nagamori, was it ever escalated? And if so, what was the judgment made? Internally, if it is -- if it were handled internally, I would think that, that was that would be characterized as connivance. But how did you find out about such cases in your investigation, if any?

In the past, Mr. Nagamori and other executives, there were reports made to management regarding violations of compliance as well as regulations and there were instructions for improvement issued. So instruction for misconduct and connivance of misconduct at that time, it was not done. So the issue was addressed properly, it says.

So was communicated properly to the customer? Is that how it was handled?

At least including in media. Well, whether you should disclose a lot is another question, but it seems like you didn't disclose such cases. So it says that it was handled appropriately and your understanding it's probably that it was handled appropriately. But what was done exactly? At that time, it was recognized that it was handled properly. By properly, what do you mean? Necessary disciplined reaction was taken, explanation was offered to the customer to revert back to a normal state. That is what was meant. Some companies would hold the past competence and with apologized to society at large, but such action was not taken in reality. Is that correct?

As far as I'm aware, that was not the case, but what is to be publicly announced or not is a management decision. I'm sure you understand. So based on such management decision, it was handled properly as we understand.

I'm very sorry to say this, but next person will be the last 1 to ask questions. So the person sitting close to the entrance, please.

This is Takeuchi from NHK. I have 2 questions. Sorry to be asking something very basic. So in this report, and the management level. The term management level does that include Mr. Nagamori?

Yes, he's included.

And there was a mention that there was no investigation going back before 2012, and therefore, it's not recognized as to whether such misconduct took place prior to 2012. But misconduct must have been repeated. So even though it was not recognized, maybe was there anything that indicated that it was done for a very long time in terms of inappropriate actions taken regarding quality issues? What is your view on that possibility?

Thank you for your question. In general, I cannot roll out that possibility. But from our perspective, what we recognize as evidence was after 2012. So that is what was written in the report. And before that, we cannot say whether such a case existed prior to 2012, where we cannot deny that such a case did not -- or we cannot deny that either. So with that, we will conclude the press conference. Thank you very much for your attendance, taking time out of your busy schedule.

Now we'd like to get to the Nidec's press conference started. Here are the present as representing Nidec Corporation, Mr. Mitsuya Kishida, Representative Director, President and Chief Executive Officer; Mr. Masayuki Minai, who is the member of the Board of Directors, Senior Vice President and Chief Compliance Officer; and Mr. Takeshi Miyake, who is a member of the Board of Directors, Vice President and Chief Supply Chain Officer. I'm Keita Watanabe, Nidec Corporation's Corporate Communications Department and moderate this press conference.

In this press conference, Mr. Kishida will give his opening remarks first, followed by his explanation on Nidec's response to and actions regarding the quality-related issues. Then the floor will be open for questions. Please kindly wait until then to ask your questions.

Now opening remarks by Mr. Kishida.

I'm Kishida, Representative Director and President of the company. And after the discovery of a suspected in our property quality-related practices, we launched on May 13 and Investigation Committee comprising outside experts who conduct an investigation based on expertise and objectivity. I am very creditable to the members of the committee. Since the members of the committee have already explained the details on the report we have received from the committee. I would like to comment on the overall response from our company with respect to the report. Extremely surely accept the fact that the investigation identified cases of misconduct at multiple business units and business spaces of the business group in the area of quality assurance, which is the very base of a manufacturing company. We deeply apologize to our business partners, shareholders, investors, the market and society as a whole, for the anxiety and in convenience, these issues must have caused followed by the service of inappropriate accounting practices.

With respect to [indiscernible] in the investigation, we promptly reported them to customers and verified that these issues have no impact, no impact on product safety. Additionally, while addressing individual issues and our CXO system, we are reviewing and improving Nidec's quality management system itself. Going forward, we will carefully -- we will carefully explain to our customers the investigation results and our investment measures in order to receive opinions and address them with sincerity. We are currently examining these issues impact on our performance together with the impact of corrections of the past fiscal year's earnings results. Our intention is to discuss them at the press conference scheduled for September 30.

To be reborn as a company that does things right, we will company-wide promote a drastic improvement of the company's culture, systems and processes.

If we may, we would like to continue our presentation on details seated from here on.

Next to Mr. Kishida, we'll explain the company's reaction to the investigation committee's investigation results. It was October 28 that our company was placed on a security on special alert. And right after that, we established Investigation Committee from there on, we established quality investigation working group. And after that, we have launched a company-wide, group-wide quality inspection. Within this quality inspection, we interviewed people at a business basis. We had individual people checking and we established quality opinion boxes. Those are our main activities and this new system, which was launched in April, we received a lot of opinions from many employees, and we decided to establish a committee after that, and we decided to launch a multi-phased investigations.

With respect to these investigations, as has been explained already, we did in case the forensic investigation. And we have covered 35 business basis covering the 97,663 employees we utilized AI technology to collect opinions from a variety of employees, and we do some on-site investigations as well. in parallel to these investigations, we explain our situation to our customers. And these explanations are ongoing as we speak, many customers are eager to learn the results and findings and opinions from today's press conference. We will continue to explain this information with sincerity. And we will we have already started talking to our customers 1 after another, 1 by 1, necessary investment impairment and corrections correct measures will continue. At this moment, as of now -- at this moment, there is no report of any cases that has impact on the product safety.

With respective functionalities of our products, there are 2 cases about which we are going -- we are continuing to have negotiations discussions with our customers. We will sincerely continue these discussions to take appropriate actions.

With respect to possible future issues, we will take actions promptly our customers take presence over internal logic. We need to have a pride in our product, and we need to make the quality of our top priority and that's the type of change we are making happen. That's the type of commitment we are going to have. And we have started taking such measures to or that goal. Based on the result of the net results of the investigation we accept all the results from the mitigation with sincerity. And we deeply apologize to our customers and all the other stakeholders that we have. And after accounting in appropriate practices, we have started our proactive investigations and many things have been identified. And based on the results of the investigation committee's investigation results, we have confirmed these matters as facts. We have issues with our corporate culture, processes as well as systems. We need different systems, new systems to be introduced into our company. we are determined to take appropriate actions based on this new policy.

From today onwards, we will have new realization of these facts and we are going to launch new measures, which will be explained by Mr. Miyake. And I will give you some closing remarks after that. Mr. Miyake please.

This is Miyake speaking. I would like to provide you with the information regarding the results of the investigation by the Investigation Committee. As I will not go into details, which have already been explained by the Investigation Committee. We have a total of 850 in its conduct, including 844 quality related and 6 cases that are in appropriate labeling of country of origin information were found. 95.4% or 84 or 5 cases of the quality related to misconduct our 4 changes, roll violations made without informing a customer in Netherlands of obtaining its prior consent and material quality related [indiscernible] our 60 cases in total.

With respect to falsification, fabrication testing results and a violation of testing results were also found and we take these facts extremely seriously, and we will take appropriate actions for these matters and foreign change roller violations account for more than 90% of all the issues that we have found. And within our organization, these importance of these roles were neglected or ignored in our organization. Next slide, please. This is results by BU with respect to quality account misconduct cases as well as significant quality cases. If you take a look at the left-hand side, you can see the number of the total cases, medicines, Nidec Mobility, Nidec Technomotor, these 3 BUs account for 91% of the entire cases. It may look as if these issues were considered to specific deals and organizations.

Maybe if you take a look at the next chart, you can see several top instruments has the percentage decreases and AMC organic and other companies have more issues, as you can see. Just because the number of the issues is large, doesn't necessarily mean that your company or organization has a most -- the largest number of issues.

If you take our quality-related issue called instruments sometimes have the cases of coming up with the fictitious numbers results that were submitted to its customers with Nidec Mobility band substances were used without prior consent of a customer, among other cases. These are all depending on the situation differs from 1 company to another based on the business circumstances and other elements. Sometimes there is mismatch in information. there was not rolling fully capable functional systematic processes in place. These are the very sales as we have to take as a company. For these cases, we have already reported these cases to our customers, and we have done required technological verifications. We will continue with our efforts and we will take appropriate measures and careful measures. We need to reestablish our change rules and we need to inform everyone of these rules. And based on the futures and characteristics of individual organizations, we need to make sure to have a recurrence prevent measures comprehensively. We will continue to work the company-wide to obtain regain the trust of our customers in Nidec.

Okay. Then next, we would like to invite Mr. Minai, who is going to talk about the future actions that we are going to take.

So based upon the result of the investigation by the investigational committee, we will take ratio sincere measures, we'd like to make an all efforts to regain the trust as was already introduced that well based upon the improvement plan for the accounting misconduct. We have already started the countermeasures, but based upon the result of investigation, we are further augment our improvements, we will add some more measures. About the pillar those measures agriculture and system process, these 3 pillars. So since come to the organization, of course, we should not try our customers. We should make much of that quality. We'd like to protocol. This is a system we need to create as a company. So Nidec as a whole, I would like to make every effort. After this space, you would like to explain to you about the details. And first of all, that the system and processes for each. So as you already know, that we had issues about accounting the problems. We already started some countermeasures. Based upon that, we are going to enhance more measures. First of all, the system. So well, that we already took some actions that the accounting program, for example, we review the governance by the BOD, and we enhanced accounting system. [indiscernible] to this, this time because of quality issues in the short term and the midterm and long term. So we are going to take necessary measures in the short term Well, that the QA should be independent, we'd like to enhance independent if something arises. So QA should have the authority to stop the operation on site. So in other words, we are going to give the authority highest to the QA. You mentioned to that the corporate QA, so the demote and audit is going to be enhanced. So in action to those short-term actions, you are going to review the authority division of the authority and the image division. So roles and responsibility edition making needs to be more clarified in each other tier business. And also QA needs to be enhanced, including we need to hire more people, more excellent people for growth assurance. Furthermore, about the processes. are accounting issues that we review that the business processes and also internal data control and also with blowing are being reviewed.

In addition to those, so based upon those quality issues as additions, as shown here, Bob we are well, realize this. So that the QA Eat system should be reduced. So we are going to finalize the basic rules for QA globally. When something arises, so we need to be different that we need to receive the escalation to the other corporate headquarters. So in other words, we need to enhance the reporting lines and also mid and long land across their organizations so that the value chain should be established from the R&D to the operations and the manufacturing.

And also about the quality data, we need to have more transparency about the quality data and also that we need to enhance the traceability by which we can see the quality data at anywhere, but any time. And finally, about the corporate culture. So as a whole company, of course, that the quality compliance, including the accounting. So in order for us to regain the trust, so the well last company, we need to the change our culture. This is quite important for us. Last year, However, since the last year, we already started a cultural change. On a daily basis, we have been making a report. So on your left-hand side, the culture, there are 4 items in the culture unless we realize those, we will continue to change our culture on steady basis. So the culture we want to attain is that to have the right actions rewarded. We are going to enhance the quality and compliance way comes first always, not only the QA, but they are other people in own layers and all operations should be responsible for the quality. And the same thing can be said for compliance, on every 1 of the people working for Nidec should be responsible and also speak up about the news first. So these are the items we wanted to realize on this we achieve. We will continue to change our corporate culture.

Financial details the actions are shown here on the right side. So we are going to be restricted that the interactions solve the matters and also communications message needs to be enhanced still further. Also the CXO, the present several leaders should at announced the message globally. And also , we need to create a common understanding. Furthermore, so we need to have a good communication with sites through the town halls, we need to continue to do this and also compliance educations including QA, should be continued on a steady basis. So we will continue to have those measures. And to every 1 of us has a good culture at the well mind set. By doing those the actions, try very hard not to cause any problems the troubles to anybody related.

So from now on, so the financial balance and also the business impact also future well perspectives. So well, we like to be very sincere to since for the customers and also that we are going to continue to the necessary other defects toward the result meetings, of course, we have already started our measures. At this moment, so that the -- we are now at assessing that impact to the financial impact to the situation. The financial impact in individual matters, we have found that the no matters have been identified that are expected to have the material effect on the Nidec group. So about the business impact. So that we will continue to talk to the customers, and we will make corrections, so we will examine whether we have any duty impact to the customers and also the products. At this moment, we don't have any major recalls or operation itself, we don't see any negative impact. Also the result outcome of the investigations at the main side of the group that we have found that the issues . So those issues have been reported repeated. So these are the core of the trust of the manufacturer, so those are very important factors to take. So we want to share the value. And also we wanted to recreate our system business operations. Well, we have some structural programs shown by the investigations corporates and sites. So at each level that we will try to create a penetration and as the grows, we'd like to make a steady effort. So there are 5 pillars. So these are the -- we have already started the revision of our business and also business portfolio is essential for us. We have already started partially for such portfolio review. So -- and also close to the business and also pathways, but it should be added as the [indiscernible]. This is a new initiative. So we have take this initiative. And about quality and governance, so human rises was such that we are going to make investment due to human resource to support. And also, IT infrastructure is already shown to you. In the future, we try not to cause any admins conducts, we are going to create recreate our IT infrastructure. So we will continue to have the correct regions, correct management. So these are the basis for our business.

So based upon the well report of the mitigation today, would like to be sincere in are talking to our customers. And also by September 30, we are going to Security report and other documents around those timings that we are planning to have a press conference about the result. And also on the end of October. So internal control is going to be confirmed. So we are planning to submit the document for internal control. And also around the end of this year. So we have a 5-year plan for revision, we will update such the phone plan. Well, on a steady basis quality and also accounting, and we will continue to take the measures continue to monitor those actions. And also to internal and also outside parties, we will continue to report the current status, most of today's status of our efforts.

With this, we'd like to conclude our presentation. Thank you very much for your kind attention.

Then from now on, we'd like to entertain your questions. [Operator Instructions] Yes. Okay. The -- okay, the close to the entrance, the second from the top.

So my name is [indiscernible] Newspaper. So my first question about investigations. So structural proms shown by the investing report, what is the reaction to this. in all while you were working as Vice President, you have been involved within the management of the company that receives the result of these evaluations, which includes structural situations. Perhaps the -- I guess, you have noticed this kind of situation, you discounted problem. However, you are not able to take any actions. So including our loan so would you please share with us your reactions?

Thank you very much for your questions. So I already said earlier, this time. So that the -- we identified the issues so that the linac those quality issues are very important issues. These are the basis that create a transfer to customers. Therefore, that we take those certain instances and report investigation result seriously. And I could have done something. Of course, I have this can look back. Well, in [indiscernible] to work for this company? Or of course, in order for us to become a better company, I have been involved in many different types of reforms so far. So in some cases, we're able to [indiscernible] well -- we are able to take good action. Sometimes we're not so that the culture and the process system needs to be further reformed this determination after the result of the investigation report. For example, that well, perhaps because you grew up very quickly through M&A, but interim control may not be [indiscernible]. So is this something you noticed already?

Well, so globally, our system was not very strong. But I began to realize this as we receive the investigation report. Well, the headquarters and also that the local and regional headquarters management at the level in terms of the human resource allocation to such, I think we are rather weak. So I have already the others this. So how we are going to augment this, including human resources and also the human resource education. I think this is something we need to still making a further airport. So these are the findings throughout the process and systems about those. Well, of course, we need to have our investment into the human resources. And of course, it entails some costs. The headquarter is very thin in a sense because we try to set money however that our company has grown to this level. Well, whether we can continue to grow or whether we can continue the healthy operations. Well, that we used to have program. That is why we wanted to reform our system and process.

So my second question. In terms of outlook on outlook and the impact on business and finance. So there are 60 material cases. And the ranking of importance or material or given that could potentially lead to recall safety issues. So there are 60 cases found. But you say that you have not found anything that could impact finance. Could you explain in more detail why you think so?

Of course, the customers evaluation will be made after we make a full package of what we have found, what the improvement measures we are to take and we will continue the relationship with the customer after presenting the whole package and closing this matter. And in most cases, we have interacted with our customers, but many customers say that as a company as a whole, there should be measures to prevent recurrence. So there should be a group-wide mechanism that should be presented. That has been asked for.

And on that point, we are the timing to take appropriate measures and move forward. So in that context, major recalls or large-scale compensation payments are not expected to arise. So even if there is a recall, it won't take place with products that are selling well, and therefore, the impact will not be that material. Is that the image you have? It's not based on whether the product is selling well or not or hit products or not including technical verification, we don't recognize anything that may turn out to be large care equals.

Understood. So far, there was pressure against high level targets and there were a lot of improper practices that took place on the front line. But if you're not engaged in an appropriate practices to reduce cost, then that would potentially impact the financial performance. So what would be the impact or the scale of that?

I think the point is missed a bit. So the cost in front of you, being engaged in activities to reduce the cost is not the only kind of cost reduction activities as a manufacturer. We should take a long-term view. And there may be actions that can be taken from a long-term perspective to bring about reform to the current state, and that will bring good results to financial performance. And that is at the center of what we intend to do in terms of doing the right thing. So in that sense, responses or over emphasis on the short-term achievement that will be rectified.

So we need to limit the questions to 2 per person. So we will move on to the next person. The 1 the person that's sitting on the front.

I have 2 questions. I'm [indiscernible]. So the -- looking at the cost analysis of the Investigation Committee report, there are a lot of overlaps the cause behind the accounting fraud. So once again, the inappropriate practices of quality and the accounting fraud could we have your comments on the true cause of these issues.

Thank you for your question. Let me answer your question first. And Mr. Miyake and Mr. Minai, if you have any additional comments, please go ahead and make the comment. So this time around, what we are talking about is culture system and process. And here, once again, well in the report by the Investigation Committee, what we want is referred to as culture, that is connected from the accounting fraud to inappropriate quality practices. But this time around, 1 of the major steps of the investigation committee is that there are specific issues with quality when it comes to system and process and for specific BUs or specific sites. And there are other -- there should be other reasons behind the issues. So unless measures are taken for those particular issues, we cannot resolve these issues. That's how we understood as what was pointed out in the report. So in that sense, we want to categorize issues into system and process. I have the same understanding. So there are 3 common factors, system, process and culture. And as for system and process, there are quality specific issues identified. So from the headquarters of Nidec to all entities around the globe, it should be shared across the board, and we need to create something that is more appropriate. So when it comes to quality, this holds true for accounting, but from development to shipment a wide range of processes would create quality. So in that sense, there should be proper system and manufacturing processes that would run across the entire organization.

Mr. Miyake, do you have anything?

If I were to add this time around for changes or tests and the inspection results and data were falsified. So against the required level by the customers, the value chain process across the company. did not meet the requirements of the customers or each function sharing such requirements and having the mechanism and operational systems to support such process was weak. So my understanding is that it will be important to take actions along those lines.

My second question is that at this point in time, though, you're not expecting any impact on finance. But even if there are no -- even if the amounts are not major, are you expecting any compensation requests from the customers? And in terms of accounting treatment, you may have to book the losses or provisions for such claims or compensation. So what are your thoughts on that?

Thank you for your question. So what we state here is that for the group as a whole, the -- there are no material impact in terms of finances for the company as a whole. Of course, with customers, the additional costs for additional tests and certain compensation claims, some are being raised. So we will continue to sincerely discuss with the customers and take appropriate action. Related to that, at the earnings presentation on September 30, would you disclose such provisions for compensation claims. As of today, we are not expecting huge provision for such compensation claims. But if we see anything that would arise, we will treat them appropriately in terms of accounting treatment. And if there are any material numbers or material compensation claims that we should disclose then we will do so.

Next person.

This is Sato from Morgan Stanley Securities. I have 2 questions. First, at the end of September, you will be issuing a securities report Well, that is the current schedule. But at this point in time, as being part of a management team do you judge that the current internal control is effective? And from audit firm, will you be receiving unqualified opinion from the accounting firm I'm sure you're interacting with our audit firm, but what is the current sense on that now? So that is my first question.

So the first question will be answered by Mr. Mina,i and I may add something if needed.

In terms of internal growth, towards the publication of securities report at the end of September, we are closely examining these matters. This time, in the improvement report, as reported there, there are -- there's issues that need to be improved. And on that point, based on the improvement plan we will pursue actions on a day-to-day basis. And including evaluation on how that is progressing, we will provide a self-assessment.

In terms of the valuation of accounting auto, we are not in a position to make any comments, so we are looking at the prior 5 years corrections of financial statements. And in addition to that, we are exerting maximum efforts so that we can get the unqualified opinion from the auditor. So this is something we have been doing to date, and we'll continue to do that going forward.

In terms of the schedule going forward, at the end of the year, the calendar year, you will be presenting midterm business plan according to this slide. So in the -- when will you go back to making earnings presentation on a quarterly basis?

Well, as of today, what we are running the fiscal year 2026, the semiannual earnings release needs to be published, and that will be a turning point. So as soon as we close the books, the ordinary account closing operations, and we will issue the report -- accounting reports so that you can look at the numbers. And for that purpose, towards the publication of securities report, we are making an effort. And starting with the semiannual report in November, we will go back to the normal cadence of earnings release.

Is it correct to understand that you're going to make some corrected version of your report for the past fiscal years? That is the correct understanding.

That is the correct understanding. Next question, please.

From your right, 2 blocks from the right, the person -- second person from the front.

This is [ Sano ] of [ Kelewspaper ]. Thank you very much for your presentation today. I would like to ask you about the impact on your customers. I understand that you are handling issues with sincerity, but with respect to the short-term impact on the customers that you have, I believe there are some concerns, I believe. Do you think some customers are severing a ties with Nidec? Has there any been in such a case?

Thank you very much such a very important question here. As of today, there's been no case of any customer severing ties with us at this moment. No there are no such cases so far. However, we have made an announcement on May 13. And after that, we have received many voices from our customers about having lost their trust in Nidec. We have a lot of complaints like that from many people, many customers. What we need to do as a company is to make a group-wide effort to regain the trust we have lost. And going forward, we will continue to make group-wide efforts to rebuild our reputation.

Here's my next question. With respect to this schedule to stay listed, and at the end of October, you will be submitting the written confirmation of internal management system. When do you expect the result to come out after submitting the written confirmation? What type of responses are you expecting?

Thank you very much for your question. First of all, I would like to make an overall response and to be followed by Mr. Minai's additional comments, if any. With respect to June, we have the Annual Shareholders' Meeting. This is something that I repeatedly stated to our shareholders. We'd like to continue to stay listed on the Tokyo Stock Exchange that we have a strong determination for that, and we are making efforts for that purpose.

I believe your question is regarding whether this special order status will be listed or not. We are not in a position to make a comment on that possibility yet.

This is Mr. Minai speaking. I agree with Mr. Kishida that we are in a position to make any comment on the possibility. We have submitted our improvement plan, and we will organize and we will continue to take appropriate actions based on the improvement plan. We will do our very best to make a recovery, and that's what we needed towards the end of October.

The person right next to the person. Lady over there.

This is [ Taka ] of [ Toyo Keizai ] Magazine. With respect to this appliance business, where there are quite a few quality-related issues. And I believe this is subject to your review or reorganization of your business. And one reason for that is about this very tough business environment that could be related to the quality issues. Do we have to expect major changes in your appliance business going forward?

Thank you very much for your question. As of today, we are having this portfolio strategy discussion on a day-to-day basis with respect to our midterm strategy. It's not that the entire appliance business is in struggle. The global warming is happening. And amidst the situation, air conditioning, data center and all the other cooling businesses will be part of our important growing businesses going forward. We need to review our technologies, and we need to come up with a very good strategy based on the profitability and capital efficiency. That's what we like to do.

Thank you. Here's my next question. With respect to the Executive Responsibility Committee, please give us an update. After the quality investigation is over, can we expect response results from the Investigation Committee -- Responsibility Investigation Committee sometime soon in the future?

Mina-san, thanks very much for your question. This is Mr. Minai speaking. The Executive Responsibility Committee is continuing with its investigation as we speak. We'd like to get the results from the committee as soon as possible. That's what we hope for. But it all depends on the completion of the fulfillment of the responsibilities of the members of the committee. We are waiting for the results to come up from this Responsibility committee.

With respect to quality-related issues, based on the results from the Investigation Committee's report, we will take appropriate actions as a company. We're not really planning to have any responsibility committee for these quality-related issues.

Next person, please. The person towards the entrance person, the person from -- in the third row.

This is [indiscernible] of [ Nikkei ] Newspaper. Here is my first question with respect to the quality-related issues. As I check the details of the report in May, June, you can see there are some issues occurred. And by that time, you have already had some committees in place still you continue to have these issues. What do you comment on that?

And for your company to stay listed on the stock market from your perspective, Kishida-san, can you possibly give us your personal response or feelings about the investigation report.

As has been indicated in the investigation report, we have started the company-wide quality inspection back in July and or so. And after that, according to the reports issued after that, the quality-related issues continue to occur in May as well as in June. We will -- we take that reality very seriously. Without reforming our corporate culture, we cannot move forward. We need to establish a very good environmental atmosphere so that people can point out issues freely and frankly.

With respect to corporate culture, we like to establish a very free corporate culture. And we are spending a lot of time on a company-wide basis. Back in the months of May and June, we continue to have these problems, which is an unfortunate event, but I believe it is a positive news that it has become easier for employees to be able to point out such issues more freely than before. such information can be now shared on a company-wide basis. That's the type of situation we like to establish for it.

Here's my next question, which is related to the question made by the person from [ Das ] newspaper. Even if you stay listed, I believe there are concerns for profitability of your company. On a short-term basis, I believe you have to have increase in the cost with respect to quality and other accounting issues. How do you see that?

With respect to all of these issues, I believe it's a combination of everything. Now we are submitting -- presenting a report to you with respect to accounting as well as recent quality-related issues we have resources. We need to strengthen our quality personnel to handle these issues on a global basis. With respect to accounting issues, we have a very weak thin organization. We need to have more people to make the organization richer, better.

In order to do everything right, these actions are critical, in my opinion. Without establishing such a good organization, we cannot expect a very good profitability or very good growth. That's the type of possibility that I'm thinking of. We need to establish a very good system first to prevent the recurrence of these issues. With respect to profitability, I would like to make a presentation as part of our discussion as part of our presentation for the midterm business plan.

Related to that question, I would like to give you some other rather vicious question here. So far, you have been able to enjoy a very good profitability because of the lack of sufficient people in the quality and accounting areas. How do you say -- what do you say that to such a question?

With respect to administrative department personnel of our head office, to be honest, we needed more people. With respect to our global organization, we need more people for in various departments, in my opinion. We need more people. We need to invest more in our human resources. That's what we like to do.

In addition to that, in order to achieve the goal, we need to have talented people select this company to join. In order to do that, corporate culture reform will be critical. corporate culture, the process and the system must be improved in our company. That's the type of strong determination that I'd like to move forward with.

This is [ Kanayoamii ] Newspaper. With respect to accounting misconduct investigation, you have mentioned this as a negative legacies from the past. Kishida-san, you yourself declared improvement on that issue. With respect to quality-related issues, you have understood these issues that existed in the past. And in the investigation latest investigation, Mr. [ Nagomi ] himself admitted that there was a lack of enough number of people for our organizations. And I believe you have you had any discussions with Mr. Nagamori on that point or with others?

Thank you very much for your question. With respect to quality, I haven't had experiences about these quality-related issues in the past. I haven't recognized these quality-related issues in the past. But as we check our past records and information, the executive management back then has received quality-related reports, and they have discussed such quality-related issues in the past executive management meeting and other meetings. We have confirmed the fact.

But with respect to instructions have been limited to those existing issues that were in place at the time. What we should have done was to go step -- make one step further to handle the entire company's processes and systems. I believe that's the type of discussion we have liked so far in the past. As a company, we received all the facts. As such, we'd like to take a very good measures to address those issues.

To confirm, and you are going to address all of those quality-related issues that we have -- you have identified so far. Is that right?

You're right. We have identified more than 800 quality-related inappropriate practices. We have had issues at some organizations, and we have different customers for different businesses. And we have many issues that we need to take actions for company-wide. We would like to comprehensively solve all of these issues.

There is one more question from me.

There is a time limited. Please make sure to keep the number of questions just 2. I was just asking 2 questions per person, please. Okay. The next, the third from the very end.

My name is [indiscernible]. The first question is that finally, who give instructions. We actually disregard those quality issues conduct in the report of investigations. Well, it says everybody is responsible. So in this case that we can't see who actually gave the instructions. Otherwise, we couldn't have any quality issues. Mr. Nagamori didn't mention that we should be involved in the misconduct of the quality in trying to achieve the target. So of course, it's okay for you to have the strict goals that the corporate management and at the management level, for example.

And also, they say to the Nagamori-san, these are the numbers they couldn't achieve. So no, they are not realistic numbers they could achieve. So that perhaps anybody actually raised this kind of voice to Mr. Nagamori.

Thanks for your questions. Minai is going to answer your questions and I'm going to open to some of the other aspects. Well, thanks for your questions. So this is a hard question from which aspect I should answer. So because for each case, we have a different situation. So to the goals that we are facing, for example, were there any discussions whether that we will be able to achieve such goals or not, we're going to review it.

So at each site and also at each business level, management or the executive levels are involved for instructions or well, they actually disregarded the possible the quality misconduct. These are already reported in the committee. So we cannot say nobody is responsible for the misconduct. Of course, we need to identify what was wrong, what that went wrong, what about the situations. So that it's not -- it's not up to each section, each business units who try to conduct this kind of quality issues.

Perhaps they were very much in difficult situations, how they could achieve the goals. But this is something we need to review exactly from now on. So the process rather than human resources, I have questions in a nutshell. So the process for manufacturing. So what is your problem? Why does this kind of quality issue were allowed? So how you are going to rectify those stations?

[indiscernible], you are from Toyota Motor Corporation. Therefore, you know this very well about quality. So that preventive actions is exercised by Toyota well, I think you know this, you have been involved in the, for example, enhancing check items, but that is not enough by Toyota, right? So what was wrong in the process, did you find out anything wrong with the process itself?

Well, to be honest with you, so there were several situations, several factors involved. So we didn't have a very clear cut rules. On what occasions do we have to have the incident reported. And on what occasions we need to explain to the customers, we don't have a very clear cut transparent rules because of the MLAs that the -- well, just the old habit has been continued. So at the time of the beginning of the contract, what was the contract with the customers, for example, that we didn't have a very good handover from the company we purchased.

So the -- well, perhaps there were some rules and criteria established between the old company and clients. That is why, therefore, that there were some gaps between our rule and the old rules by the company we purchased. This is something we confirmed in the investigation report. So that we didn't have a minimum common rules in the past. We need to create such common basic rules. And also, we need to conduct good education in processes and in operations. We need to create a good system that everybody can follow -- everybody should follow the [indiscernible] criteria. This is something we need to create from now on. In this regard, well, well, perhaps in the changing of the organizations, everybody should follow that process.

Next question toward to the very end. Yes, please.

My name is Naito from Citigroup Securities. So there are 2 questions to raise. My first question so this is more of a qualitative issues. So that this kind of quality issue, what is the -- well, because of those quality issues, what was emerging that you increased perhaps against very strict goals, you already mentioned this a number of times. So towards such very hard goals, I thought you are making efforts as a result that some of them are involved in the misconduct. So including that the materials, for example, that since you are going to reform, there are some occasion that you need to increase your cost.

Yes. Thank you very much for your questions. So many of the issues we have identified, including materials cost. So that because we have the changes, that is that -- well, that perhaps one of the rules -- one of these why we have had such issues. I think we need to have a good understanding with our customers about the cost. So we don't believe that we will have a negative impact to the cost.

I understood. And my second question. So this may be related with other questions. So in your manufacturing processes or spreads, perhaps in some areas, you are not very good at. At the very beginning, you already made the questions you want to have additional investment, for example, that perhaps inspection, the process was not enough. So it was a painstaking process. That is why you are not able to communicate with your customers or materials. So in trying to reduce the cost, you are not very good at reduce cost of materials. What are the issues you identified? What is your reduction measures you're going to take?

Thank you for your questions. So in the productions and also plant operations we don't have any specific -- we don't have any special conditions. We don't have any specific weakness. However, in all the processes, we have had manual processes. therefore, we are depending up on human operators. We cannot deny this.

So about those issues that well, we have already reported so that the operational processes and in appropriate measures should be avoided by the automations. So we want to be more positive to take measures that we would like to make the investment for such the automations.

If you have any addition, [indiscernible] please.

That's it.

Next question, the close to very entrance [indiscernible].

My name is [ Miyajima ] from the [indiscernible]. So that you always talk about something like a culture. So this is the past very good reasons you try to avoid the exact reason why those difficult issues occurred. In this case, what is culture, corporate culture, leading to the quality issues that you investigate over 100,000 people. You received responses from the 90,000, 30% said they were under pressure. 40% of the respondents already noticed there was some misconduct of the quality.

I guess this kind of the issues. Well, I think the reform is very difficult. Root cause investigation, the investigation report may not be meaningful to the top level management.

You didn't raise any instructions. You didn't disregard the actual practice. However, some 40% of sites already knew and that -- there was some misconduct of quality. With, without instructions, I think that the corporate management already knew there were some cultures, which allows that the misconduct of the quality. I think you need to start root cause investigations. Otherwise, you want to be able to identify what is your responsibility as corporate. What is your culture then in this case?

I'd like to raise this question to [ Thita-san ]. Thank you very much for your very important questions. So the corporate culture reforms how difficult is it? Have you -- whether we have noticed this difficulty or not? Well, myself, I understand this kind of the corporate culture reform is very difficult. In trying to reform this corporate culture, we may bump into the more difficulties. On a day-to-day basis, I realize the difficulty of creating a good culture of the quality.

So this is [indiscernible]. So if you -- well, we don't limit our efforts to just surface we want to have more -- we want to have a deep dive in the system and also the organization. We'd like to have a comprehensive reform -- that is my own thinking, first of all.

And also, I'd like to make one correction. So if you said some 40% of I noticed that the -- well, the quality issues. But no, that is not the case. 40% people said that they felt the pressures, but only 4% actually noticed there were some misconduct of qualities. I don't say that the number matters, only number matters. But anyway, the corporate culture should be established to recognize well in. So we'd like to have some discussion on those difficult matters. We need to create a corporate culture in which we can start discussing such difficult point.

Sorry, I didn't read this report very well. So only 4% of the respondents noticed that there was some quality misconduct. Well, in those 4 segments, overwhelm, I think that the corporate headquarters top management should be more responsible for that. Otherwise, we will sacrifice the people working at the forefront. So of course, that they try to work very hard to achieve the goals. So I think that -- well, I think finally, I think the exec management should be responsible for the quality issues.

Yes. Thank you very much for your instructions. I will take it very seriously. this organization process, corporate culture, we need to reform. Throughout those dialogues that, for example, pressure itself, wide pressure rises, we need to raise this kind of questions. So perhaps the management overall operations, I think that well, we need to look back our stances because the pressure that origin from the corporate the top management. So this is something we need to improve and reform.

I'd like to go on to the next question right next to this person, the question we just made. Yes.

My name is [ Mori ] from [indiscernible]. So to begin with, about those quality issues in. So when we take a look at the business units, [ Nagomi-san], [indiscernible] used to work as the executives, 844 cases. Many of them happened under the supervision of [indiscernible], I wonder whether you disregarded that the investigation committee were not able to detect. So how should I understand this problem?

Thank you for your questions. So Minai will provide a comment. And if needed, I will make additional comments. As it's written in the report, well, first of all, is quite -- it is to be taken seriously that you're looking at it from that perspective that you just described. So as management, we want to make sure that we can detect issues and solve issues. So whether there was any instruction or whether they acted in [indiscernible] or fraud or not, as was written in the report as far as we were able to confirm, we did not see such fact.

So in that case, Mr. Nagamori and Mr. [indiscernible] management, even with that, these were never found. Is that the right way of understanding? Whether they were unable to find it or not is not clear, but we did not confirm anything where the 2 of them gave instructions.

One other point. Currently, there's investigation is ongoing regarding responsibility. But in terms of legal responsibility and Mr. Kishida, you are saying doing everything right. But Mr. Nagamori not being held accountable. Is that the right thing?

Thank you for always asking that question. On that point, as I have been repeatedly saying, today, at this company and at this group, I am the person that is responsible. I am the CEO, so I am the one to be held accountable. And that is my understanding, and that is all for me.

Next question. The gentleman sitting in the second row from the back with glasses.

I am [indiscernible] from emerging markets. I have 2 questions. First question, you intend to maintain being listed. But looking at the conclusion of the investigation committee. What do you think of the importance or the significance of being listed? I'm sure it would be the Tokyo Stock Exchange that will do the screening, but what are your thoughts? And in October, you would provide the attestation and there is a short term like independence of assurance, the escalation. But with the attestation statement in October, will there be any additional measures, I think. The direction is set forth, but in what ways you would ensure the independence.

So including the significance of maintaining being listed. And when will I hear -- when will we hear more details? Could you answer that question.

I will first address your question and Minai may add a few more points. So we are targeting the end of October to prepare for the attestation for internal control. So we will submit the improvement plan. We will submit the revised version of that plan. And following the quality-related process, any additional process and systems, if there are such things that would need to be added, then we will add that. So we will be preparing for the submission of the report. And we are scheduling the work accordingly and including that aspect, we intend to maintain being listed. So the stakeholders that support us we are aware of such stakeholders.

So in order to meet their expectations, we will implement the improvement plan, and we will submit that plan to the Tokyo Stock Exchange. It was mentioned earlier, the point about how it's not specific by certain timing, we will come up with more specific measures and submit the attestation or improvement plan.

Next question. The one sitting in the front row close to the entrance.

Electronic device industry newspaper is my affiliation. I'm Takasa. I have one point I'd like to clarify. On Page 5, you talk about the existing automobile business under the material quality matters. So what would fall under this? And what is the background behind why there are lots of quality issues? If I read the investigation report fully, then maybe I will find out. But if you could also provide the commentary or summary, that will be helpful.

Thank you for your question. So perhaps Miyake can answer that question, and I may add additional comments. So the automotive customers tend to have high level of requirements and the terms and conditions are very complicated. So in that area, there's a certain level of quality that needs to be met across the company, across the all areas. So that standard is quite rigorous. So there's that trend.

So first, in terms of existing business, in automotive business unit, there was traction motor business and existing business. And it's the components, the existing business that is not traction. That is referred to as existing automotive motor and control [ BU ] for business unit. So various components and motors that are used for automobile, that is what this business unit group handles.

Thank you.

Any questions? Yes. The one that's sitting in the front row there.

This is [ Murai ] from Diamond. I have 2 questions. And my first question is related to that question that was just raised. There are 60 significant quality cases. And of those, a lot came from Nidec instruments and small platform motor and the traction or existing automotive motor instrument was [ Nippon Dan Sankyo ] or at the very old. Mr. Nagamori acquired this company a long time ago and Nagamori method was introduced and was enjoying high level of profitability. And as for the small platform Motor and Solutions business, this was the very founding is the business that existed from the founding of the company. And the Traction Motor business is a long-term business. And then the U.S. [ ASIM-related ] cases only too.

So looking at this trend, Mr. Nagamori's culture impact seems to be huge or in that area, there are more misconduct. So as -- can that be detected as a trend? And as you try to reform the culture, is there anything that you can analyze?

Thank you for your question. In that sense, the fact that there are misconduct cases in the entities that have been with the group over a long period of time. That is quite -- should be taken quite seriously. On the other hand, we have acquired various companies and that has led to where we are today. So the process that was used by the company that is acquired, that process was retained. That is the situation across the world.

So from the headquarters, changing the process or changing this process to that process, how much did the headquarters how much control did the headquarters really have?

That is the important matter. So as was mentioned in the investigation report at business sites, depending on the business sites or business unit, the true causes vary. So it's not like it's someone's responsibility due to nature of certain business, there are many cases of [ 4M ] changes. So we need to take action across the company. Do you have anything to add Mr. Minai?

This is something we will be analyzing going forward. But given the nature of business, the nature of certain components and parts used, there may be different trends. So we need to thoroughly analyze such trends and think further. But I take your point. So [ Nidec Techno Motor ] has fourth highest number. But after [ OMRON's ] business was acquired, Mr. Nagamori explained that it turned into profitable business right away. So I understand that you are to start analyzing going forward.

And as for your second question, based on the report, there was a mention that HR-related sanctions will be taken. So in the business units where there were lots of significant quality issues, whether it's instruments or SPMS or existing automotive [ BU ], there were changes of personnel.

But before that -- before the change of personnel takes place, you will probably find out who did it. So is it correct to understand that there will be certain disciplinary actions taken and changes to compensation?

Rather than pointing out which division regarding specific incidents and cases, we are going through a fact-finding process, and we will take appropriate measures as we go forward.

Next question. So second block from the back maybe seated at the back [indiscernible].

My name is [ Niyamoto ] from NHK. You talked about the disciplinary action for certain personnel. So that is my first question. So based on the facts that are found in the investigation, you are to take disciplinary action. So what will be the pace of action that you have in mind?

Minai?

This is Minai speaking. We'd like to take those actions as promptly as possible. I believe that's what's important here. In that regard, we will identify those who have been involved in these instances instant. And we will make sure that these people will understand the responsibility that they have -- and we need to understand what is right and what is wrong in our company. That's the type of recognition we should have as a company. We'd like to take speedy action going forward.

Related to that point, here is my second question. Your company has gone through these issues and individual shareholders seem to have instigated some legal actions against your company. And based on the recommendations by the various committees, you said that you would promptly disclose necessary and relevant information in my understanding. With respect to the latest results of the investigation committee's report, please tell us about your response to take in response to these actions by shareholders.

We received these individual litigation claims one by one. We will take actions on these litigation claims appropriately. And our investigation is still ongoing and a lot of which is regarding accounting-related issues. And based on the results of the investigation, we would like to take appropriate actions as a company.

Any more questions? Sorry, 2 questions per person.

Here, I would like to check one thing that you had said. So your stance to the litigation claims is that it remains unchanged. Your policy remains unchanged as a company. Is that what you're saying?

Yes. We will take our action based on the results of the investigation committee.

Any other comments or any other questions from anyone in the audience? The person -- the second block from the interest, the person lady over there.

This is [ Suzuki ] of [ TV Tokyo ] Broadcasting Corporation. In this latest report, it says that there's been a pressure from Mr. Nagamori and other executives. Are you going to make any litigation claims against Mr. Nagamori or others?

Thank you very much for the question. As I have been saying, we are going to wait the results to come from -- conclusions to come from the Responsibility Committee. And based on that, we will take appropriate decisions and we will take appropriate actions.

Okay. Any more questions from anyone? The person in the last row, there's only one person left raising his hands.

This is [indiscernible] of [ TV Asahi ] Broadcasting Corporation. In your today's release -- press release, you have had the announcement on the transfer of personnel of Nidec Instruments Corporation. It's effective immediately, which is today, which is the day of this press conference. And this company is subject to various large number of incidents. Is this transfer related to this number of incidents? And we have the executive counselors, and they have become members of the Board of Directors. It's rather a very rare move, in my opinion. Can you tell us more about these transfers, personal transfers?

I will have Minai-san answer that question.

We have had this quality as well as accounting-related questions. We have caused a lot of concerns among various people. And one by one, we will take various actions based on the situations on individual group companies as well as other business places. Not related to this issue, we have had a report coming out -- coming based on the accounting-related issues. And since then, we have secured a number of people. And this move -- latest move is part of these activities.

With respect to the transfer of former executive counselors to join Board of Directors of Nidec Instruments, they have joined Nidec Group. We have a growing number of such people joining the Nidec Group trying to determine to make improvement on a group-wide basis, we would like to promote such -- we are welcoming these determined motivated people. With respect to the title, executive counselors, this -- I have an impression that such people tend to be senior -- age doesn't matter with respect to this title, Executive Counsel.

So as necessary, you are taking actions and this latest move coming from the instrument is part of this ongoing improvement, and it's not really related to the disciplinary actions for the responsible personnel.

That is correct. Next question, please, the person raising his hands at this moment.

This is [ Kanaboami ] Newspaper. I would like to ask my second question. I missed the timing for my second question previously. You talked about corporate purpose to produce. What type of discussions are taking place with respect to the preparations of the corporate purpose? What type of schedule do you have in mind? You have these -- the 3 essential corporate values, which are now not really part of the corporate website anymore.

Well, thank you very much for your -- the important question. When I became the President of Nidec Corporation, personnel, technology and purpose have always been and remain to be the major pillars of activities. For those elements, we have had intensive discussions. We have come up with some draft ideas. It was before prior to having a series of these instance. So we need to rethink about our corporate purpose to be made. We need to rethink once again what type of company we would like to make Nidec going forward. And towards that goal, we have this investigation committee within the conclusion made by the investigation committee, there is a certain part that was truly endorsed.

There are goals and principles in the section of the investigation report. These are the basis of our corporate purpose to be made. We have had a redefinition declaration established on the 1st of April this year. We have established principles based on the declaration, work with integrity and sincerity, doing what is right, et cetera, are among those basis. We are making global discussions to spread the notion of this new corporate purpose we are going to make. Thanks very much for your question.

What are you going to do with the old 3 challenges of Nidec?

With respect to purpose, what it means is that we are going to be focused on major issues as a company. We will redefine our purpose -- and we would like to appeal our company's meaning existence to the inside and outside of our company.

And any more questions from anyone? Our time to end this meeting is approaching. So we'd like to have these final questions from these 2 people raising their hands at this moment. The person from the back, please.

This is [ Nishino ] of [ TV Asahi ] Broadcasting Corporation. Thank you. As you stated at the beginning of this press conference, you talked about the special [indiscernible] status imposed on Nidec by the Tokyo Stock Exchange. Are you having any discussions with the TSE about this situation?

Thank you very much for your question. We are having appropriate and timely discussions with the authorities from -- of the Tokyo Stock Exchange.

And one more question to the minds of shareholders of Nidec, what will be the most appealing point regarding the change that you are going to make as a company?

I believe Nidec as a company is making dedicated efforts to improve its reputation, resume its -- improve its reputation. But I would like to have all of us make a statement about this question. As far as I'm concerned, Nidec is now changing for sure. That's something that I'm realizing on a day-to-day basis. We have many issues to go through. And as you see when you read the report, there are some surprising matters and issues. Now we need to understand this reality properly. That's what we need to do for us to change for the better. That's what I realized very strongly.

In that regard, not so many people are checking everything in detail, but we have this Nidec Journal that people can check. It's like a document type information that you can check with respect to our internal activities with respect to our town hall meetings. This information is something you can obtain very clearly freely by visiting this Nidec Journal on our website. As investors, please understand that we will submit our earnings report to go back to our original right state as a company. Miyake-san, please.

This is Mr. Miyake speaking. I believe I understand your question is about to have -- how to have shareholders and other stakeholders understand the Nidec is changing. This is the moment we are defining as a second founding of our company. Of course, business strategy is important, but at the same time, changing corporate culture, regaining trust from our customers are also important so that we can have outside people clearly see the Nidec is changing for the better.

This is Mr. Minai speaking. Of course, we have a lot more things to do going forward. We have employees all around the world working for Nidec. The largest issue is that we play respective roles for the same common goal. So far, we have been so focused on profitability and sales increase, but we need to regain people's trust in Nidec. We need to make sure to issue our securities report. That's a very clear goal. And we need to submit our written confirmation of internal management at the end of October. And so many people of our company have participated in this movement proactively. And we have been going through a lot of workload. We are having a lot of workload, but we are working dedicatedly. All of our employees are working dedicatedly for this common goal. And I'm truly -- and we are truly grateful for these employees' efforts, dedication, and we are gaining confidence in our service as we go forward.

And one thing that I feel very happily about is that many members of our company are making suggestions to us by -- with a proactive attitude. It's such a wonderful thing to the growth of these people within this group of motivated people that I'm beginning to see that the changes are happening. There are so many things we are yet to be able to do properly, but our title is -- has always been for this refining for the Nidec reform toward the Nidec reform. This is the goal we are dedicating large -- so much effort.

Would like to entertain the last question. Please go to the very end.

My name is [indiscernible]. So as you mentioned earlier that about automotive components that perhaps you need to meet the very specific requirements, strong requirement. That is why you end up having so many quality issues. As you already explained, what reaction you received from your customers in your business, perhaps you said you didn't have any negative impact such as this continuation of the contract. But however, what is the reaction you can expect from your customers?

Thanks very much for your questions. As you just mentioned, yes. Well, of course, that -- well, when it comes to reaction by the customers that we received the very severe responses from our customers. We already recognize these. Well, that, of course, we do not invite that this kind of be well call issues once again. We need to redefine. We need to show our severe stance to the customers. This is a big piece of hallmark. So we have been engaged. So well, we need to explain to the customers so as to gain the customers that they trust.

So when it comes to the automotive components, safety and functions, we don't have any issues related with the safety and the functionalities. We already explained about those.

I have another question. Back in the press conferences in May, perhaps you may have a restructure of your business, including your business. Could you tell us the current situation?

So at this moment, we don't have anything different we can announce at this moment. Well, perhaps that we have been supported by our [ Hitachi ] joint ventures. So well, perhaps the joint ventures companies that we have already started dialogue for the possibility in the future.

Thank you very much for your kind questions. With this, we'd like to complete today's press conferences. Thank you very much for [ Hitachi ] allowing us to have this press conference. Thank you.

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

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.