Q2 2015 Shinsei Bank Ltd Earnings Presentation Webcast

8303.T - Shinsei Bank Ltd
Q2 2015 Shinsei Bank Ltd Earnings Presentation Webcast
Nov 04, 2014 / 04:30AM GMT 

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Corporate Participants
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   *  Shigeki Toma
      Shinsei Bank Limited - President and CEO
   *  Shigeru Tsukamoto
      Shinsei Bank Limited - CFO
   *  Tsukasa Makizumi
      Shinsei Bank Limited - General Manager, Specialty Finance Division

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Presentation
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 Shigeki Toma,  Shinsei Bank Limited - President and CEO   [1]
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 Ladies and gentlemen, thank you very much for coming despite your busy schedule and I very much appreciate there are so many people in the venue, but you know how old I am so allow me to stay seated as I speak.

 To give you the results of the first half of fiscal year 2014, net income, JPY28.9b. Against the full-year target, the progression rate is 53%, this is so-so, not good, not bad. But how we got there? As I have said, maximization of top line to accompanied by expenses, to be accompanied by increase in bottom line, that's the ideal, but again in this first half and the reasons why will be explained later, but although there has been progress made they are not reflected in the numbers.

 So we underperformed the top-line revenue target and also expenditure and credit cost was below the budget and that is why net income was so-so good. But I would not give good grades although net income-wise we didn't do so badly.

 But if we look at the individual business groups for retail, smart phone banking, technological development had made progress which upgraded the convenience. And convenience store ATM alliance network has been made much wider and in that sense the level of convenience to the customers has been upgraded quite significantly. Housing loans. And finally, consumer finance and consumer loans have been expanded business-wise.

 So we've been able to expand the customer platform and revenue platform as we proceed towards the future and we are beginning to see the tangible results being delivered through those efforts, not so much reflected in the numbers, so that's an urgent issue, so that we could show numbers that are easy to understand, for you to visibly understand that progress that we've been able to make.

 And institutional group, I don't mean to boast what we've been doing but in the past few years we've been identifying the strategic business versus the non-core business, or non-core assets from which we would be withdrawing, and withdrawal and expansion of strategic areas has been done concurrently. And the areas from which we are withdrawing, not only the non-performing loans but low profit business or low profit customers, ABI, these are some of the areas from which we are withdrawing and we've seen certain progress in the exiting.

 And if we exclude such exiting and focus only on the strategic areas, during the past four or five years on an annual basis some 10% -- 15%, close to 15% growth rate has been achieved.

 So the total lending, some areas are seeing reduction in the total lending, so it's not really reflected in the numbers, but taking also into consideration the macroeconomic GDP growth rate we think that we are doing fairly well.

 And another point is interest margin, which will be explained later. The net interest margin is better because many of the expensive time deposits have matured and financing cost has been dropped and in the end, therefore, spread is much more attractive.

 But another point is with regards to the average yield of assets under management which is now beyond 2%. So we are avoiding being bogged down into a price war and focusing on areas where there is true funding need and also taking into consideration the business prospects of those customers and those efforts are also blossoming.

 Of course these are excuses and in the end we have to show that the numbers have also increased to have you understand the growth potential of Shinsei and that is the biggest goal that we have set forth in the second Mid-Term Management Plan. So we will be working towards that and striving towards that goal.

 So we're still a step behind in the first half but we're beginning to see some fruit coming out of those efforts. The details will be given by Mr. Tsukamoto, the CFO, and that concludes my presentation. Thank you.

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 Shigeru Tsukamoto,  Shinsei Bank Limited - CFO   [2]
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 This is Tsukamoto, CFO, and I would like to sit down as well for my presentation. As the CEO explained, I would like to give you the results of the interim of the first half of this year in more details based on the material. Please go to Page 4. Total revenue up by JPY10.8b to JPY111b and as a result of the better results, gross expenses, OBP up by JPY6.6b to JPY41b.

 Net credit costs compared to the first half 2013 an increase, but still stable at a low level. As a result, net income was JPY28b, which is up JPY1.6b. The non-consolidated net income was also increased by JPY3.7b to JPY149.3b. And our total target of JPY34b the progress rate is about 57%.

 Right-hand side balance sheet items. Loans and bills discounted, in September 2013 it's increased by JPY129.9b to JPY4.338 trillion. However for this first half it's about a JPY20b increase only.

 So that is all about the summary of financial results of the first half FY2014. I'd now like to give you some more details about each item.

 First, net interest income, please go to page 5. Net interest income, as the CEO mentioned, the past campaign deposits in yen matured, accordingly the funding rate decreased significantly. Accordingly our net interest income increased by JPY5.9b (sic - see slide 5 "JPY5.5b").

 And for the institutional group the assets did not grow as a result from JPY14.8b, this is JPY14.5b so it's almost the same level or slightly less.

 And for the individual group the consumer finance loan balance increased steadily, so this was the major cause, from JPY40.5b (sic - see slide 5 "JPY41.5b")in the first half 2013, this first half was JPY43.7b, so we saw an increase.

 As a result, net interest income, as I said at the beginning, was JPY60.5b, which is increased by JPY5.5b from the first half 2013. And as shown on the right-hand side, campaign time deposits, the cost reduction is about JPY6b. And in FY13 or FY14, so that comparison is shown here.

 Next I would like to explain net interest margin. As I said, the funding rate for the deposits and NCDs decreased to 0.2% from 0.39%, so this was a major cause of the improvement, from 0.47% [to 0.2%].

 Now for the yield on investment, because of the decrease of the loan interest -- the investment products from 2.5% this increased to 2.59%. As a result, net interest margin improved, 2.28% from 2.03% by 0.25%.

 Next non-interest income, page 7. First, non-interest income, if you look at the bottom of the left chart, corporate and other. FY2013 in ALM business because of the market fluctuation, in order to avoid fluctuation we sold JGBs. Accordingly we recorded a loss of the [DSLs] and JGBs; however, for this fiscal year we booked the gains on sales of JGBs. Accordingly this corporate and other improved significantly.

 And global markets group, the first bar, at the global markets group as well it was JPY3.2b, this first half it was JPY5.5b so it has improved by JPY2.1b, because in 2013 the global markets group performance was not very good but the performance recovered in 2014.

 And second from the bottom, the orange one, the individual group. At retail banking, the investment products, the revenue deteriorated, however APLUS financial installment sales performed steadily. Accordingly from JPY21.4b to JPY22.7b, so it's an increase.

 Accordingly, non-interest income was JPY50.5b which increased by JPY5.3b from 2013.

 Now I'd like to move on to expenses, page 8 please. The expenses are promoting operational efficiency, but based on the increase of the business we've decided to spend expenses needed. Accordingly, the expenses rose by JPY4.2b to JPY70b from JPY65.8b in 2013. However, the expense-to-revenue ratio, the total revenue increase was greater than the increase in expenses, so it improved from 65.6% in 2013 to 36.1%.

 Next I'd like to explain non-performing loans on page 9. Balance of non-performing loans compared to March 2014 reduced by JPY54.5b to JPY110.2b. Accordingly NPL ratio improved to 2.61% from 3.81%, entering the 2% to 3% level targeted in the second Mid-Term Management Plan. For NPLs going forward we are expecting a decrease.

 Lastly capital, please go to page 10. The Basel III domestic, the core total capital ratio was 13.81%, so it was improved compared to 13.58% in March 2014. The fully loaded common equity tier 1 ratio improved by 1.15% to 10.6% from 9.5%.

 Lastly, Basel III, international standard Basel III basis or fully loaded basis as shown on the right-hand side is 10.6% which improved from 9.2% at March. That is all about the overview of the financial results in the first half.

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 Tsukasa Makizumi,  Shinsei Bank Limited - General Manager, Specialty Finance Division   [3]
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 This is Makizumi of Specialty Finance Division. Let me sit down as well. We are engaged in domestic and international project financing, or (inaudible) finance, or shipping finance, so structured finance other than structured finance. And for the last few years we have been focusing on project financing especially for renewable energy so this is going to be the focus of today's presentation.

 First, market environment understanding. I think all of you are fully aware of the situation but let me share our understanding. The understandings are shown on the top. On the left-hand side this is the actual electricity generation by power sources in Japan. Actually it is in megawatt hours, the Japanese power is about 1b megawatt hours and the peak was 2008, this is as of March. So March 2008 was peak and it started to decrease since then, however it's been around 1b.

 And, as you are aware, there was an earthquake in March 2011 so the nuclear power generation decreased significantly and in 2013 September it's been zero as you are aware. So that is the current situation in Japan power generation.

 So new energy showed here, the renewable energy is included here, it says it's shown in green, but actually it's really hardly visible. That is the current condition.

 Under such circumstances, especially after the earthquake, renewable energy the main is solar power generation and that is shown on the right -hand side. So how this certified or installed capacity of solar power generation increased is shown on the right-hand side. So of course it's continued to increase and in March we saw a significant increase. This is because of a change of the fees. There is a rush in increase during this period especially there was this 30 gigawatt increase, because this is the increase of the purchase price and installments is no longer available so there was a rush increase in this period. So these are the causes for the change issued by power companies.

 Now how about implementation? So that is shown on the chart at the bottom, so this is continuing to increase, there are no ups and downs, it's almost increasing in a straightforward manner. And unit, the first one is 80 giga or 60 giga and currently is about 70 giga, however the implementation is about 10 giga. So to the certified the progress is about 15% so we don't know how much can be generated.

 Now, how about other than the solar power generation? That situation is shown on the next slide. The next slide is about the other powers such as the wind, biomass and, so this is also continuing to increase. The first one is certified capacity and the bottom, installed capacity. It has continued to increase however compared to the last slide, if you compare the units, the former chart for the certified was 80 giga or 60 giga, in others it's 4 giga or 3 giga, so it's less than 10% certified, so it's quite small.

 Now the implementation of installment, again is going to be 10% of the -- 200 megawatts, so it's 10% of the certified.

 Based on such a situation compared to other countries, what is the implementation status in Japan? So the comparison is shown on the right-hand side. First you see that the size of the pies are different. For China and US and Germany the demand is slightly smaller than Japan however they have already implemented more than 10 times the renewable energy than in Japan, however in Japan it's totally yellow, so that means only solar power. With this then Japan is about 1% or 2%, I cannot say clearly because of statistics but that is the current situation and Germany has reached 20%.

 So first, our understanding of the market, Japan's renewable facility is increasing drastically; however, compared to Asia or Europe the absolute amount is still very small and the ratio of such renewable energy is also small compared to other countries and still we have a way to go until reaching 20% or 21%.

 So there is a strong bias for the solar power and that's accounting for an overwhelming share but in this context it's only 15% that's already been installed and registered. Under such circumstances, going forward, we will continued to pursue opportunities in renewable energy market and there will be adjustments in the market and also [EPCos] not purchasing the totality, but in the future I think there is still much more room for growth. So that is the backdrop in terms of how the market is.

 So what have we been doing in this context? Frankly speaking. we were the earlier ones than our peers, (inaudible) sat next to me, was it three years ago or more than three years ago he suggested that he himself be involved in this business. So we were the early ones and therefore we are currently being able to enjoy the pioneer's benefit. And VBI office, VBI promotion department, division, has been started up in March 2012 and in this context they did this all from scratch.

 And we already had the structured finance division and we've been offering the actual finance based upon the business opportunities the VBI promotion captured and, as is written here, we have slightly over 30 members in our team pursuing these areas.

 So on the right-hand side, we describe the actual measures that we have taken. I think we were the first ones to do project finance in GK and TK structures and did a solar project. And we've also made use of trust structures, or foreign funds or infra funds. So we are doing something different than how the megas are approaching so we are implementing a unique strategy and unique concept.

 I think they quite accurately described our philosophy behind, so that's how we've been able to pursue these opportunities and 15 projects and JPY80b of financing has been provided. By end of fiscal year 2015 JPY150b is our target which is comfortably achievable.

 So our next steps, as indicated on the next page, as I said, that's where we are and we are confident. But then, on the other hand, people are all talking about mega solar, mega solar. We didn't want so much attention, we wanted to pursue these opportunities in a more serene environment but megas are after this and they are focusing on large corporate mega solars so competition has intensified quite significantly.

 And in this context we're looking at many sponsors like small and mid-sized enterprises, infrastructural funds or non-Japanese funds and I think by exposing ourselves to those parties we would be able to enjoy our uniqueness and also geothermal, bio, wind cogeneration, these are some of the generation sources that we have not yet tapped, like offshore wind, which we will try to capture in the future by tapping on our uniqueness.

 And in order to achieve these objectives we are not such a big team so there are limits to what we can do alone. So we're trying to cooperate with regional financial institutions with whom we've had relationships since the long term credit bank days and by making use of those relationships we want to provide financing to locally started up, locally consumed electricity projects. And we can offer unique structuring suggestions to create a new market.

 Last but not least, there's one point I wish to leave behind and there was an article on the Nikkei Newspaper with regard to reservation on the part of the power companies and this is a result of the problem with regards to regime setup that has surfaced. So to a certain extent this issue was anticipated but the nine electric power companies are now subjecting the applications for interconnection to the grid. But we believe that this is a process for legitimate projects to survive and we don't think this is so negative.

 First of all, macro-wise, renewable energy against other countries is low in percentages against the energy mix in Japan. So we want to increase the ratio within the energy mix. So the form of these project may change, but we think this is a business area that will survive.

 And who will be subject to the reservation on the part of the EPCos? It would be projects that have started out without having the visibility in terms of interconnection to the grid. But we are providing only project finance. So the project to whom we have provided financing or the financing that are already in the pipeline will not be affected by the reservations on the part of the large electric power companies to implement reservations for interconnection to the grid.

 And regarding the future, of course we would have to do some evaluation that is slightly different from past projects. But, as I said, as long as there's the macro trend, we think that these projects are economically viable. And we think that this is the area where we can survive and do well.

 So we would like to solicit your continued support. Thank you very much.

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Unidentified Company Representative   [4]
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 Next I would like to receive your questions. So if you have any question, please raise your hand.

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Questions and Answers
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Unidentified Audience Member   [1]
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 My question is about the total revenue and net interest income. For the next fiscal year, if you look at JPY70b target, first about the net interest income, JPY14.5b is the plan for the increase. And in the first half we saw an increase of JPY5.5b but after the reduction -- after considering the reduction of the funding rate, your [still] is not increasing. So there's some uncertainty for the second half. So what do you think about this momentum towards your target for JPY70b? Do you see the probability how they have to increase?

 And even for non-interest income you're expecting JPY22.5b, but it's JPY5.3b is actual increased, and increase includes treasury and markets was, businesses were sluggish. So it seems that there is some shortage of the power. So towards your target for JPY70b, what's your view?

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Unidentified Company Representative   [2]
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 First of all, net interest income, as you pointed out, the question is how to increase operating assets. In that sense, with this 2014 we have not achieved our target slightly. So we are in a little difficult situation. However, as you are aware, we should achieve this at the end of the term. So that this second half is going to be very important for the next fiscal year.

 And for the non-interest income, when we develop Second Mid-Term Management Plan, the key driver is credit rating business. The financial revitalization law disappeared, and we thought that the distressed business will be active. However, we have not seen as many deals as we expected. However increase of credit rating, rather than the credit rating or PTSG, or principal transaction sub-group, is engaged in various businesses, including IPOs investments. And then those are likely to cover the revenue.

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Unidentified Audience Member   [3]
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 Yes. I have two questions. First of all, renewable energy, to confirm, recently the rejection of EPCos to interconnect, of the JPY70b committed, will there be any risk for additional credit risk or no?

 And then by the end of fiscal year 2015, you are planning to hit JPY150b project financing. And does this target remain unchanged; that's my first question.

 Secondly with regards to your financing policy, NPL disposal has progressed and therefore capital ratio has gone up. And increase of dividend or buyback of shares are there in pipeline; what's the idea with regards to returning benefits to the shareholders?

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Unidentified Company Representative   [4]
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 Let me take that first question. You mentioned the rejection of the EPCos to connect to the grid. That has nothing to do with the project financing that we've done, because all of those projects has been approved by the electric power companies. And there will not be any impact to the pipeline, projects in the pipeline.

 So JPY150b by the end of fiscal year 2015 remains unchanged as our target. We think that there's an upside to that target, in fact.

 On the second question, with regards to the funding policy, first of all payback of public funds, that's our priority. Secondly, of course we have to continue to think about shareholder benefits. And finally, how to finance our future growth. We have plans to grow in the future and we need sufficient capital to support the growth.

 So it's a balance between these three objectives. As far as the first objective of payback of public funds is concerned, as I have said repeatedly, the public fund that has been injected have all been converted into common shares. So increasing the share price is the orthodox avenue towards payback of public funds. There is no alternative to that.

 And, as you may know well, for the government, book value is about JPY450 per share. And judging from our current share price, there is still a wide gap. So first and foremost, we have to pay back and get rid of the burden on the taxpayers. Secondly, shareholder benefits. JPY1 per year dividend has been the level at which we have asked the shareholders to tolerate during the past few years. And this would be subject to consultations with the Japanese government, but we want to treat our shareholders well.

 Of course we need to ensure capital enough to finance our growth. Fortunately or unfortunately or unintendedly the capital or asset is not increasing. But the quality of portfolio is becoming better, so we are not experiencing impairment. So there is no urgent need for capital for growth.

 So in terms of priority, first increasing share price to pay back the public funds. And secondly shareholder benefit, how can we offer more benefits to the shareholders? That's our thinking behind.

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Unidentified Audience Member   [5]
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 I have two questions. Actually the first question is for the CEO about the non-interest income. And the second is about non-performing loans.

 First for net interest income, the principal transaction and retail banking, focusing on these two, what is the current conditions and what are their challenges? And compared to them, for this fiscal year or the next fiscal year, what will be the initiatives you're taking. This is about non-interest income, the challenges or the actions for the principal transactions and the retail banking.

 And second question is about the non-performing loans. The CFO mentioned that he's expecting the decrease going forward. And what are the causes or the drivers for the further reduction of NPL ratio? And, based on that, what is your forecast for the credit cards? Compared to this fiscal year and next fiscal, how are they going to trend going forward? So, if possible, I would like to know your forecast on the credit cards.

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 Shigeki Toma,  Shinsei Bank Limited - President and CEO   [6]
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 There are two questions. So the first I would like to answer about the non-interest income especially focusing on two sections which are PTSG, principal transactions sub-group, and retail business. First about PTSG. As Tsukamoto san explained, domestic distress business, two or three years ago when we developed the plan, then it was sluggish.

 So for the seed, they're working to develop the seed for future profits and replacing them, as the alternative, they're doing different things, I think we can mention about it, which are the non-core assets of various companies. How those should be solved; so to offer such solutions. So such business is going to be developed. And we have started taking actions.

 Accordingly, in that sense, what they're facing today is for the future. For example, five years later, how they're going to gain profits? So that is their concern. How to create the seed for future profits. And currently the seeds that they have developed now that they are sowing the seeds. So at the very favorable prices, they are able to dispose them.

 So unless the situation changes for this year and next year, they will be able to secure reasonable revenue. So their concern is about the three years later or five years later, how they're going to ensure the seeds for future profits. That is the current situation.

 And for the retail business, what they are doing are two things. One is expansion of customer base. The core customers have to be increased to 5m. Core customers, this may be a little misunderstanding but bank customers and the customers of the retail banking arms, our two subsidiaries which are Shinsei Financial Lake and APLUS Financial. So we will promote the cross-sell of products.

 And within our Group we would like to offer various services. So those are our core customers. So, for example, APLUS issues credit cards. And such credit card customer or holders are 7m. To these people ask -- have them open the settlement account. So such customers we are planning to increase them to 5m. And what we are going to do using such customer base, is to move or to shift from the saving to investment.

 So to them what financial products we sold? So tailor-made products for each individual customer, person A, B and C. So there are all size of wallet different and their lives different and our life design so is different as well. So to these customers, for future risks, how they should respond to the risk. So such investment consulting business will be expanded and we will sell the financial products and solutions. So by doing so we would like to expand our fee income.

 Our weakest point is the customer base. Our customer base is very small. So how to secure customers. So these activities are very much linked with such weakness.

 And for the non-performing loans, the recovery of the non-performing loan market was not expected when we developed the plan. So we have targeted 7% -- 2% level. But now the market moved in favorable to us and the real estate market recovered. There are a lot of benchmarks, so it's not that all the benchmarks are good, but the lease occupancy rate or the rent are improving. So disposal of our non-performing assets proceeded very smoothly.

 And this situation is likely to continue to for some time. We have a major non-performing asset which we cannot disclose. But we are working on the disposal of such asset one by one, steadily.

 So this 2.61% ratio I cannot give you exact number, but we are expecting the further decline. I hope I answered your question. Thank you very much.

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Unidentified Audience Member   [7]
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 Three questions. First of all, you're struggling to maximize topline. What about M&A and business acquisition; has your policy changed? And also what are the specific areas you want to strengthen and what's the hurdle rate for which you would be taking the projects?

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Unidentified Company Representative   [8]
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 Hurdle rate, you mean profitability?

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Unidentified Audience Member   [9]
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 Yes, right. What level of profitability are you drawing the line? And what line would you draw to make judgments for investment? And I'd appreciate if you could be as specific as possible in your responses; that's my first one.

 And secondly. again the same question with regards to shareholder benefits. Your policy on dividend increase; in comparison to 6 or 12 months ago, are you positive or are you flat in terms of your desire to increase dividend?

 Thirdly, this is about the future, but in electric power, if there is a separation of power generation and transmission and distribution, then what kind of long-term business opportunities would there be for Shinsei? Those are my three questions.

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Unidentified Company Representative   [10]
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 First of all about revenue topline growth, of course our own effort is very important. Be it in retail or institutional, expansion of our customer platform is crucial. And that's the area where we're focusing efforts; so that's number one.

 Then what are we doing in terms of M&A? Aren't we going to capture those opportunities? No, not that we're avoiding those opportunities. If there is a good buy, then we would be willing to capture those opportunities. But having said so, so far we've not seen any attractive deals in the market.

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Unidentified Audience Member   [11]
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 Then what would be the areas?

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Unidentified Company Representative   [12]
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 I'm not sure of your question with regards to hurdle rates, what you're speaking about. So it's unclear and later I will think about it. But what are the areas? Of course there are many fields that could be falling within our scope, be it individual or institutional. But the biggest vulnerability of Shinsei is the very shallow customer base. So if we can seek more depth in customer base, then that's the kind of business opportunity we're willing to capture.

 But one point I need to make the typical, quote unquote, corporate finance, not that we won't be doing that, but for blue-chip companies are we going to be serving them? They wouldn't come as the top-ranking customer. Not that we don't like them; not that we hate those companies but I'm just saying they're difficult customers from which to profit. And already there are incumbent players, so even if we go in, in the midst of incumbent players, there's not much we can do. So that's an area that we tend to avoid, not really forming the core of our customer platform.

 And also we want to focus on new players, as explained. And also if there is an unserved sector, and most likely SMEs would be such a genre, so we want to expand our business platform in SME.

 When you say hurdle rate, are you talking about the risk return? I would guess that's what you are talking about. And we have an internal rating system and we have the hurdle rate in that mechanism. Not that it's fixed when it's decided; it depends on the sector, it depends on the type of financing. So I cannot give you a certain percentage number beyond which we would be willing to offer financing. I hope that answers your question.

 And next our policy with regards to dividend increase. Of course, I do apologize for paying only JPY1 per year of dividend. So, in that sense, we have abundant capital. So from the shareholders' perspective, it's only natural that we pay back to the shareholders in way of dividend. And I think that's a natural request coming out of our shareholdership.

 So as a person who listens to the voice of the shareholders, if I'm asked whether our desire level is flat, going up or going down, of course it's going up. But will it be to the long-term benefit to implement those measures? There has to be a balance amongst the three factors, as I said. So that's one point we wish to think.

 And also the separation between power generation versus power transmission and distribution, this is quite an interesting subject. If decision is made to completely divide, then locally generated power to be locally consumed would become even more valuable. And personally I know well, Kobe Steel, was it around the year 2000, they used to have Kobe Steel Works. And they created two fire -- power-generation plants. And one was 70 megawatts per hour and they installed two.

 And by using the IPP system, they are selling that to Kansai Electric Power Company at a price which covers construction cost and the amortization and the working capital. They used that to calculate the cost and then plus margin they're selling it to Kansai. And they have a 15 year agreement which will probably mature soon. And KEPCO was quite happy back then when the deal was stricken. They accepted the purchase from Kobe Steel because Kobe Steel generated power will be provided to the totality of Kobe city and therefore the transmission cost is almost zero.

 So in that sense there's distribution loss. And power is something that cannot be stored in the case of long-distance power transmission. So locally-generated power being locally consumer is quite efficient.

 And I think that point is going to be highlighted and attract attention. I'm a layman in terms of energy sector, but I think there is certain certainty in that business model. As mentioned by Mr. Makizumi, locally-generated power being locally consumed is quite positive.

 And also of the nine major electric power companies, the generating capacity can be limited to a certain extent. So if you're dependent on one EPCo, then you could face an unexpected power outage.

 For example, Hamamatsu city is very much concerned about such possibility. There are many factories; Suzuki has factory, Yamaha has factory and many blue-chip manufacturers have plants. If the local electric power company suspends the provision of power to those large users, then it would become a big problem and this is a real concern for this. So the municipality can create an EPCo or invite a company that would only be generating power for Hamamatsu city. These ideas are popping up within the municipality and therefore this is very positive for us as well as for the users.

 So sorry for the crudeness of my response, but that's my impression.

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Unidentified Company Representative   [13]
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 Well, it's over than the scheduled time. So that concludes FY 2014 business and financial highlights. Thank you very much for your attendance.

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Editor   [14]
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 Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.




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