ORIX Corporation American Depositary Shares

The attendees are member of the Board of Directors, President and CEO, Mr. Inoue. Member of the Board of Directors, Cinemaging Executive Officer, Mr. Taniguchi. Executive Officer, Head of Treasury and Accounting Headquarters, Mr. Yano. Before we begin, we would like to ask you to make sure that you keep your mobile phones and other communication devices away from the telephone or turn them off in order to prevent feedback. If there is severe feedback during the meeting, the organizer may decide to interrupt the meeting for a short while and speak to the participant who may be causing the howling with your kind understanding. We will receive presentation from Mr. Yano, first half, and Mr. Inoue, second half, followed by Q&A. The duration of the meeting is expected to be approximately one hour. With that, we would like to begin the meeting. At this time, I would like to call upon Mr. Yano.

I am Yano, head of finance and accounting headquarters. Thank you very much for joining us in the financial results briefing today despite of your busy schedule. I would now like to explain our financial results for the second quarter of the fiscal year ending March 2022. So please open page two of the financial results briefing material on hand. In the first half of FY 2022, net profit was up 56.3% from the previous year to 146.7 billion Japanese Yen. This is a progress of 58.7% against a full-year profit forecast of 250 billion Japanese yen. ROE on an annualized basis was 9.5%. Although we did not reach our target of 11%, we are getting closer to achieving double-digit figure. We will continue to aim for improvement of the performance. Please see the chart on the right. This shows the trend of the quarter. Net income for the second quarter was 81.5 billion Japanese yen, the highest level since the COVID-19 outbreak. You can see that we have recovered to the level of the second and the third quarter of the fiscal year ended March 2020, before the outbreak of COVID-19. So please refer to the next page. The page shows the breakdown of segment profits, segment income, total 240.7%. 1 billion Japanese yen, an increase of 53.1%, compared with the same period of the previous fiscal year. In this section, we explain our results by dividing them into base profit and investment gains. The dark navy color base profit on the chart shows an increase of 45.6% year-over-year, 173.5 billion Japanese yen, which accounts for 72% of the total segment profit. In the domestic market, the corporate financial service and maintenance leasing and real estate segments recorded significant increase. As for the overseas, three segments excluding transportation equipment continued to perform well in the second quarter following the first quarter, contributing significantly to the increase in profits. The pale blue colored gain on sales increased by 77.1% year over year to 66.6 billion yen. At Oryx USA, we recorded gains on the sales of road safety the leading U.S. traffic infrastructure safety service business in the first quarter and in the second quarter due to the exit of several TE investees. In addition, in the real estate segment, we sold a total of three logistics facilities in the first half of the fiscal year. Seifi Company Limited, a business partner of Corporate Financial Services, is a video recording service company focused on surveillance cameras. The IPO of this company resulted in gains on the sale of shares held as well as valuation gains, which also made a significant contribution. Investment gains for the first half of FY March 2019 and the first half of FY March 2020 before the outbreak of COVID-19 was approximately 70 billion yen or so. So you can see that the gain on sales returned to the level before the outbreak of COVID-19. We intend to capture favorable market conditions to continue to realize gains on sales, as well as improving base profit. Please refer to page four and five. Now, breakdown of process analysis by segment is shown on these two pages. The table are shown to allow the investment community to grasp the situation of the segment. These are the information for each segment can be found from page 21 and onwards. So please refer to them at your leisure time. In this section, we will focus on some of the highlights. First of all, Oryx USA and the banking and credit segments which recorded gains on large sale divestiture in the first quarter reported lower earnings compared to the previous quarter, while the other eight segments reported higher earnings compared to the previous quarter. Compared with the same period of the previous fiscal year, five segments of corporate financial services and maintenance leasing, real estate Oryx USA, Oryx Europe, and Asia Australia recorded increasing profits. but the extent of increase in these segments was in units of 10 billion yen, respectively in terms of the rate of increase that ranged from 67% to 446%.

In the corporate sales and maintenance fees segment, in the corporate sales unit, we recorded valuation gains and gains on sales associated with the IPO of an investee, as mentioned before in the second quarter. In the automotive unit, in addition to the strong performance of the U.S. car market, The sales policy emphasizing profitability for assets above fruit, resulting in substantial increase in profit. Renting units also doubled earnings due to growing demand for rental products and the impact of rising prices in the used equipment market. In the investment operations units in the real estate segment, we generate gains in the sales of logistics and other facilities, and hotels and inns continue to be affected by COVID-19, and have not really contributed to profits. However, with the termination of emergency declaration, operations are gradually improving. If this unit recovers, we can expect a further result. In Daikyo, profits doubled due not only to the sales of newly built condominiums, but also to the purchase and resale of pre-owned condominiums, as well as the steady performance in condominium and building management. Oryx USA Business. In addition to gains from the sale of private equity investments, sales of real estate loan origination and asset management services such as Zulmint were strong. Regarding Oryx Europe, AUM continues to rise. The balance at the end of the second quarter was 328 billion euros, a new record high on a quarterly basis. In particular, the balance of sustainable development Equity funds, in which Robeco has strength, have increased, and these AUM expansions have contributed to the increase in fee income. In the Asia and Australia segment, some investees recorded impediment losses in the previous fiscal year, but income from investees increased in the current fiscal year. In addition, leasing increased in South Korea and China, while in Australia, auto leasing performed well, resulting in a significant increase in profits. Please turn to page five. Segment assets increased mainly in the environment and energy segment and the Asia and Australia segment. In the environmental energy segment, we successfully completed the M&A of Elowan, a Spanish-based renewable energy company, in July. In the Asia and Australia segment, we are increasing lease assets, primarily in South Korea and China, where COVID-19 impact has a lesser impact. As a result of these factors, segment asset ROA on an annualized basis improved to 2.6%, a year-on-year increase of 0.9%. Like ROE, we would like to continue to improve ROA. And finally, once again, looking back at our overall performance, we can say that the second quarter has been returned to pre-COVID level. despite the fact that some units continue to experience sluggishly earnings due to impact of COVID-19, thanks to the strong performance of other units. That's all from me. Next, we would like to invite our CEO, Mr. Inoue.

Mr. Inoue, please. My name is Makoto Inoue. I'm the X Group CEO. Thank you. And please refer to page 6 as well as page 7. So with regard to ESG-related matters, I will be reporting to you later on. So first of all, Oryx Group reported 146.7 billion Japanese yen net income for the first half of FY22 March. This is 53.6% year-over-year, an increase, that is. And this is an achievement of 58.7% of our full-year net income target of 250 billion yen. Although the situation remains unpredictable, The impact from the COVID shock is waning, and we see some green shoots that economic activity will normalize in the second half. So for this reason, we would like to accelerate our investment activities. We expect interest rates to turn upward towards the end of 2021. Central banks, with the exception of BOJ, beginning tapering. Although there are several concerns, such as rising resources prices and the slump in real estate prices in China, We will continue to seek worldwide new investment opportunities while retaining a somewhat cautious stance. We expect the three COVID-challenged businesses, aircraft leasing, hotels and inns operations, and airport concessions to steadily recover, although they did not contribute to earnings in FY21 March end or FY22 March end first half. ROE has improved from 6.4% to 9.5%, so we think that a return to 10% is simply a matter of time. As to the credit rating, S&P upgraded Oryx outlook from A minus negative to A minus stable. As of the end of October, we have made steady progress in share repurchases, completing 38.4 billion Japanese yen of our 50 billion Japanese yen buyback program, which was announced in May of this year. We will also pay an interim dividend of 39 yen per share, in line with a promised full-year dividend of 78 per share. As for shareholders' return policy for FY22 March end and beyond, we will decide in light of those second half results and a medium-term outlook. In any case, we plan to present adequate and appropriate and sound shareholder return policy at the time. Please turn to page 8. Overexposed investment gains of 66.6 billion Japanese yen for the South by asset sales of overseas private equity. The environment and energy segment and domestic real estate capital gains earned from the IPO of an investor in our corporate financial services segment also contributed positively This represents a sharp increase of 77% year over year. Now, in the real estate segment, Oryx sold three logistics centers against the backdrop of strong e-commerce demand and a healthy appetite for assets among overseas investors. We have a pipeline of more than 100 billion yen centered around Tokyo metropolitan area, and the plan to continue a successful develop, operate, and sell business model of asset recycling for logistics centers for the time being. Since last fiscal year, we have completed approximately 800 billion yen in new investments, primarily in the environment and energy, asset management, and private equity. Despite a market climate, a favor for sellers, a focus on direct negotiations with the seller rather than a bidding process has allowed Oryx to invest at an entry price that matches with a price discipline stance. Our acquisitions of Spain, India-based global renewable energy operators Elalan Energy and Greenco have completed, and we are now shifting to the post-merger integration stage. Both investments are on track with our initial plans in terms of both generating capacity and profit outlook. By expanding our renewable energy footprint overseas, led by Elalan and Greenco, OREC seems to increase its global renewable energy generating capacity to roughly 8 gigawatts by 2026. Now, please turn to page 10. While a simple comparison is difficult, but it is estimated that the market cap of public companies that has a renewable energy capacity of 570 megawatts is estimated to be 350, 60 billion Japanese yen. And the acquisition cost of private businesses that has a capacity of 708 megawatt is estimated to be at the 200 billion yen. So our environment energy segment that has a capacity of 848 megawatt would be an enterprise value of more than 400 billion Japanese yen, we believe. In addition, when our capacity under construction and the pipeline from LR1 and Greenco Taken into account, we believe this segment has a great potential to create substantial future value. Now please turn to page 11. On September 28, Osaka Prefecture and City announced that a consortium of companies led by Oryx and MGM had been selected to operate the city's planned integrated resort development. In April 2022, we and Osaka Prefecture and City planned to apply to the central government for approval of our area development plan. The total investment will be around 1.08 trillion yen, with the likely opening of the facility around 2029. As the site sits on the reclaimed land, we will finalize our construction plans after a thorough ground survey. ORIX has several preconditions that must be met as the process moves forward, but we continue to steadily progress our plans. Please refer to page 12. OREC plans to announce its latest sustainability report within this month. Although I would ask you to refer to the report for details, OREC's roadmap for promoting sustainability and our identification of material issues and focus areas as part of our company's effort to contribute to sustainable society will be shown in the report. At today's board of directors meeting, Oryx Group's basic policy for sustainability and key ESG related themes and goals were approved. We also established a sustainability committee as a new executive body. Under the direction of the board of directors, the committee will outline specific measures to achieve our key ESG-related goals, and we'll work to realize these themes and goals by setting medium- to long-term sustainability-related targets for each business unit. Now, this chart outlines ESG-related material issues and focus areas. For reducing climate change risk, there are six material issues and focus areas, including setting GHG emissions reduction goals. As for reducing social risks, including human rights risk, we have outlined three material issues and focus areas, including continuing to strengthen our sustainable investing and lending policy, code of conduct, and risk management system to adequately cover new and emerging social risk areas. As for strengthening governance based on transparency, compliance, and integrity, we have identified five material issues and focus areas, including continuing to strengthen the independence of the board of directors so that the board may provide appropriate and effective oversight over the management business execution from an independent and objective perspective. Please turn to page 13.

In addition to these material issues and focus area, Our key ESG-related goals are as follows. Our directors to account for over half of the composition of the group board by June 2023 shareholders meeting. Female directors to account for over 30% of the composition of the board by the end of fiscal year, end of March 2030. Female employees to account for over 30% of management positions in ORIGs groups by the end of fiscal year, ended March 2030. Reduce Oryx Group GHG emissions by 50% compared to the fiscal year, ended March 2020, by the end of fiscal year, March 2030. Oryx Group to achieve net zero GHG emissions by the end of fiscal year, ended March 2050. Reduce Oryx Group's investment and credit balance in GHG emitting industries by 50% compared to the fiscal year, ended March 2020. by the end of March 2030. OREC's groups achieve a zero investment and credit balance in GHG-emitting industries by the end of fiscal year March 2040. Please turn to page 14. OREC's group's sustainable investment and lending policy established in September 2019. Based on this, the investment and lending committee and the segment management with the requisite authority approves and disapproves investments. our basic policy is to make decisions based on a thorough consideration of the environmental and social effects of each transaction. In addition to sovereign risks, such as government finances and legislation, human rights risks are also key factors for investment and credit-related decisions in countries and regions determined as high risk in relation to human rights. Transactions are prohibited in cases with companies where there are human rights risks or grounds of suspicion for such risks, sectors in which transactions are prohibited, and sovereign transactions in which there are concerns or confirmed cases of human rights issues. Transactions are, of course, also prohibited with organizations that carry out forced labor, child labor, human trafficking, or any other practices defined as human rights offenses by the UK Modern Slavery Act. Organizations that are operating in countries, regions, determinants, at high risk in relation to human rights violations and have participated in human rights violations and business practices and sectors in which new transactions are prohibited. The Board of Directors' primary focus is determining mid- to long-term management strategy, capital policy, and deciding upon policies and direction to ensure sustainable growth. The Board will direct and manage or exclude sustainability efforts as well. Please turn to page 15. Oryx will establish a new sustainability committee, an executive body to oversee management of ESG-related key themes and goals. Following the clear determination of strategy, KPIs, and schedule for sustainability efforts, the committee will report to and seek approval from the board. The Oryx Group CEO will serve as chair of the sustainability committee, with its activities supported by the Sustainability Committee Secretariat. Members will be comprised of segment and business heads with direct ESG-related responsibilities, and the committee will be run flexibly with other responsible parties attending as warranted by the matters under consideration, and we will also consider inclusion of third-party experts. The Sustainability Committee has the following roles. One, discuss specific policies, such as goals, discuss conflicts between short-term profit growth and long-term growth, discuss TCFD-mandated measures to reduce climate change risk, share information from within and outside of Japan related to sustainability, and to discuss what to report to the Board of Directors. Please turn to page 16 and 17. Oryx Group's greenhouse gas emissions were 1.266 million tonnes in fiscal year ended March 2020. Two coal biomass co-fired power plants in the environment and energy segment accounted for 941,000 tonnes of this total, while site and waste processing facilities generated 93,000 tonnes. The real estate segment accounted for 85,000 tonnes. while other businesses were 147,000 tons. By March 2030, Oryx aims to reduce emissions to 50% of March 2020 levels and aims to achieve net zero emissions by March 2050. We have specific measures to accomplish this. First, Oryx operates highly efficient biomass coal-fired power generation plants in two locations, one in Soma, Fukushima, Output of 112,000 kilowatts came online in April 2018, and one in Kitakyushu broke up, 112,000 kilowatts, December 2018. Approximately 4 billion profit before tax is generated by these two sites. There are several ways to reduce CO2 emissions from these plants. We could raise the wood chip mix to a maximum of 40%, Or we could look for alternative for coal fuel in order to increase the efficiency even further. And also, we can consider refurbishing to holy biomass and consider other ideas such as mixture of fuels as well as carbon capture and utilization technologies. However, If we judge it will be difficult to cut emissions group-wide by 50% by 2020, then we would need to either reduce the scale of these plants or shut them down. The cost of decommissioning of these plants would be approximately 17 billion yen. We plan to make a final decision while taking careful stock of our future CO2 reduction efforts and the reduction contributions from our renewable energy business. OREC's environmental resources business Your waste processing facility generates 93,000 tons of CO2 emissions per year. However, this facility, which subcontracts waste processing from providers disposing household or commercial waste, melts waste at high temperature, which produces gas. This makes the facility capable of a high rate of recycling, allowing it to contribute to proper waste disposal while maintaining strict environmental standards. Although Orixa Environmental Resources disposes of waste materials appropriately in this role as a contractor, we are required to report emissions generated from these operations as part of a group total under the International Greenhouse Gas Protocol. We plan to carefully watch developments for revisions to international emissions reporting rules. as well as trends and discussions for carbon pricing rule-making by the Japanese government. And if necessary, we will consider installation of carbon capture technology. Recent page 18. I would like to add that Oryx Group has already made more than 3 million tons in CO2 reduction contributions through its renewable energy business, including solar power generation. In addition, Oryx Group contributes to climate change solutions and the shift away from the fossil fuels through our renewable energy business, including GreenCo, Elowan, and the geothermal power plant developer, OMAT Technologies. That concludes my explanation, and I believe that we're moving on to Q&A. and I'm looking forward to answering your questions. Thank you.

Thank you. We are now ready for the Q&A session. If you wish to ask a question, please press 01 on your telephone keypad. After your names are announced, please ask your question. If you wish to cancel the question, please press 02 on your telephone keypad. So let us begin the Q&A. So if you wish to ask a question, please refrain from asking more than one question. So the first question comes from SMBC NICO Securities. Mr. Muraki, please. Thank you very much. So on page two, you have the full year forecast and the progress that has been made so far. According to Mr. Inoue, so it looks as if your outlook from the second quarter, second half onwards is pretty bright. So why did you not carry out an upward revision? Is it because the upward revision is minimal or Because in light of the possible divestment of Yayoi, is there a possibility of revising upward your second quarter, second half forecast? So what are we to expect going forward? So I know that the Investment Committee, you have published various different reports on our company. But with regard to Yayoi, nothing has been decided as to a possible divestment, although much has been said. So there are numbers of restrictions. So this is why I would have to refrain from telling you anything further than this. But I think at a high probability, there could be a possibility of revising upwards our full year result. But at this point in time, To be honest with you, we do not know as to the magnitude of this upward revision. So maybe in the third quarter result timing, perhaps, we will know how much of an achievement can be achieved vis-à-vis, of course, our three-year forecast. I think a decision will be made around that time. And especially with regard to aircraft-related businesses, in Europe, the integration and consolidation of the market is underway. So this is yet to be decided as to what is to be done. And as to the hotels and inns, now that the COVID-19 pandemic is almost over and done with, so we are beginning to see an increase in the booking. So how much improvement in terms of the performance is yet to be known. So there are numbers of uncertainties still. So this is why at this point in time, at the announcement of the second half, the first half, I'm sorry, the second quarter, we are yet to know as to what kind of magnitude of adverse revision may perhaps be feasible. So this is why on the timing of the third quarter performance announcement, we may be able to give you further details. I hope this answers to your question. Thank you very much. That was very clear. And one thing, and that is related to this year's forecast, performance forecast. So you have given us the explanation with regard to the shareholders' policy that you're going to be making a decision at the end of this fiscal year. You're talking about the policy for the shareholders' return for this fiscal period or onwards. As for this fiscal period, So 250 billion yen of an achievement would allow us to pay out 78 yen of a full-year dividend. So if we can achieve an overshoot of 250 billion yen, 78 yen would not be enough to convince the community, I suppose. So this is why, by referring to the result of the third quarter, we may have to revisit the plan of ours in terms of the dividend payout. So this may be the achievement to the end of 300 billion yen or 100 billion yen. How fast can we get to that extent? We would have to, of course, discern and decide on the shareholders' return policy for the next fiscal year and onwards. So in other words, it applies to both, in other words, for this fiscal period as well as this year and beyond. And also, at the same time, that includes, of course, not just the payout, but also at the same time, shares repurchase program as well. So by end of December, at the time, maybe at the timing of the third quarter result announcement, or maybe at the full year performance announcement, at the moment, it is yet to be decided as to the timing. Thank you very much. That was very clear. Thank you. Thank you.

Diver Securities, Watanabe-san, please ask your question. Yes, this is Watanabe with Diver Securities. Additional question about the shareholder return policy. If the profit level is higher than expected, not just dividend, but also share buyback may be increased. Is that a correct understanding? And what about the return, shareholder return policy from next year and beyond? are you going to set the actual dividend amount or payout ratio, or depending on excess capital, you will create a new formula for shareholder return. What are you considering at this point? Basically, in the last one and a half years, because of COVID-19, we did announce... make an announcement about the payout ratio. But if the profitability level improves in terms of absolute amount, of course, it will go up. But in terms of the payout ratio, we want to go back to normal. And as I explained before, dividend should be based on one third of profit. And in addition, even if the profitability goes up, If the dividend is lower than the previous fiscal year, it would not be probably acceptable. So we have to set the minimum level and also look at the payout ratio. We announce the payout ratio. And once we go back to the normal level, how much should be the payout ratio that we'll be maintaining for the long term? So we would like to announce such a plan in the future. In addition to that, we will consider share buyback on top of that. That's the basic policy. I see. For this fiscal year, is there going to be an increase of share buyback? Well, $39 billion, and $50 billion is the target. So in December or January, we will probably reach the $50 billion mark. So January, February is not really a good timing we may announce additional shibai back at that time, or maybe we will announce another one for the next fiscal year instead. We have not decided yet. That's very clear. Thank you very much indeed.

Thank you for the question. The next is Mitsubishi UFJ Morgan Standard Securities. Tsujino-san, please. Thank you very much for the opportunity. As to the capital gain, or it is a question related to capital gain. In the first half, I know there were numbers of capital gains that you were able to enjoy, and also private equity-related businesses had performed pretty well in the overseas, such as in the United States. And also, you enjoyed a pretty good performance in terms of the real estate businesses, and there could be a divestment of Yayoi as well, which means that in the next fiscal period, So you may have generated a pretty sizable profit in this year, which means that if there was to be quite a large amount of overshoot in this year, there could be maybe a negative base effect in the next year perhaps. Yayoi for sure is going to be quite a significant deal, but... the pace that you're currently enjoying, maybe the speed was too fast, would you reckon? And do you think that there could be a slowdown, or do you think that you can keep up the pace? So what are we to expect going forward? Well, thank you very much for the difficult question. So I think I would say that this is going to be a cruising speed, and we hope to kind of jot out a very smooth, upward kind of curve but of course capital gain could of course experience ups and downs and so 300 billion yen and in thinking about the 2030 we may perhaps move up the schedule a bit or there could be a delay somewhat but that is very much dependent on the market conditions after all so we will have to continue to refer to the market conditions so I don't think it is possible for us to draw out a smooth line upward line going forward So this is why. But hopefully, you know, we don't want to, of course, create such a bumpy kind of very volatile kind of line going forward. So this is why the divestment of private equity, of course, is still progressing. So we hope to draw out a slightly smoother line than perhaps anticipated. So this is why. It goes without saying, you know, inclusive of the shareholders' return, such as payout ratio, we hope to achieve a smoother kind of line in order to convince the investment community. So I hope this answers your question. Yes, for sure. You know, although your profit, of course, a trend may be a little bumpy, but it will not be the case for the shareholders' return. That is what you're saying. Now, talking about the concession segment, This time, the segment profit was 1.5 billion, I think it really was. So looking at the P&L of the segment, the expenses of the segment was 14 billion yen. So I think it was reversed back. So I know that the cost of goods may have increased as well, but if you refer to such a number, especially in the investment area. I don't know how much of a push-up has been kind of artificially created. Yano-san is going to be answering to your question. So if you could refer to the appendix material, and so negative of 8 billion yen of, I think, segment expenses is what you're referring to, I'm sorry, but there is a non-disclosure agreement that we have to, of course, abide with. So all we can say is there was a certain amount of gain. And of course, we have numbers of investment. And in some cases, we may have to refrain from disclosing the details. And we do not have a fund accounting. So with regards to the investment related it would appear on the balance sheet, which means that the profit that is generated by the set company will be added to P&L. So the private equities, profits and loss, the fluctuation, in fact, would affect our consolidated earnings. So please understand that there will be some fluctuation over time. I hope this answers your questions. So, yeah, I understand, but this fluctuation, there are some positives on one hand, but there could be some negatives on the other hand. So, you know, I have to imagine that. Well, yes, if you were to perceive it in a negative manner, that may be the case. But each of those investees, if they were to generate the profit, means that their enterprise value, of course, will be further enhanced in the future. So this is why, you know, please do not just focus on the downside. Please, you know, refer to the funny side of the matter, if you will. Thank you.

Thank you. B of A, Securities, Sasaki-san, please ask your question. Yes, this is Saki, Bank of America. There are two questions. Mid- to long-term performance, how do you view this? That's the question. Q2 earnings results. No change to the mid-term management plan announced this time around. And in Q3 and end of the year, maybe there's going to be additional updates. COVID-19 impact is weakening and the outlook is becoming more clear. So originally you had 400, 500, and with COVID-19 you started talking about 300, for example. Now the COVID-19 situation is improving. What is your long-term outlook? And the global renewable energy, this is my concern. European and American major players They provided guidances and warnings, saying that the equipment cost is going up, environment is changing. And I feel like the tide is changing. There's a sea change. So in relation to the long-term performance outlook, how does it look to you? I usually show you the 300 and 400 billion chart. And this is on page 47 this time, the reference material. COVID-19 impact is actually lessening and we can go back to 300 billion much faster than expected. And based on that, 300 and 400 billion midterm objective is shown here that maybe we have to reconsider the timeline because aircrafts and concessions and hotels, if all of them go back to normal, we're talking about approximately additional return of 80 to 100 billion. So if your target is 300, 400 billion, and there is capital gain, as you can see on page 47, well, we have to maybe reconsider this chart and present it to you. Otherwise, it will become just a graphical representation. That is why it is not in the main part of the slide deck. Elowon and Greenco and the other projects. What would be the profit contribution, and when will it begin? For example, Avalon. For next fiscal year, we expect a big increase, but we don't know exactly how much by how much. So that is why we could not really provide a specific explanation this time. But the 300 billion market target should be cleared quite easily, and maybe even 400 billion as well. But going forward, including Mython IR, we will be doing more greenfield projects. Elowan has a lot of pipeline, but many of them, most of them actually greenfield, which means that it will take them two, three years before they start contributing to the profit. And we need more time before we can show you a nice, steady, constant growth plan. In other words, we cannot really share the detailed numbers at this point in time. Please give us some more time. And please understand that the explanation is a little bit vague because of that reason. What was the other question? Well, I don't really need the detailed number, but how do you feel, Mr. Inoue? 400 and 500 billion was the target before COVID-19. Do you think you can go higher than that? That's the sense I'm getting from you, but is that correct interpretation? Well, I'm always positive, as you know. So I always feel positive, and I want to go back and recover as quick as possible. And in the beginning, we thought it would take maybe one or two years longer, but now it seems that we can go back to the previous level more quickly. So it's a half hope and half confidence. That would be the correct interpretation, I think. Understood. Renewable energy. European players' profit outlook are becoming more challenging. We are seeing more warnings coming from those players. But over the mid to long-term performance for Oryx, do we have to be concerned about that? You mentioned that there are many greenfield projects. And how do you see this? Well, with renewable energy, we have many things in our pipeline. And there are three things we can do. One is we keep holding those projects to enjoy the full profit, four-year profit. The second is once it's established, we can sell it to a fund, pension funds. At a cap of 3%, many investors actually buy these projects. So our target is about around 8% NOI. So we try to sell the project so that we can get gains or hold. Or we can build a fund and manage a fund. So these are the three different methods that are being considered. We need to figure out which is the best way. And if we're going to build a fund of our own, how big is it going to be? Because if it's less than $1 billion fund size, it's not really meaningful. So we are discussing this involving UK. We don't want to be cherry-picked too much, but good ones we want to hold, and the medium NOI we want to sell. And if it's low, but it's a good project, maybe it should be included in the fund. So that would be the strategy. So this is more of a profit adjustment, so to speak. So profit growth trend can be more constant and steady. Does that answer your question? understood. And last but not least, in your presentation today, you talked about ESG. You spent a lot of time as the CEO to explain about ESG. That's my impression. Contributing to the society does not necessarily equal contribution to the shareholders. That's my impression. So in your mind, Oryx's initiative toward ESG, how should it be reflected in the share price? Can you please simply talk about this? To be quite honest, if you look at other manufacturers and trading companies and compare them against Oryx, 1.26 million tons of CO2 emission is not such a big emission. And out of that, 900,000 tons comes from something we started 10 years ago. Probably my fault. But in Fukushima and the Fukuoka prefectures, we have the fuel mixed combustion. And 17 billion yen cost will be incurred if we're going to deal with it. And scope three includes automobile, ships, and aircraft. We need to really understand the needs of our customers so we can use low-emission engines or maybe convert to electric vehicles. But anyway, we will not be receiving a big negative damage. If you look at overseas, auto lease for coal companies and also a lease for plants, This balance is approximately $23.5 billion, and the risk is just five years. So we can make the necessary adjustments and reduce the emission without causing a big damage to the business. So we promote ESG initiatives, and we do not consider that we're causing any damage to our investors through these efforts. Understood. It's very clear. Thank you very much for your answers.

Thank you for the question. So from JP Morgan. Otsuka-san, please. Thank you. This is Otsuka from JP Morgan. Do I limit my question to two or one? Where we asked the, it's okay, one or two. whichever of your choice. So please refer to page three. So in the first half, you managed to generate 173.5 billion Japanese yen, but what is your takeaway as a management? And I'm sure, you know, there are a number of factors that have contributed to this profit generation, inclusive of Forex, and also supported by the market conditions, for sure. As compared to your initial expectation, this 173.5 billion Japanese yen, what is your assessment? And if you were to double this 173.5 billion, in fact, it is larger in terms of the profit size as compared to pre-COVID period. So this is the one and only question of mine. So as compared to pre-COVID period, or referring to this number, this is more of a cruising speed, I would regard. And to be honest, this is something that we were able to achieve without exerting a huge amount of effort. But for sure, the corporate financial services had done pretty well, and also banking and credit and life insurance, they were not affected by COVID-19 in a negative way, that is. and this is why they were able to generate more profit. And in Asia, as well as in Australia, so during the pandemic, they had to, of course, keep to the moratorium, or they had to refrain from carrying out an aggressive operation by the government direction. So this was done without exerting a huge amount of effort, in other words. So, like, what you have included in the base profit, such as the sales of second-hand cars, for example, in fact, in other words, without, you know, exerting a huge amount of effort. Is that right? So, you see, it is more of a second-hand car. The re-seeing of those second-hand cars are pretty profitable. So this is why automotive business, in fact, has enjoyed the expansion of their profits. And also, the sales of second-hand car had trended pretty well as well. So for automotive segment, for automotive businesses, I think they were pretty grateful for what had happened as a result of pandemic. So thank you.

Sato-san, Missile Securities. Please ask your question. Yes, this is Sato, Missile Securities. Page 52, about the capital utilization rate. 91% is the recent number. And can we please talk about this? Depending on the investment and turnover, it may go up and down, or up or down. I think your target was around 80-some. Accounting-wise, some things are not counted as leading profit, which is part of this. So if you add those things, can we expect the available capital level to be quite high? So 91%. From the management perspective, what does this number say to you? That's a very difficult question. Yes, this is Yano responding to your question. The reason that this number went up is Greenco and Elowan, mostly. Eighty percent is not really a target for us. Right now, we don't want to have any excess capital, so we feel comfortable with a number around 90 percent. But we have to respond to the situation in case something happens. And this is also an internal calculation. It's not an absolute number. Please understand that as well. So there is a portfolio turnover, which is happening on a day-to-day basis. So we don't expect this number to worsen We believe that maintaining the current level is fine for us. I hope this answers your question. Just one thing. In that case, rather than thinking that you have excess capital, you will be actively making investments. So it's a balance between the investment cadence and also the turnover. And is this the right level? Well, it's not that we have to replace or turn them over. Well, we don't decide everything based on just shareholders' capital. We look at risk and return or what we have and make the final decision. So this is not the only criteria for decision-making. Please understand that. There are many other factors involved. So we want to enhance the capital and asset efficiencies and the increase the absolute profitability and profitability per share. And based on those assumptions, we will be changing the items in our portfolio. Understand. Thank you very much.

Thank you for the question. From UBS Securities, Takama-san, please ask your question. Okada is my name from UBS Securities. As for myself, I would like to ASK QUESTION ABOUT OSAKA MYSIR ON PAGE 11 REFERRING TO THE KPI NUMBER, THE NUMBER OF TRAFFIC AND ALSO THE EXPECTATION FOR THE REVENUE AS COMPARED TO WHAT WAS ANNOUNCED BY OSAKA PREFECTURE AS WELL AS CITY, I THINK IT IS EXCEEDING THE NUMBERS THAT WAS ANNOUNCED BY THE PREFECTURE AND THE CITY. SO WHAT IS AT THE BACKDROP IN REVISING UPWARD THE NUMBERS THAT YOU HAVE SHOWN ON THIS PAGE AND ALSO providing that there is going to be a disclosure. So the return on investment to this project, is there any kind of expectation that you have as of now? So with regard to my SIRR, the numbers, in fact, to the numbers that Osaka Prefecture and City has announced, this is just our tentative expectation. And the inbound tourist was, of course, taken into account from several years back. But at the moment, the traffic, in fact, that we expect is just limited to the Japanese people. And that is the basis of the plan. This is going to be a pretty difficult simulation. But in the next 10 years or 20 years, and, of course, it depends on, you know, how long we can run this, operate this facility. But the IR of... 20% in fact is expected and so this is why we came out with this 1.08 Japanese trillion yen of initial investment. Out of this 1.08 580 billion accounts for the construction cost and all others are expenses for the operation. So 10% and above of IRR is pretty I think achievable we think. So with that in mind we have come up with this simulation. So MGM, in fact, has come up with a number which is almost double of our number. But our expectation is not as high as MGM because we have only limited the traffic to the Japanese people and we have not extended over and beyond such an expectation. So this is how we have arrived at this number. Thank you.

Thank you. City Group Securities, Niwa-san. Yes, this is Niwa with Citi. Can you hear me okay? Yes, we can hear you. Thank you. About ESG business opportunities, this is a follow-up to Sasaki-san's question. Other than power generation, when it comes to supply chain as a whole, Aircrafts, automobiles and ships were identified as big impact areas. What are the initiatives that are already underway and what are your near future plans for these areas? Accelerating the purchase of Yupik? And what is our advantage as opposed to the competitors within the domestic market? Depending on the segment, what we do is different. With aircraft, whether this is fortunate or not, stage four engine, younger aircraft, that's what we have. And with Avalon, again, we have new models. CO2 emission is not really critical for us. Within the aviation industry, By 2030, CO2 has to be reduced and maybe zero emission by 2050. What is the alternative fuel? The whole industry is already moving in that direction. So we will continue to provide aircraft according to those changes to the companies. Within scope three, of course, we have to monitor the CO2. And not just scope one, scope two, but also scope three has to be taken into consideration as we continue to manage our ESG initiatives. So employers and the supply chain, we have to monitor the CO2 emitted by them. So how to do this is the same thing with automotives and also ships. We have to convert into eco-ships as early as possible, which means that we may have to accelerate the replacement of these assets. As for the automotive, we are focused on hybrid vehicles right now, but there are still a lot of internal combustion engines and very few customers who actually use EVs. How to convert to electric vehicles is going to be the biggest challenge for our automotive segment. In the next few years, we need to see progress in terms of CO2 reduction contribution. We have to change the models. And asset-based lease and finance team will face this challenge. This is going to be the biggest challenge, I think. So we have a target for 30 and 50 we are basically binding ourselves to these targets as we continue to manage the company. I hope that answers your question. Thank you. A follow-up question. Compared to the existing players, competitors, what would be Oryx's strength? Well, strength is fast decision-making and... selling of assets which produce a lot of CO2, even if we have to put in payment, we are much more agile than other players. I hope that you will see us that way. I understand. It's very clear. Thank you.

Thank you for the question. So it is time for us to close this session. So the next person is going to be the final question. from Nomura Securities, please. I am Sakamaki from Nomura Securities. I have one question. I know that, sorry for being persistent, but with regard to shareholder's return as well as investment, you may not be able to give us a clear answer. As compared to the prior briefing sessions, what has been the changes in your mindset? because your business performance expectation, in fact, the prospect is becoming kind of brighter. So do you think that you are turning a little more aggressive in terms of making further investment? I understand. So is there any kind of changes in mindset of the CEO? There has been no changes in my mindset, as a matter of fact, because after all, talking about the business performance, you see one-third will be, you know, should be appropriated for the payout and the rest for the investment, and that remains to be unchanged. So this 250 billion yen, as has been announced at the beginning of the fiscal period, and that we were very much affected negatively by the COVID-19, and you see it was COVID-19 everywhere until summer, but all of a sudden, beyond our expectation, I don't know whether the government has come up with a fake number, but in any case, it looks as if the pandemic is beginning to show some signs about closing down. But, of course, still things remain to be unpredictable. And, of course, if there was to be a big kind of increase in terms of the profit, we don't want to be that kind of volatile in our expectations. So I really want you to wait until the next quarter before, you know, this is my request, before you hear anything more, any more from our company. Okay, understood. Thank you. Thank you very much. So with this, we'd like to conclude the Q&A session. So Mr. Inoue, would you like to give us the closing remarks? Thank you all very much for asking a lot of questions. So the questions was related to ESG and the And because of the COVID-19, the market is pretty volatile. And we were not sure as to how, to what extent we were able to achieve our target. But you see, we have not come to an extent whereby we can loudly say that we are confident in achieving our profit. $250 billion is quite achievable. But how far can we go over and beyond this $250 billion is yet to be known. And of course, for sure, we are going to continue to consider the shareholders' return. So if you could wait a little more before we can make a further announcement. So that is my request. So that concludes today's financial briefing session of Oryx. Thank you for your participation. And you may now disconnect. Thank you.