I am Urata, CFO of ORIX Corporation. I would like to extend my gratitude for participating in the session out of your tight schedule. I would like to give the first half financial results. In your document, please refer to Page 1. This is the overview of the business as you have seen every time. The net income for the first half of fiscal year ending March 31, 2015 was ¥142.1 billion. All segments increased their profits steadily, achieving 77% profit growth against ¥89.4 billion during the same period of the previous fiscal year and 68% against the full year target of ¥210 billion. We have achieved increased first half profits for the first five consecutive fiscal years. I think you see the red line, ROE was 14.4% on an annualized basis. It continued to exceed 10% level which was achieved in the previous fiscal year. Please go to the next page. Total revenues increased 55% year-on-year due to factors including consolidation of Hartford Life Insurance K.K., Robeco and Daikyo and increased profit contribution from private equity investments. Operating revenues had renewed record high results for the first half. The total revenues went up by 55%. For the segment revenues, it went up by 63%. Retail and overseas led the growth, while real estate went up as well and corporate finance as well as maintenance lease steadily improved. Total assets were 2,150 billion and segment assets went up as well from the end of last fiscal year at ¥1,850 billion due to the Hartford acquisitions. ROA of segment assets was favorable at 3.46% -- it was fairing very favorably. For the short-term and long-term debt and deposits went up by approximately ¥40 billion compared to the end of the last fiscal year. We have been controlling the balance of interest-bearing…

I'm Inoue. Hello, everyone. Thank you very much for joining us today and thank you very much. When you look at today’s stock price and Nikkei 225, it's going up. But when you look at that old – our stock price of our company, the drop rates, and when you look at all these constant prices of the company and we now we think it's our strategy to investors have not been enough. And for example, we have experienced about lot of the business failures or that the company had to make the told revision in the business performance, but only since now [indiscernible] just like all these other companies. But I think that my mission is to review the situations and make a turnaround. And also we have explained earlier and we made report of this in the first half of the business performance and 14.4% of our ROE and 68% of achievement we have achieved. But based on some disappointment today dynamics and also uncertainty in the macro global economy is now an increasing now [indiscernible]. We think that we don’t have so much of concerns about [indiscernible] in terms of the sales and also the finance. But, this year's is alright. But that’s the growth of the company, will start next year and also revenue and profit will decline for the company. Yes, that’s one of the view to our company from the market. We understand that. So this is one of the reason that our stock price underperformed the top exchanges. But on the other hand, when we look back on the past six years I hope you understand that we have overcome a lot of the problems, the comps in the bubble economy, the Asian currency crisis and financial crisis in 2008. But other than…

Thank you very much. We’d like to move on to the question-and-answer session. (Operator Instructions) Before you ask questions, please identify your name and your affiliation. So the floor is open for question.

Tsujino of JP Morgan Securities. You may say again, Tsujino. You said 20% payout ratio is the minimum of what you’re going to keep with adjustment EPS is going to be the basis or since you have goodwill, are you going to exclude the goodwill or are you going to consider goodwill in addition to EPS? That's my first question. Let me go to my second question. You said that you’ll continue to make growth and you will seek for the revenues source. So the business model has changed every five years, as you have rightly pointed out. But in your base line scenario, a certain level of the asset based revenue is included and therefore it is the source of comfort. Otherwise, if that's the case, you told us that you are not non-bank anymore. But since you are making a variety of different investments, i.e. trading houses, so what's the differences? Trading house have a very stable income stream based on the assets and that’s the strength of the trading firms. But having said that, asset base for the stable income source is getting tough competition with banks and therefore it's very difficult to grow. And also retail as well as consumer finance might be showing some growth, but it is very competitive. And mortgage is growing slightly, but the corporate finance is not doing well in terms of growth. Therefore, we would like to see the improvement in asset-based cash flow and income in the future. What can you comment on this?

With regards to the payout ratio, it was 16% or a little more last year. And when I explained that Daikyo and other – other than the accounting profit and income, I'm going to achieve 20%. But, I thought this is not going to be specific enough. And therefore not because from any others factors we achieved 20% and since we haven't discussed at the Board of Directors meeting yet, it's not finalized. But that’s the basic stance that we like to have consensus internally to keep 20% regardless of other factors. Now asset based income and revenue sources, we’re not giving up. As for the interest rate income, we have not given up, but with the current, with zero interest rate, ROA of 2% to 3% is impossible. And therefore, what we are doing now is that there is a cheap, very inexpensive fund available, so we are going to use that money to expand the business, to expand and to increase our revenues. In case that interest rate goes up from zero interest level to a higher level, of course we are going to have the arbitrage business and financial businesses with the wider spread. So, we are going to be flexible. Where we can find the revenues and profit, we are going to make decisions where we can find the best sources of revenues to move the human resources as well as the fund. We are not becoming non-bank. If we were just a non-bank, I think ORIX is gone already because spread is so tight and it's not very profitable and there is a leasing companies and other financial companies with very tight margins. So, we don’t have the intention to compete against them.; So we have six segments and all segments and each single one of segments should be profitable. And even though one of them is not going to be unprofitable, if the real estate is going to grow 20% or 30%, growth can be achieved. And if finance is not going to be achieved, zero growth will be okay. But as a whole in the six segments in total, we will like to achieve a certain 10% of growth as a whole. And in order to do that, where we should allocate the human resources and fund, and that’s the decision that we have to make and that is the most improvement thing for us. And I believe that we are successful in doing this. So, the revenues from assets should be expanded and we should also get the commissions related ones. I know, so asset based one is the whole focus. Real estate is doing quite well at this moment and that’s asset based income stream and we are going to expand that income stream. So, we are not really concentrating in one area, but we have six different segments as revenue sources and profit sources. Thank you very much. Do you have any other question?

Ms. Otsuki from Merrill Lynch Securities. I have two questions. My first question is about -- now I would like to know about your mid-term and long-term strategy from the perspective of President and in which region and which specific product or service. And will it be the key for the mid-term and long-term growth? This is my first question. And my second question about your domestic business. In retail segment, now I think that the presence and the position in the retail segment is getting bigger for your business strategy, but it's still new brand of ORIX and retail business, it's still weak. How do you enhance and how do you think about your brand power at ORIX in the retail industry? This is the second question.

My hint about strategy for the mid and long-term basis in the domestic business, to tell the truth, it's very competitive in any business domain and segment and it's too difficult to maintain at a certain level of profitability, it's very difficult. Now, so when it comes to [indiscernible] power generations and feed and tariffs and ¥42 and ¥36 and ¥32, they have declined, but we still maintain sustained level of profitability. But still it’s only temporary business and then also for the [indiscernible] power plant so that is,, some power plants and this is a new area that we are still studying about it. But when it comes to [indiscernible] it's a little bit uncertain because we don’t know exactly that how much of that generation is available and before [indiscernible]. So that’s try to explore the possibility of [indiscernible] and also for the ocean a power plant and we need to just set up a lot of wind farms on oceans and so that we have an negotiation with the manufacturers what kind of wind farm would be business suited. We're still working on that. And when it comes to in 2018, this is the year for the power plants and the power generation business will afford it [indiscernible]. So when you think about the possibility of summer power plants and how we can secure the capacity of the several hundreds of megawatts of the capacity of the summer power plants. And then we have completed the assessments and we're getting into the next phase of constructions. And taken this all into consideration, we have about 200 billion or 300 billion of assets and that we can expect some kind of revenues and profits. And also we would like to export these assets and skills to Asia. And…

Let us go to the next question, please. Next person please.

[indiscernible] Goldman Sachs. Thank you very much for your presentation. For the renewable energy I have a question. FIT system is going to be revised and the discussion is going on. What is your main scenario you have in mind? And also, how are you going to approach such a scenario? Or if you have no impact, I’d like to know. And also, in relation to the first question, then secondly, you have SPC type of also the projects. Are you going to have a private placement type of exit or securitizations? And how are you going to make all the business more liquid? Now since you are a representative of the company doing such a securitization, I believe that market is expected to grow with higher liquidity. So, what are you going to do in leading the market?

Now as for the FIT system, in the past several months all of the sudden in the newspaper negative campaign has been launched in a series. That means, in my personal opinion I believe that as a backdrop in order to promote the nuclear energy, I think negative campaign was launched to criticize against the solar energy as an extensive sources. Kyushu Electric and we work together and Kyudenko is our partner and Kyudenko is 100% subsidiary, our main subsidiary of Kyushu Electric. And as we have a discussion, it is always talk about alliance and collaborations and for us Kyushu Electric is going to accept everything for whatever we have arranged. Hokkaido Electric is not going to come into this business, because they do not have any business. And if they go expand the solar business, it’s not going to keep them grid. So there is different situations in each region. So we will talk with the different utility and then negotiate the cost and also profit and see the profitability in each region in making the decision. Now since we are the Japanese company, it is linked to the sovereign risk. Japanese government has come up with FIT system and for 20 years they have guaranteed ¥32. After several years, if Japanese government say they’re going to quit ¥32, it is sovereign risk. So if we start criticizing that, we have to be out of Japan and therefore the risk is nil in our understanding. Germany, Spain are the cases. In the middle, they had a system to be able to change the price. Of course the price comes down. But FIT is a system to keep the price. There is no option to reduce the price once contract is signed and that’s why we decided that we can take the risk. Now let me talk about solar energy. In the beginning, approximately 600 megawatts to 800 megawatts is going to be supported. It is going to be 100 billion to 200 billion and half of that is non-recourse loan. And therefore, approximately our investment is around ¥100 billion for 20 years with a 5% or 6% of net spread and 8% to 9% leverage in place. However, if we’re going to keep it for 20 years, it is not suitable for ORIX business model. So all the transaction, I am not going to say CLO, but cash flow is going to be generated and it will be subject to securitization and that’s the next step. In the beginning, there is a green tax system and others, so we’re going to enjoy the green tax. And once the cash flow becomes more stable, we will consider the next step and that’s our plan.

Let me go the next question then.

I'm Shiota from Daiwa Securities. I have two questions. My first question is about the shareholders and return to shareholders. You mentioned about the payout ratio, you like to make it more than 20%. And on the other hand and when it comes that -- this is based on the net income -- and you have the plan for about the [indiscernible] next year and this is 20%. So you can, so may we expect that kind of -- your forecast of the amount of dividend would be announced at the same time? And the next question is about the share buyback. You don’t think that for the time being, for example, a 0.9 times PDR and this is that – do you think that also this is very, very favorable situation for share buyback now where the PDR is less than 1? But still you don’t think about the share buyback. And my next question is about the focus for your next fiscal year. And now you mention you still keep your double-digit growth targets and so you mentioned also about the next years, and this is a gap from that level that we’re looking at your business and now we try to still aim for having the double-digit growth, there is a gap. How do you fill the gap? This is my second question.

When it comes to -- as far as the dividend, as concerns my former statements of the dividends, we did not make to the last minute so far. And also I do not to make any – I don’t want to mention anything about the dividends. But when I look at the current stock price, I think that I should mention something about the dividend and without any specifics to negotiations, so same discussions with [indescribable] extend to our directors. But they'll simply mention that we'd like to keep and maintain 20%. We still have five months to go and we have to change how to deal with these issues. But they will also have their internal discussion. So whether or not we give a forecast of the amount of dividends, when we announce the next areas of focus and still we don’t determine. We cannot make any commitment on that, I am very sorry. And when it comes to share buyback, we have a lot of questions and a lot of same questions of share buybacks including small meetings. But it’s not that we turn it down nor we reject the idea of a share buyback. It is also within the scope of our actions. But I myself think that share buyback is a last resort for us, returning to the shareholders. A lot of other things we have to implement or make a contribution to the investors, so that’s why -- and we have the other things with other higher priority. But still the share buyback also within scope of that actions and this is what I have been keep saying in the past two years. But still still we have kept growth right now. So as long as we keep growing, we'd like to allocate as much…

I'd like to move on to the next question, please.

Muraki, Deutsche Securities. I have two questions. My first question is related to cost. In the Appendix document on Page 11, you have SG&A and [indiscernible] 8 and compared to a year ago it is picking ago. And compared to the gross profit, the ratio of SG&A is getting larger. Of course Robeco and other labor intensive business is increasing its percentage and therefore it is pushing up the cost. But since the new companies are consolidated one after another, cost management initiative is very important. How do you take initiative in the cost reduction? Secondly, I believe it's a maintenance lease. IT expenses are recorded. In order to seek the efficiency and also the IT related investment for the growth, it's going to be incurred. In which segment and what scale in the third quarter? My second question is about U.S. business. Foreign exchange is moving with a lower yen and approximately there is additional ¥180 billion of assets accumulated. It is leveraged loan and CMBS and other secondary type of loans and also securities related risks that you took. But more recently, you have acquired a credit portfolio. What is the average yield you have acquired? And also for loans, I believe it is the duration of three years to five years. But, are you going to hold it to maturity? I don’t think so. Therefore, with the interest rate picking up in the coming years, such a variable interest floaters will be sold. What is your timing of exit that you have in mind?

Let me talk about cost management first. In net investment in the private equity, if you get more than 50%, it is going to be subject to the consolidation. And therefore, the entire corporate cost is going to be included in the ORIX. And when STX was included, there was ups and down in the cost items. So it did not look very well on the surface. But this is accounting requirements, so we couldn’t do anything about it. So in each segment for our investment return, we were trying to identify whether we’re going to make investment or not at the bottom line. After tax how much profit can be generated, and we have a hurdle rate and in order to achieve that hurdle rate, what has to be done, and that is the discussion we have with the head of the business. So cost management is done on an individual basis. For example for Robeco, it is a labor intensive business, you said. However, for Robeco, Harbor Capital or Boston Partners incentive plan was renewed and that will push down the commissions. The Transtrend CTA companies within Robeco, however the performance was quite poor. However, we jumped up and improved the performance. Transtrend was the company that we expected a notable profit. And when there is earnout, there will be a return, yield – a partial payment to the Rabobank, that has been the arrangement. So that’s the cost. Now with IT, ORIX System is taking initiative in IT development. But for the banking as well as for the life insurance, we have to have our own unique IT areas. And since it's a business requirement due to the law, we cannot do any changes of legal requirements. But we have renewed new systems for the automotive cut…

What is the portfolio superficial on duration or the yield?

It is 4% to 5%.

So 200 billion and the balance might go up or down? So is the income that you expect?

Yes.

We’re allowed to have one last question.

I am [Kawuhara] [indiscernible]. There is another question that initially President mentioned that the base profit and capital gain in credit cards, these are [indiscernible] get them separated and get them together. But some time ago, the sell side also made some assumptions and a lot of the gas is made by the sell side and before you make the disclosure and we had a lot of much confusion. So it will be very, very informative for us if you disclose all these information. So that’s why you just – you said disclosing all these detailed information. So, now for example the gains from the SK group selling and you disclosed the capital gains. That’s why we can understand that you have a very good assumptions of a business and we take advantage of that information so that I hope that would you please keep disclosing that’s the same information also after this? This is my request.

I truly understand that you request. But as I explained that for one single project and for example as private equity 100% we have acquired private equity 100% on the PL. And all the profits would be reflected, recognized. These are regarded as base profit. But now we have a client and also project is that made exit five years ahead. And the capital gain, how much of the capital gain we expect, about 20% or 25% IRR. This is the basis of the projects and five years ahead and we sold that project. So, these are older profits, for the one single united projects. So then we have more of the retained earnings and rather than PL we have more to retain earnings and to have the value up and we'd like to invest that and for more profits in the future. This is the basic that business owned in the PL. But we have done a lot of capital gains and so that’s why they have the high volatility for the ORIX. And so we like to point to that situation. That’s why as CEO I'm determined to remove that. So that’s why in change for that we disclose that PL for each segment and also expenses and I’d like to disclose all the inflation for each segment. And if there is any request that you need some additional information, then we'd like to think about it again. So, I hope you understand how we think about it. For example, also for the [indiscernible] business and we look at the depreciation at the PL -- depreciation is in the PL, so that this will be decreases in the non-recourse loan and securitized in that business and when we securitize them, we also have a capital gain [indiscernible]. And this is based on – now you have the present cash flow, cash value for the 20 years of project. That's why – so this is cash flow what realizes now, but although I explained that. But everyone think about that’s the capital gain. So we like to avoid that kind of discussions. And we have determined to change that disclosure rule, but this is not final. And like to IR group and we'll also keep disclosing all this informations. And if you have any comments, I would like to listen to your comments and I'd like to anyway disclose that any convincing information.

You mentioned that -- but some of the analysts think that to secure the capital gain, is that the corporate business of ORIX is about half-and-half, 50% of the investors think so, but anyway. Okay, that’s all. Thank you very much.

Thank you very much for joining us today for this business performance briefing meeting. Thank you very much. Thank you.