Good evening, this is Chun Yang of ORIX Corporate Planning Department, and I would like to welcome you to ORIX conference call to review our first quarter consolidated result for the period ended June 30, 2015. I'm joined here this evening by Mr. Kazuo Kojima, Deputy President and CFO; as well as Mr. Shintaro Agata, Corporate Executive Vice President and Head of the Treasury Headquarters; and Mr. Takao Kato, Corporate Senior Vice President and Head of the Accounting Headquarters. During this evening's call, I will go through the first quarter results, and then we will open up the line to Q&A with Mr. Kojima, with assistance of an interpreter. I presume that everyone has in front of them the presentation materials that were posted on the IR section of the website this afternoon, Tokyo time. The following live broadcast is copyrighted to ORIX. Statements made today may contain forward-looking information. While this information reflect management's current expectations or beliefs, you should not place undue reliance on such statements, as our future results and business activities may be affected by a wide variety of factors that are out of our control. You should read the forward-looking disclaimer in our earnings presentation as it contains additional important disclosures on this topic. You should also consult our reports filed with the SEC for any additional information, including risk factors specific to our business. Also, please note that the net income used in this presentation is same as the net income attributable to ORIX Corporation shareholders, as referred to in the latest financial statement titled, Consolidated Financial Results April 1 to June 30, 2015. And without further ado, I would like to start the presentation from Page 1 of the presentation material. Net income for the first quarter was JPY 81.5 billion, 24% increase…

Our first question today comes from Raj Chaudhary, Odey Asset Management.

Could you perhaps talk a little bit about the domestic corporate business? Are you seeing any increase in domestic capital expenditure and in leasing activity?

Thank you for the question. Please hold on a second.

Basically, we are seeing gradual improvement in terms of our customers' business activity, as well as capital expenditures on that front.

So far, the improvement appears not to be sufficient to drive an increase in leverage. Yet, as you noted, you made some ABS disposals. Could you maybe explain some of your thinking as to why you're releasing assets in the form of ABS and how you plan to sort of redeploy that equity?

Okay. I'd like to answer your question. Regarding the ABS we executed in the first quarter, there were -- part of it was in Japan and part of it was in the U.S. The ones in Japan was a part of our funding diversification strategy. And as you understand, the funding environment at the moment in Japan is still quite good. And whereas the ABS we executed in the U.S., these are COOs and forecasting the increase of interest in the United States, we believe now might be the time to adjust our exposure in this type of asset at this moment.

That's very helpful and the rationale seems reasonable, but from the shareholders' perspective, that reduces the segment assets, as you mentioned, so it creates a higher hurdle to sustain a return on equity. So what plans do you have to either increase the asset base or reduce the equity base in order to enhance ROE?

Thanks for the question. Okay, regarding what we do with those capital after we execute these ABS, basically, we still see many opportunities in certain business fields. In Japan, for instance, Environment and Energy-related business, this is an area that we have been actively engaging in. And so it may very well be we inject more capital into this field. And I mean, it's one of the important areas that we're focusing on right now. And outside of Japan, there are other ways of utilizing our capital to more profitable businesses. For instance, aircraft or other private equity investments, and that's the basic thinking behind this decision.

Our next question comes from Paul Smith from PK Investment Management.

Thank you very much for the education. On Page 7, you commented about your real estate exposure and you suggested that you think it continues to be appropriate to reduce your position. I suppose there are 2 questions. To what would be the minimum level that you would look for? And what would be the catalyst for you to increase exposure to real estate?

Thanks for waiting. Okay. To answer your first question, basically, the baseline is still at JPY 800 billion. Even though I mentioned that we may sell more and reduce it down further below that level, it's rather temporary. I mean, you may be looking at a level between JPY 700 billion to JPY 800 billion. But basically, for the company's -- for the management -- for our management plan, JPY 800 billion is still the baseline. And for your second question, catalyst. The current market condition, we think, is not the right time to buy. Maybe in the next few years, let's say, a market downward adjustment or crash comes, we think that will be the right time to start buying again. Does that answer your question?

Yes, that's very helpful. Can I ask a follow-up question, perhaps?

Sure.

And maybe it's a delicate question, but with regard to Daikyo what is it that you say is that you're hoping to get from Daikyo? I think they've restructured their business so that they're effectively looking for more maintenance-type or rather, condominium management-type revenues rather than building new condos. Any yet doesn't seem to be such a profitable business. Are there any comments you wish to make?

Thanks for waiting. Yes. As you know very well, we've mentioned that we're trying -- we've been restructuring the company, increasing the portion of property or condominium management. You might be correct to point out that, that particular part of the business isn't exceptionally profitable. But it -- nevertheless, it produces stable incomes. And so that part will still continue, and that's our current plan for this particular project.

Okay. And may I ask one final question, please?

Sure.

In answer to an earlier question, you said that you see opportunities in the environmental and energy sectors in Japan. In particular, with the energy sector, I wonder if you can remind us, and perhaps elaborate on what you think you can do, particularly given the opaqueness of the energy strategy on the part of the government.

Okay. The current plan for our Environment-related business, currently, the segment asset is about JPY 150 billion, and we plan to expand it to about JPY 450 billion in 3 years' time. And that would include various kinds of businesses, included like mega-solar, that sort of stuff. And because, for instance, mega-solar, this is under the government subsidy program, feed-in tariff. So these are going to be very stable income streams, and so that's that. And in terms of other new areas we can further develop, one example would be electricity retailing. This is one of those deregulations that we expect to see happening next year. And of course, there is not that much detail out there yet, but this may potentially be a very large market and we are currently prepared for that -- preparing for that.

Our next question comes from Raj Chaudhary from Odey Asset Management.

I have a follow-up question. On Slide 4, you have kindly outlined an indication of gross profits and of services income. Am I right to think that you are trying to highlight the recurring portion of non-spread-based income on the right-hand chart? And does that approximate to operating profit? Or how should I interpret that chart?

Thank you for waiting. Okay. On Page 4, the graph on the left, the gross profit, this is just -- basically, we're trying to illustrate that, based on the strategic direction that we have released before, that we want to expand non-finance business going forward. And you can see the portion of our income coming from that particular side of the business, non-finance, has been increasing in the last 3 years, okay? So that's for the graph on the left. And in terms of the graph on the right, services income, these are, I'd say, operating gross profit. They are after deduction of expenses, but they are before the segment's SG&A.

Our next question comes from Mr. Taichi Noda from Goldman Sachs Japan.

Kojima-san, sorry, I asked a question at the Japanese call, too, but I'd like to ask only one question regarding Hartford Life Insurance. Are they contributing to the profit at this moment or not? And then if so, how much is the contribution roughly to the -- your Retail segment profit? Also related to the Retail segment, this quarter, you have sort of other segment expenses of JPY 59.9 billion. Is that kind of the sort of normal level at this moment or...?

I'm sorry. Could you please repeat the second question again?

Okay. The Retail segment, you've got the other expenses of JPY 59.9 billion.

Hold on a second. Other expenses...

After the interest and after the loan provisions. Retail segment.

Yes. Yes. Yes

Okay. So that's basically JPY 59.9 billion. So JPY 60 billion out of JPY 62.7 billion. So most of all the expense is coming from that line. Going forward, are they stably stay at roughly 50 -- around JPY 60 billion? Or do they vary over time?

Thank you for waiting. Okay. The answer to your first question, the contribution segment profit from Hartford Life in the first quarter is about JPY 7 billion. And to answer your second question, other expenses, JPY 59.9 billion. We expect this amount to stay roughly around the same level. Basically, the expenses coming from Hartford Life should gradually decrease, but the expenses coming from ORIX Bank and ORIX Life Insurance will gradually increase. So they sort of offset each other. So we expect the final amount to be roughly around the same level going forward.

Our next question comes from Paul Smith from PK Investment Management.

It's actually Paul Kirkby for this question. You refer to the fact that you might be looking to apply more capital in the future to the Environmental -- Environment and Energy section. I just wonder, in the light of the recent announcement that you are -- I think currently the only bidder jointly with VINCI for the Kansai International and Osaka Airport operation, which is I think an JPY 18 billion project over 4 to 5 years. I guess, you can't say much about it, but I mean, is that an area where you're looking to prepare capital for the future, for what may or may not be a big commitment? And would that business come within the facilities management business? Where would it belong?

Thanks for waiting. Yes, there is very limited information we can disclose regarding this particular Kansai Airport project. But basically, this kind of business, we call a concession business, mostly deregulation involving concession rights. We see this as a very big market, with a potential market size of JPY 70 trillion. So yes, this is one area that we would like to challenge going forward. And as for where do we put this on to our reports, which segment. It hasn't been decided yet. I mean, we just have to think about it and decide it as we go along with the project. We still are at a very early stage of the project.

Mr. Yang, there are no further questions today. So at this time, I'd like to hand the conference back over to you for any additional or closing remarks.

Yes. So if there's no more questions, Mr. Kojima here has some final words he would like to share with you.

Okay. This is Kojima. This first quarter results proved to be a good starting line with the new strategic direction that we have announced. As the company's new CEO, I will do my best to ensure the company maintains its financial discipline and stay focused toward achieving midterm targets. Having said that, I appreciate your continuous support to ORIX until now and also in the future. Thank you.

Okay. Thank you for participating in tonight's conference call. If you have any questions or comments, please do not hesitate to get in touch with us using the contact information found on the last page of this evening's presentation materials. Also, a replay of this conference call will be available shortly on the IR website, if you joined partway through or would like to listen to certain sections again. On behalf of the management and the entire ORIX Group, thank you for your participation. I hope that we have a chance to meet, whether it is in your corner of the world or here in Tokyo.

Thank you. That concludes today's conference. Thank you for your participation, and you may now disconnect.