Q&A Session at the IR Presentation Meeting for the Second Quarter of the Fiscal Year Ending March 31, 2018
1. As for the new orders received in the first half of the fiscal year ending March 2018, you said that the decrease due to the reactionary decline in large-scale projects received in the first half of the fiscal year ended March 2017 had been just as expected and, that in light of the decrease, the result has continued to be steady. Regarding the large-scale projects in the Financial segment and the Australian large-scale project in the North America segment, could you tell us the affected amount of reactionary decline for each?
Regarding the effect of reactionary decline in large-scale projects in the Financial segment, approximately speaking, the decline was more than 160 billion yen.
The effect of reactionary decline in the Australian large-scale project in the North America segment was around 80 billion yen. The North America segment as a whole recorded an increase of around 60 billion yen year on year despite the effect of reactionary decline.
2. You mentioned that the result is positive despite the effects of reactionary decline in large-scale projects. Could you explain the factors?
To begin with, it is necessary to divide overseas markets from domestic markets in understanding the factors more accurately.
I will explain the domestic market first. There were some major projects we needed to secure in a steady manner, such as in the Public & Social Infrastructure segment as well as the Financial segment. In fact, we were unable secure one or two of them, but we mostly succeeded in securing contracts for other projects.
Additionally, irrespective of industrial category, there are many moves to invest in new areas such as digitization, and we received quite a lot of requests for assistance of varying nature; in fact, too many for us to accept them all. This means we are in a very good situation for receiving orders.
As for the overseas markets, the situation is not necessarily similar between markets. Concerning the business of the North America segment, we are currently pursuing the procedures for PMI (post-merger integration), but we were able to maintain most of the large clients. Also, since the acquisition of the former Dell Services, we have been able to secure most of the renewal projects of large scale. Also, corporate investment in digital transformation is continuing to increase more rapidly there than in Japan.
On the other hand, it is noteworthy that moves toward vendor consolidation are seen with many clients of the North America segment. Vendor consolidation means reduction in number of contracting vendors. The client requires us to give them greater cost advantage, in return for choosing us. Because of the moves toward vendor consolidation, the North America segment faces difficulties in securing orders in some cases.
As mentioned earlier, despite the negative effects of reactionary decline in large-scale projects, the overall results were positive as you have seen, thanks to the impact of the unification of accounting periods, the impact of consolidation of the former Dell Services, and reasonable success in winning new orders.
As for Europe, each of the three companies (EMEA, everis, and Business Solutions) has a somewhat different situation from one another.
Regarding Business Solutions, their SAP business continues to perform very well.
Their SAP business portfolio includes, comparatively speaking, more projects for small to medium-sized companies; therefore Business Solutions has a relatively steady performance.
As for EMEA and everis, they are currently working on some large digitization projects for new clients. Geographically, subsidiaries in such countries as Spain and Germany are quite vivacious, so I think we can expect higher performance in these subsidiaries in the second half of the current fiscal year.
1. Regarding PMI-related costs for the former Dell Services, the actual cost for the fiscal year ended March 2017 was around 10 billion yen, and the budgeted cost for the fiscal year ending March 2018 is 15 billion yen. Is it correct that year-to-date outlay is just in line with the budget or below that?
Also, other than the initially expected items, have you faced any other items requiring cost coverage? Could you confirm this point?
Firstly, the planned total of PMI costs is 250 million dollars. So, if 110 yen to the dollar is assumed, it is around 27 to 28 billion yen.
We actually spent a little less than 10 billion yen in the fiscal year ended March 2017, and the planned cost for the fiscal year ending March 2018 is around 15 billion yen. In addition, it is projected that we will spend about 3 billion yen for the fiscal year ending March 2019. All in all, total expenditure for PMI would be just as budgeted.
2. If any part of the PMI processes is completed earlier than projected, I suppose the total amount of PMI costs would be reduced. Do I suppose correctly?
One of the cost elements of PMI that could vary is the cost for TSA (transition service agreement).
TSA represents an agreement with Dell whereby we keep using Dell’s system to a limited extent during the transition period. If the period is shortened, the budgeted cost for the remaining period will become unnecessary.
However, even if that is the case, its impact on profitability would be minimal or slightly positive, as the cost size is not that large.
The PMI period would be up to the end of the first quarter of the fiscal year ending March 2019 for system integration and, as for the others, it would be up to the end of the second quarter of the fiscal year ending March 2019, just as scheduled in the initial plan.
1. Concerning the Mid-term Management Plan (with the fiscal year ending March 2019 being its final period), could you explain the underlying thoughts in setting the objectives?
The targeted operating income is 150 billion yen, a 50% increase from the actual income of the fiscal year ended March 2016. Since budget for investments in new fields will be increased by 10 billion yen compared with the fiscal year ended March 2016, I understand operating income net of the investment would be around 140 billion yen.
Starting with the operating income of 120 billion yen expected for the fiscal year ending March 2018, there would a positive effect of around 24 billion yen from non-amortization of goodwill as a result of adopting IFRS (International Financial Reporting Standards). So, if the outlay of 10 billion yen as investments in new fields is counted as a negative factor, are you actually expecting negative growth in operating income for the fiscal year ending March 2019?
You have spent around 500 billion yen for cross-border M&A deals so far, but it seems you have not realized any sizable business growth from the investments. I think the stock market is not so generous as to accept such sluggish performance without any criticism.
I believe you would have to show really profitable results through organic growth, after having absorbed necessary investments, and not counting the non-recurring effect of the changes in accounting standards.
First of all, I will explain our underlying thoughts in setting the objectives in the Mid-term Management Plan.
The targeted net sales is over 2 trillion yen and the targeted increase in operating income after adjustment is 50% (over the actual figure of 100.8 billion yen in the fiscal year ended March 2016) in the Mid-term Management Plan. At the time the Plan was compiled, we thought such targets were quite challenging, based on the fact that acquisition of the former Dell Services was yet to be determined.
Our insight was that, in light of the harsh competition in technical innovation in the industry, we would like to invest around 10 billion yen in new fields, out of the expected 150 billion yen in operating income. This comprised our underlying thoughts when we compiled the Mid-term Management Plan.
Admittedly, in terms of operating income, the simple sum of 120 billion yen expected for the fiscal year ending March 2018 and the positives from non-amortization of goodwill, etc. is around 142 billion yen. Please note, however, that our targeted level is not around that, but higher.
In our projection, operating income would be at least over 150 billion yen as net sales grow surpassing the line of 2 trillion yen.
At that time, we shared a desire to invest an amount in excess of 140 billion yen in new fields, if and when operating income surpasses the level of 150 billion yen. This is the message which was incorporated into the current Mid-term Management Plan.
In other words, if the planned increase in investments in new fields is excluded, operating income should increase. We would appreciate your understanding that it never is a negative planning.
2. Generally, shareholders do not exclude investments in new fields when looking at the performance in operating income. You have spent around 500 billion yen for cross-over M&A deals so far, but you have only shown negative growth. This is not the type of story shareholders would like to see. It seems there is a big discrepancy in the way of thinking.
We fully understand your viewpoint.
We would like to once again review the forecast for the fiscal year ending March 2019, taking into account such viewpoint.
Q1. Page 15 and Page 18 of the Company Presentation show the results of the first half of the fiscal year ending March 2018 and the full-year forecast on the EMEA & LATAM segment. I would like to confirm the underlying thoughts for the results and the forecast.
When operating income figures are compared with the previous fiscal year, the results of the first half showed a decline, whereas the full-year forecast shows an increase. Does this mean you are projecting a significant increase in operating income for the second half of the fiscal year? Could you explain the positive factors for the second half?
There is a very good market environment for taking orders in the EMEA & LATAM segment. If orders received in the first half are adequately executed and allow entry to net sales in the second half, it is needless to say that we would have a larger operating income.
Unlike the business custom in Japan, it is customary, upon securing a project, to gather the needed manpower to proceed with the project. Since there are some such projects where project members are being gathered, we would appreciate your supportive expectations.
Q2. As for the North America segment, it is rather hard to understand the real situation, because of the effects of consolidation of the former Dell Services. My impression is that both the amount of new orders received and profit have been hovering at relatively lower levels most recently.
Concerning the current situation as well as the outlook for the coming few years, could you share some key points with us?
In the North America segment, the top priority for the year from now is PMI. Business integration was completed in April 2017. Business integration requires consolidation of members of the former Dell Services and members of the former NTT DATA, Inc. In the process of consolidation, redundant resources need to be reduced, but we have so far succeeded in keeping all the core members.
Another material point is keeping the client base as was. In this point, we have been in a favorable situation so that we have already secured large-scale renewal projects from existing clients.
Looking at the synergies by industrial sector, the healthcare sector is the area where we expected high synergies before the acquisition of the former Dell Services and, in fact, we can now see very good synergies being realized.
We know there are voices saying that the medical insurance-related and medical institution-related businesses of the former Dell Services would face hardship since the inauguration of President Trump because of his total rejection of Obamacare.
However, the view is incorrect. We have learned this in discussions with some experts in Washington, D.C. and through face-to-face meetings with our clients.
A review of Obamacare would have an impact especially on Medicaid* (which has about 70 million members). However, its impact on our healthcare-related business, whose operational base consists of medical insurance services and the services provided by medical institutions, would be negligible or, depending on situation, could even be positive, so we have no anxiety about this point.
We will share another positive point. With the acquisition of the former Dell Services, our business for the federal organizations of the U.S. has been strengthened, like the system services we provide to the U.S. Navy.
Nonetheless, we have some concerns about the financial sector in the North America segment.
In this sector, the former NTT DATA, Inc. was competitive historically. And, through the acquisition of the Carlisle & Gallagher Consulting Group, Inc. (currently called NTT DATA Consulting, Inc.), we intended to further strengthen the upstream business areas.
However, we are facing new trends among clients, or a massive shift to digitization and attempts towards vendor consolidation as explained earlier. We will need to look more carefully into this sector during the second half of the current fiscal year and beyond.
- * Medicaid: Public medical insurance program in the U.S. for lower-income people
Q3. I remember that the former NTT DATA, Inc. previously had an EBITA margin of 10% and an operating income margin of around 5%.
For the North America segment, since all PMI processes will be completed in the fiscal year ending March 2019, have you reached a perspective that you will be able to recover to the previous levels of profitability as mentioned in a couple of years from now?
The EBITA margin in the North America segment expected for the current fiscal year is around 7%, and we believe we will be able to achieve that, though of course we will have to make greater efforts from now.
On the other hand, as for the EMEA & LATAM segment, it is projected that an EBITA margin of around 5% will be maintained in the current fiscal year.
We are currently doing our best to achieve the targeted goals for the current fiscal year. If successful, our next material managerial issue will be how to raise the levels of the EBITA margin in the fiscal year ending March 2019, and in the following Mid-term Management Plan.
Q4. According to our observation, the European business has continued to be a thorn in the side of NTT DATA’s global business.
By the revision of business segments, Europe became the EMEA & LATAM segment, and these three companies (EMEA, everis, and Business Solutions) are referenced as a group. This made the situation of individual companies hard to grasp. Although NTT DATA has endeavored to improve the profitability of the European business, especially concerning EMEA, do you expect any setback due to the recategorization?
Yes, we have three Companies in Europe: EMEA, everis, and Business Solutions. Currently, everis is performing very well. Moreover, Business Solutions will be able to secure an EBITA margin of around 5% per year.
As you may already know, EMEA kept recording losses. Thus, we took restructuring measures for the company. Consequently, EMEA has realized a turnaround reporting profit in the latest period. Although its margin is still low, we will endeavor to raise it to 2 or 3%, or up to 5% per year and increase the EBITA margin of the EMEA & LATAM segment as a whole to a level comparable with that of the North America segment.
Please note that we are securing new projects in a steady manner in the segment, such as a new project for an automaker in Germany. We would like to keep closely monitoring the situation.
1. You mentioned that the performance is steady in terms of new orders received. However, it does not look that robust in terms of the net new orders received during the latest quarter, given the negative effect of reactionary decline in the Australian large-scale project accounting for a decrease of around 80 billion yen, the positive effect of around 16 billion yen from the impact of exchange rate, and potential positive effect of around 60 to 70 billion yen from the consolidation of the former Dell Services. Could you explain the situation of new orders received in the Global business?
We included a description on Page 43 of the Company Presentation, which shows a transition in the amount of new orders received excluding the impact of the unification of accounting periods and the impact of exchange rate.
As seen there, the North America segment showed an increase of 24.8 billion yen over the previous fiscal year, even taking into account the effect of reactionary decline in the Australian large-scale project in the previous fiscal year accounting for around 80 billion yen. So, it is not necessary to be so pessimistic over the results.
We admit that, when the first half and the second half are compared, we have to make greater efforts for better results in the second half. Nonetheless, historically, there has been a tendency for more new orders received to be booked in the second half than the first. Especially in the North America segment, it is now in the process of PMI. Subsequent to the change in the name of the contractual counterparty, some of the clients of the former Dell Services are just postponing their final decision, though basically intending to renew the existing contracts. Partly due to this, the pace of their placing orders was somehow slow. We expect the pace of receiving orders to recover in the second half and move steadily onward toward achieving the targets for the fiscal year.
Please be informed that we are now trying to secure some huge projects of over 10 billion yen each with multiple clients of the former Dell Services, and that the project size for the clients of the former NTT DATA, Inc. is also becoming increasingly larger. In consideration of these factors, there should be enough potential for us to achieve the targets for the current fiscal year.
2. Could you tell us the amount of new orders received the former Dell Services in the second quarter (three months) of the fiscal year ending March 2018?
The former Dell Services was merged with the former NTT DATA, Inc. in April 2017, and it is not possible to separate the performance figures between the two after the integration. So, we cannot give you a precise figure. However, we assume that the results of new orders received through net income of the conceivable former Dell Services in the quarter would have been just within the range of expectations.
For reference, please note that the amount of new orders received in the entire North America segment was around 100 billion yen in the second quarter (three months) of the current fiscal year.
3. You mentioned you are endeavoring to secure huge projects of over 10 billion yen each. Does the amount of over 10 billion represent the size of annual turnover of the target client instead of the size of the project?
The figure of over 10 billion yen means the project size. The business portfolio of the former Dell Services includes many such large projects, like BPO contracts spanning over multiple years.
Q2. The EBITA margin expected for the North America segment in the fiscal year ending March 2018 is 7%. Nevertheless, I think this level of performance is less than satisfactory.
You mentioned it would be your policy direction to raise the level of the EBITA margin in the future. In the medium to long run, what is the approximate level you would be able to raise EBITA margin realistically?
Past data show that the EBITA margin of the former NTT DATA, Inc. was around 10% and that of the former Dell Services was around 7%. Also, we need to take into account the fact that, in terms of revenue size comparison, the former Dell Services was larger and at the same time we can expect certain cost synergies during the PMI process. All in all, we would be able to realize an EBITA margin in the range of 8% through 9% as natural growth from the weighted average in the medium to long run. Needless to say, we would seek further synergies to raise the target level. Nonetheless, raising the EBITA margin is not an easy task to achieve in a short timeframe like six months or one year, so we need to be realistic by setting milestone targets for gradual improvement, while strengthening the corporate basics from a medium-term perspective.
1. Could you tell us the amount of losses affected by unprofitable projects in the first half, in its entire amount, non-consolidated amount, and amount attributable to subsidiaries?
Losses from unprofitable projects in the first half were 3.6 billion yen in total. The non-consolidated figure was around 2.9 billion yen, and subsidiaries reported losses of around 0.6 billion yen.
An almost similar amount of losses was reported from unprofitable projects in the first half of the fiscal year ended March 2017 as well. This is why we see that the losses being reported from unprofitable projects are just within the scope of projection, which means that the said losses are under control toward achieving the profitability target for the full fiscal year.
2. Do you have any items in the portfolio of unprofitable projects that would be prolonged over quite a long span of time?
Unprofitable projects totaled around 7 billion yen in the fiscal year ended March 2017. As for the current fiscal year, although we cannot say that there would be no such losses from unprofitable projects in the second half, we need to control the aggregate of such losses within a certain scope, and we are sure we will be able to achieve the targeted results for the full fiscal year while adequately controlling such losses.
Q1. With the former business segments, corporate expenses on the Japan side were included in the former Global segment. In which new segment did you include corporate expenses on the Japan side?
The basic principle is that corporate expenses are allocated to respective business segments in proportion to net sales. Namely, the expenses are distributed between the North America segment, the EMEA & LATAM segment, and the China & APAC segment included in the Others segment in disclosure.
Q2. I understand that in our business projection, net sales of the North America segment in the second half will be flat or show a slight decrease in substantive terms compared with the previous fiscal year.
Also, I noted that while the actual EBITA margin of the second half of the fiscal year ended March 2017 was around 7%, it would improve to around 8% in the second half of the fiscal year ending March 2018. What are the causes of the improvement?
Regarding the net sales of the North America segment, we do not see it as a decrease.
Since NTT DATA Services has already started its operation in an integrated manner, it is not possible to separate the net sales of the former NTT DATA, Inc. from those of the former Dell Services. Nonetheless, judging from the scale of net sales, we understand that what was achieved in the first half roughly represents the sum total of both companies before the integration in net sales. Further, since we are targeting above that level for the entire fiscal year, we will have to make some more effort in the second half.
Regarding the improvement in the EBITA margin, the first half was the period when PMI processes were pursued. So, we perceive that some clients have been postponing their final decision to place an order with us. Thus, when the first half and the second half are compared, slightly heavier EBITA would need to be realized in the second half.
Notwithstanding this fact, when looking at the performance by sector, the healthcare sector continued to be satisfactory in the EBITA margin in the first half of the current fiscal year. Therefore, with no serious problems at the moment, we would be able to further improve the overall profitability of the North America segment during the second half. Hence, at the current moment in time, the targeted EBITA margin of 7% for the fiscal year ending March 2018 has not been changed.
Q3. The EBITA margin of the EMEA & LATAM segment in the second half of the fiscal year ended March 2017 was only around 2.5%, but it is planned to increase it to around 7% in the second half of the current fiscal year. Could you tell us the positive factors that will support this increase?
On Page 43 through Page 47 of the Company Presentation, you can see an increase or a decrease in the first half over the previous fiscal year in real terms excluding the impact of the unification of accounting periods and the impact of the exchange rate. In terms of new orders received, the EMEA & LATAM segment reported a decrease of 4.2 billion yen. However, if excluding the effect of reactionary decline in the large-scale project with Banc Sabadell in Spain booked in the first half of the fiscal year ended March 2017, the performance actually showed an increase. Also, net sales showed an increase of 19 billion yen. We understand that the segment grew substantively in terms of both new orders received and net sales over the previous fiscal year.
On the other hand, EBITA showed a slight decrease in the first half. This was due primarily to the expenses spent intensively in the first half, or, as examples, employee recruiting expenses needed to cover the expansion of business and selling expenses to secure large-scale projects.
As for the profitability of the second half, we foresee that it would improve, thanks to the contribution of new orders received in the first half to operating income as well as by curbing expenses such as for recruiting.
Q1. As for the performance of the Global Business in the first half, net sales showed good progress against the full-year forecast, whereas the EBITA margin deteriorated over the previous fiscal year. It seems its profitability showed a declining trend. Could you explain why its EBITA margin deteriorated?
As the situation of the North America segment, the acquisition of the former Dell Services closed just around this time last year and our new operation in North America started with the integrated organization in April 2017. Many employees were involved in the PMI process. In line with the business integration, some sales units and delivery units implemented changes in organization. We now have a broad range of business models like BPO, ITO, and AMO, each of which is quite different in profitability. Although it might be usual right after business integration such as this case, it sometimes becomes harder to secure new orders due to difficulties of sales staff moving freely when they needed to devote their time to the PMI process, or there sometimes arises an idling slot for some employees if there is a discrepancy in timing between receiving an order and securing the necessary staff for delivery, all possibly resulting in poorer profitability. It is not attributable to any specific project. We admit that profitability somehow deteriorated in the first half, simply because we prioritized PMI-related matters during the time.
By sector, we have been receiving new orders steadily in the healthcare sector and the federal governmental sector, where there has been no serious problem like the afore-mentioned discrepancy problem. However, there have been some discrepancy cases in the financial sector as well as in the enterprise sector. Please note that, for these cases, too, we have already taken necessary measures. Thus, it is now almost certain that we will be able to receive new orders to be adequately forwarded to the delivery function. As a result, we expect the North America segment to report a margin of around 7% or more in the second half.
As for the EMEA & LATAM segment, the situation is different in each company. Regarding everis, the amount of expenses increased as they needed to hire more employees to prepare for building a full-scale structure for providing the services needed in LATAM. Furthermore, EMEA is in a situation that is conducive to securing new orders, with a pipeline of large-scale projects. Thus, they spent more selling expenses for strengthening sales in order to secure the projects. Due to such incremental expenses, the profitability of the segment somewhat deteriorated, but we expect that they will contribute to improved profitability in the second half.
Q2. As part of the explanation about the situation of the North America segment, you mentioned you are facing downward pressure on pricing in relation to moves among clients toward vendor consolidation, while you also mentioned that they are expanding investment for digital transformation. Is NTT DATA receiving benefits from the trend of expanding investment for digital transformation?
Digital transformation in the U.S. is progressing dynamically, especially in the financial sector. In the U.S., 70 to 80% of SEs are employees of user companies, and they take care of the IT requirements internally, unlike in Japan. The areas not covered internally are the areas where we explore our business opportunities for BPO, ITO, or AMO projects. When the balance between internal coverage and outsourcing visibly changes, that could lead to no placement of orders with us temporarily. In anticipation of such a contingency, we acquired the Carlisle & Gallagher Consulting Group, Inc. (currently called NTT DATA Consulting, Inc.) and made it our subsidiary in the fiscal year ended March 2016. Carlisle & Gallagher was known as an entity quite competitive upstream, such as in consultation. The entity is performing better than we expected. Nonetheless, please note that it will take some more time for them to contribute to the Group in the shape of tangible projects.
1. At the start of the current fiscal year, it was explained that 7 billion yen would be used for investments in new fields. How did you use that amount during the first half? Which accounts (e.g. cost of sales, SG&A expenses, etc.) did you use to book the expenditure? Also, could you tell us your outlook concerning whether the investments totaling 7 billion yen would lead to a decrease in profit for the current fiscal year?
In all viable areas, we are exploring opportunities for investments in new fields. To name a few, we selected automated driving performance on public roads in the Public & Social Infrastructure segment; blockchain in the Financial segment; AI and IoT in the Enterprise & Solutions segment; and modernization of legacy from the mainframe as an innovation in production technology in the fields covered by the Technology and Innovation General Headquarters. In terms of accounting, we used selling expenses, R&D expenses, and so on to book the expenditures. We used around 30% of the planned budget in the first half.
Out of the initiatives of investments in new fields, we have already seen many cases leading to actual new orders received or reaching the PoC stage. Hence, they will contribute to the profitability of the current fiscal year and beyond.
2. Do you mean that the expenses spent as investments in new fields are allocated to the respective segments?
Most of such expenses were booked in the Others segment.
Q2. When the results of the first half are deducted from the full-year forecast, I picture the following: firstly, the performance of the Financial segment and the Enterprise & Solutions segment would deteriorate in the second half; and secondly, contrary to that, the performance of the Public & Social Infrastructure segment as well as the North America and EMEA & LATAM segments would prove significant growth in the second half. Am I correctly interpreting the projection? Would you expect any material situational change in the second half as compared with the first half?
You are right that there are differences in performance between segments as well as between regions. Notwithstanding, we manage our corporate portfolio in its entirety. Based on the actual results of the first half (new orders received and net sales), the situation of personnel resources secured, and the perspective that unprofitable projects could be limited to around the levels of preceding years, we have come to expect that, at the current moment in time for the overall corporation, we would be able to achieve full-year results just as shown in the full-year forecast, if there are no material political and/or economic changes.
Q1. In accordance with the new business segment, could you show the results of the fiscal year ended March 2017 for each of the North America segment and the EMEA & LATAM segment?
In accordance with the new business segment, we disclosed the forecast in the current fiscal year for each of the segments. You can see the figures for the North America segment on Page 17 of the Company Presentation, and the figures for the EMEA & LATAM segment on Page 18. In each of the pages, please refer to the leftmost row, which shows the actual results of the fiscal year ended March 2017 by segment according to the new business segment. Also, on Page 41, you can see the total estimated figure for the equivalent of the former Global segment according to the previous segmentation.
Q2. I understand that, due to the impact of the unification of accounting periods, there were some companies for which the number of months consolidated has increased in the accounting for the first half of the current fiscal year, resulting in slightly swollen figures. As a reactionary decline, the results of the fiscal year ending March 2019 would show somewhat reduced figures accordingly, would they not? Could you also tell us the approximate amount of the impact?
You are right that results of the fiscal year ending March 2019 would decline over the previous fiscal year as affected by the unification of accounting periods. However, the accounting standards will shift to IFRS with the fiscal year ending March 2019. Hence, when comparing with the results of the fiscal year ending March 2019, figures net of the impact of the unification of accounting periods will be disclosed for the fiscal year ending March 2018 as well, enabling you to compare periods based on the same number of months. As for the increase/decrease impact of the unification of accounting periods on the results of the current fiscal year, please refer to Pages 43 through 47 of the Company Presentation.