hitachi8217s-hthiy-ceo-toshiaki-higashihara-presents-at-meeting-for-the-suspension-of-uk-nuclear-power-stations-construction-project-8211-transcript

Hitachi’s (HTHIY) CEO Toshiaki Higashihara Presents at Meeting for the Suspension of UK Nuclear Power Stations Construction Project – Transcript

Hitachi, Ltd. (OTCPK:HTHIY) Meeting for the Suspension of UK Nuclear Power Stations Construction Project January 17, 2016 5:00 AM ET

Company Participants

Toshiaki Higashihara – President and Chief Executive Officer

Conference Call Participants

Operator

The time has come to start the meeting for the Suspension of the UK Nuclear Power Stations Construction Project for Hitachi Limited. Thank you very much for attending this meeting despite your very busy schedules. First of all, I would like to introduce the speakers for today. Toshiaki Higashihara, President and CEO.

I would like to ask Mr. Higashihara to make his comments.

Toshiaki Higashihara

Ladies and gentlemen, thank you very much for attending this meeting despite your busy schedules. I would like to report that at the Board of Directors Meeting here today, we decided to suspend our new Nuclear Power Stations Project in the UK. Since Hitachi acquired Horizon Nuclear Power Limited in 2012, we have been making upmost efforts to supply clean energy, which does not emit CO2 by constructing nuclear power stations with two units of ABWR, Advanced Boiling Water Reactor, which complies with the UK regulations and cost requirements, the reactor which has an extensive construction and operation track record in Japan.

In 2017, ABWR for UK was technologically certified by receiving GDA, Generic Design Assessment of people from the UK Regulatory Authority. In 2018, we have officially held discussions with the UK government over the establishing the financial structure. We are extremely grateful for the UK government’s various support and proposals and the Japanese government’s cooperation during this time. However, Hitachi has decided to suspend the project from the viewpoint of its economic rationality as a private enterprise as it is now clear that more time than anticipated is needed to reach an agreement with the UK government.

As a result of this decision, we plan to revise our full year consolidated business forecast for fiscal 2018 as described in the news release. However, we judged that by owning the decision. We would back up further associated costs. Therefore, we decided to suspend the project early on in 2019 to avoid accounting further risks into the future.

In the meantime, I believe that through the various growth initiatives implemented to-date, Hitachi as a whole has gained the strength to steadily generate profits. We are making best efforts to achieve the 8% adjusted operating income ratio target under the 2018 mid-term management plan as promised. At present, we expect to be able to maintain a positive net income even after reporting at our latest calls and are continuing to financial soundness is also insured.

We are therefore going ahead as planned with investments for future growth in the social innovation business, including the acquisition of the power grids business of ABB announced earlier. Regarding dividends, the final decision will be made by resolution of the Board of Directors at the time of the statement of financial results for the year ending March 31, 2019. However, we intend to exclude the impact of the Horizon Project impairment.

Hitachi will continue accelerating initiatives for further growth, including the next mid-term management plan that is currently being drawn up. I would like to ask for your continued support going forward. With this, I would like to end my opening remarks. We would now like to move to Q&A. We will also have Toshikazu Nishino, Executive Vice President and Executive Officer; as well as Mitsuaki Nishiyama, Senior Vice President and Executive Officer, CFO, to respond to questions. The floor is now open for questions.

Question-and-Answer Session

Operator

We will take one question each. The floor is now open.

Unidentified Analyst

Question, first of all, what is the reason for the suspension of the project, their submission was provided that time will be required to reach agreement, but regarding the financing from the private sector inclusive of utilities have this also being affective for the suspension?

Toshiaki Higashihara

Answer, the negotiating party for us is the UK government. Therefore, the economic rationality that we have been pursuing is as a private sector company by pursuing this project. So we must be able to obtain appropriate level of the project. And we must also take the Horizon of the balance sheet. It has to be separated in the balance sheet. Furthermore, we had to the ¥300 billion will be the impairment to be posted. And therefore, we want to limit the investment amount to this level. And that is the reason why we have decided to suspend at this time.

Unidentified Analyst

Question, is that – can we understand that the lack of financing was also the issue?

Toshiaki Higashihara

Answer, our negotiating party is the UK government, the UK government has been making evidence in terms of financing and we appreciate the efforts of the UK government. However, in reality so far financing team has not been established. Based on this, we cannot to defer the decision making any longer, because the financing team with economic rationality cannot be established yet. That is the reason why we have decided to suspend.

Now, I understand that ¥2 trillion to ¥3 trillion is because of the safety measures in terms of the cost overrun

Toshiaki Higashihara

Answer, the amount is still an estimate. I understand the reporting that is you made about with further evaluation going forward as the financial amount will be decided. Therefore, it isn’t as if we have disclosed those numbers that you’ve stated.

Unidentified Analyst

Question, are you going to make contribution to the UK energy sector going forward?

Toshiaki Higashihara

Answer, ABB power grid business has been acquired. The UK is focused on wind power generation. And therefore in terms of the power grid and we can provide the support to the UK in this direction, we will continue our efforts going forward.

Unidentified Analyst

Question, my question is that at the moment, as you have mentioned the finance scheme, the British government, would you guys still financing, just supposed to establish with skiing and provided to Hitachi. Is that a menial finance scheme? So what was your assumption in more specific terms?

Toshiaki Higashihara

Answer, so there’s counterparty, so I cannot talk about the details. But from our position, the development investments that we have paid, if we continue with that to prepare for the construction further cost will be required. And as a private enterprise, Hitachi, there’s a limit of how much cost we can bear. So we wouldn’t – we discussed that we want them to consider the cost burden that we have to bear. And as for the business scheme, there is a strike price that is to be decided. And there is a fixed amount, fixed price to purchase the power, we went to have the whole scheme considered, I talked about economic rationality. And one point is that the scheme should be off balance and does not exceed the scope of investments as a private enterprise and there must to be appropriate profit. Is it possible to have such a finance scheme? We discussed about these three points.

Unidentified Analyst

Question related to that. Under the current British administration, they are facing Brexit and I think is the government is facing difficulties. So to provide such finance scheme, since the government is a stable situation, there are risks that the administration might change. So the current situation of British government is that affecting your decision.

Toshiaki Higashihara

Answer, these decisions that have had made and the current turmoil related to Brexit are totally unrelated. That is not influencing our decision.

Unidentified Analyst

Question, I have one more question. In acquiring Horizon ¥88.9 billion was the investment and ¥200 billion is the last. So there is a gap between the two. So in what areas due the loss generate?

Toshiaki Higashihara

Answer, ¥88.9 billion was the amount when we acquired in 2012, after that, as I have mentioned, the British ABWR to develop the British type ABWR enduring cost necessary, which is about ¥280 billion. So there’s a development cost and acquisition costs included, which is about ¥280 billion. And for the minimum maintenance required going forward would it be ¥20 billion? So in total, we assumed about ¥300 billion.

Unidentified Analyst

Question, I have two questions, one by one. You said that, this is going to be suspended. Now, what is the meaning of suspension? Please clarify. Is there a possibility that it will be revived going forward? If that is the case, what will be the conditions are allowing the resumption of the project? Even in the absence of revival, if it’s going to be a permanent withdrawal, there is a possibility of liquidation of the Horizon. Please comment.

Toshiaki Higashihara

Answer, regarding the meaning of suspension that means that we will not make incremental investments. As a project, we must make sure there is a reasonable return. We must make the project to off balance sheet and ¥280 billion has been invested, but we do not want to increase this further. And this is the criteria for the rationality. If this is the company and the new scheme can be presented by the UK government, if that is the case, we may lift the suspension, it maybe revived. However, the timeframe is not clear for this to happen. Therefore, we will maintain Horizon in the minimum organization in terms of maintenance, we shall continue in that regard. In fact if it is to be resumed, obviously will depend on the timeframe but further cost and time will be required. Therefore, it is to be resumed several years down the road on a zero base, so we have to consider the process as well the costs required, it will have to be revisited.

Unidentified Analyst

You are saying that this is going to end and if it is to be resumed it will be from scratch.

Toshiaki Higashihara

It is to be consider as investment.

Unidentified Analyst

You said that there you have reached on limit in terms of investment amount acceptable by private enterprise and what about the thermal power as well and there is downward division that has been named and from next fiscal year new plan will be introduced. In terms of corporate management what is your intention in this regard? What is the current phase?

Toshiaki Higashihara

To this question, we have to make further breakthrough. In terms of project, it is proceeding very well. And by 2020 – in the middle of 2020 it is likely that the project outlook will be clear, but we have to also discuss the sharing of the cost. And currently we are in the stage of arbitration therefore I cannot divulge the content thereof. But in terms of the costs we incurred we have more clarity that is all I can say. Thank you.

Unidentified Analyst

Now with this the Turkish project the Mitsubishi industry is also facing difficulties so in Japan overseas there are no new constructions. Then in Japan nuclear technology resources how was this being maintained like other future prospects. And people often say that the manufacturers should be integrated, so what are your views about it.

Toshiaki Higashihara

I believe that is a very important issue. The Horizon Project being suspended then how much nuclear thermal resources should be secured in what way, that is very important. And I believe that is very important issue for us. So at an early stage, we hope we can establish a direction. And in Japan we start off nuclear power plants and decommissioning our areas is that a lot of work is required. Nuclear power plants construction to plan for it and to design and to proceed the upstream human resources will be in shortage.

And Horizon Project it was a way of breaking through, but now as we decided to suspend human resources issues will come up again. And as you have mentioned, other – together with other Japanese manufacturers, how should we secure human resources? I think there must be more discussions about it. But looking at the situation in Japan for nuclear power generation, via installation, which we are not yet able to make it positive views about nuclear power generation. So nuclear power generation issue is not just a matter of restart of operations. But in terms of stable supply of energy or energy security, safety of power generation and environmental issues like the CO2, the question of supply and demand. What is the best mix of energy? I think that including the Japanese people, we should have a initial way to discussion about it and based on that, I hope we could have discussions on what about our engineers.

Unidentified Analyst

And about integration, what are your views about it?

Toshiaki Higashihara

Many people talk about integration but there’s nothing decided yet. Next question, please.

Unidentified Analyst

I have two short questions, if you said that on a general basis your plan going to be revisited. Why do you not want to withdraw completely because having the organization remain will mean there could be risk, there could be an extra cost.

Toshiaki Higashihara

To the UK government, we have a conveyed that we are going to stop or suspend the investment, but the door is still open and through negotiations going forward, we will determine the direction going forward. Therefore at this juncture it is a suspension. We have to consider the position of the counterparty as well. Therefore, we are not withdrawing. That is not what we are conveying to them.

Unidentified Analyst

Depending on the negotiations with the UK government there’s possibility of a complete withdrawal

Toshiaki Higashihara

It will depends on the direction for the negotiation. That is one possibility.

Unidentified Analyst

When will it be decided?

Toshiaki Higashihara

It’ll depend on the negotiation. We are not going to set a timeframe that would be very difficult to do. In the appropriate timeframe, we will make a decision based on economic rationality.

Unidentified Analyst

So there is no deadline.

Toshiaki Higashihara

There is no deadline yet.

Unidentified Analyst

You have made the acquisition in 2012 and significant loss will be incurred and it just becomes standard as management. So where was the mistake made or what lessons have you learned?

Toshiaki Higashihara

In 2012, we have made the acquisition of Horizon. In 2013, EDF Hinkley point strike price was a €92.5 per megawatt-hour. I cannot say the name, but there were some inquiries regarding investment. Therefore, we felt that this will be a viable business, project for us. That is the reason why have been doing this. And in 2017, we have received the GDA and therefore the design was approved and that is when we started negotiation. At that time, compared to 2012 and 2013 to 2018 in terms of the wind power generation strike price was around £70 plus. Therefore, the environment has changed significantly in the two to three years that I’ve mentioned.

On the path of management, we have set milestones and we have acquired the GDA. And we are incurring a loss this time a lot going forward. If the asset can be utilized, we will be able to post profit once again. Therefore, we have to set milestones. And therefore up until 2017 we pursued the approval of the GDA. And from 2018, inclusive of financing, there was full-fledged negotiations taking place. But the situation has changed significantly over time. Therefore, in each milestone management decision will be made. In 2018, on many occasions that we have evaluated the progress, we have sensed the possibility of the suspension at that timeframe as well.

Therefore, at 2019 today, to suspend the project is not a mistake made by management. And it is true that there is a ¥300 billion loss incurred, this is very significant. But we have been making timely decision making dealing with the changing environment. And the management has made the decision based on corporate governance, appropriate measures have been made.

Unidentified Analyst

So we were seeing recording with the changing environment. The market for nuclear power has been shrinking. Does that mean that your power system business will decline going forward?

Toshiaki Higashihara

No, that is not the case. As a private sector company, economic rationality is very important. So we have made a decision on the Horizon Project. And therefore, it isn't as if we have made economic rational decision in terms of nuclear power plant business overall. And I think there should be a very comprehensive discussion made inclusive of Japanese people and the feasibility of the energy should be subject to discussion. And in that context we should decide the direction for nuclear power generation going forward.

Unidentified Analyst

And so you will be considering the possibilities going forward?

Toshiaki Higashihara

We will be also considering nuclear power plant construction, as well as the decommissioning of nuclear power plants as well.

Unidentified Analyst

I have a few questions. My first question is as amount of ¥200 billion of loss is very large. Is it better if there were no such losses? But some cost of ¥200 billion, they are posted as loss and from the media’s point of view, for instance, Chairman, Nakanishi has indicated and of course it means the government's nuclear policy, no matter how much if you touches that he will make a judgment based on economic rationality. There are concerns that you may not be able to make a decision of withdrawing, but you were able to make that decision and why is it and what are the discussions as per Board meetings that you have today, there were agreements and objections?

Toshiaki Higashihara

As far as the content of the Board meeting I cannot disclose the details. But the judgment of suspension was a result of agreement at the Board meeting. So it's not a matter we’re an individual or some outside organization. As a private sector company, Hitachi’s Board meeting, this decision was made. So it doesn't mean that there would be any pressure from outside and that we would be turning to different for you guys for making decisions, that's just not the case.

Unidentified Analyst

As you have mentioned in the previous question, there were milestones. But why weren’t you able to make the decision of withdrawing earlier and I understand you were able to make such decisions but it is 2019, the original date that you have decided why is it?

Toshiaki Higashihara

GDA, the Generic Design Assessment unless we get this approval assessing would be in the middle of a way. We will not be able to keep the assets because we got the GDA. As the British ABWR there’ll be asset value. It's not subject to environment loss, but in the future if a British ABWR is revived, then this will be an asset. So we believe that we had to follow the milestone. And after that we move to the decision based on the financing scheme.

Unidentified Analyst

So as a result of financing scheme, you tried many ways, but recently you found out that it is not possible.

Toshiaki Higashihara

Yes.

Unidentified Analyst

With regards to integration, you mentioned that this has been discussed in many places but there's nothing decided. Of course it's not decided, but it’s also true that many people talk about it and some people recognize it. In general terms, am I right to understand that you are not denying necessity?

Toshiaki Higashihara

Including security around resources is there such talks I would like to discuss about it.

Unidentified Analyst

I think that is something in common. Integration and consolidation is something that has been discussed for the last ten years, but what is it that the discussion is not proceeding? What sort of issues that should be cleared to be able to talk about it?

Toshiaki Higashihara

That is up to the intention of each manufacturer. So there's nothing I can say about it as Hitachi, or as my view to secure some of our resources in the future. To improve construction efficiency, I believe there must be more discussions about it. But I cannot say anything about the views of other manufacturers. Next question please.

Unidentified Analyst

I have two questions. So what I would like to ask is as one private sector company, Hitachi what is the risk of Hitachi pursuing a nuclear power plant construction, has it been increasing in terms of risk? And you said that there is still enthusiasm going forward, but what will be the scope of your business going forward?

Toshiaki Higashihara

Regarding the UK Horizon Project we are going to suspend the project. Therefore for the coming several years we will be focused on restart of nuclear power plants in Japan, as well as the decommissioning. And through the negotiations with the UK Government we shall consider what kind of financing schemes will be given to them, but for the time being we will be focused on [Audio Gap] business.

Unidentified Analyst

Question I have, in terms of nuclear power plant technology globally China and Russia are emerging. And UK has decided Hitachi to be partners with. That means that there is high expectations regarding nuclear power plant technology of Japan. But there is a public opinion in Japan as well. On the project Hitachi how will you maintain the global class technology in nuclear power plant technology going forward?

Toshiaki Higashihara

So GDA has been approved in several areas. This is because our track record has been evaluated very highly. Therefore our technology is evaluated very highly. But it's a project that takes 50 years inclusive of the construction for a long-term project. How the financing scheme can be established is a separate discussion to be had. But in terms of technology we have been evaluated very highly. And we have – seem to have a world-class technology.

Unidentified Analyst

It's a project that will stand for decades. On the part of the Hitachi, is a private sector company. If you were to pursue such a project, whether it be in Japan or overseas inclusive financing. The involvement of the government in the absence of the public schemes, would it be impossible for private sectors to pursue on such a project or is that will it depend on conditions?

Toshiaki Higashihara

The Japanese nuclear power generation was established based on the utility so strong base. But Horizon is different because they have continued doing the power generation business. Therefore we have to establish our financing team from zero – from scratch, which was more challenging for us.

Unidentified Analyst

I have two questions. So I think you're coming to the decision of suspension to the British government, what is their reaction? And secondly, in the future for Horizon, you said, you would consider withdrawal. So would you consider selling or liquidating Horizon?

Toshiaki Higashihara

With regards to British government in making a decision of suspension, we have – I understand we have received their understanding about it. Until now we had very sincere discussions and proposals of our financing scheme from the British government and we had discussions so far. So this is not matching the economic rationality of a private sector company and I think they understood the reason as far as selling Horizon. We will consider the timing and if it is necessarily we would consider seven as one of the possibilities. I would like to ask you to continue your questions to one each. Next question please.

Unidentified Analyst

Regarding nuclear power generation, after 2011, they have many, many cases of failures even though project has been pursued, whether be Westinghouse or Bechtel in this project has withdrawn. So it seems that in pursuing projects, economic rationality for nuclear power business as an industry is not as successful by any private sector companies, what is the bottleneck you have identified and in the timeframe of 10 years and 20 years? What is the future viability of the nuclear power plant industry? What is the challenge? What is the difficulty in this area?

Toshiaki Higashihara

For the project that you’ve mentioned, it is not – it was challenged not only just for one reason. In the case of Horizon project, in terms of design as well as approval, we have completed the process. And in going into the construction process, so we were not able to obtain the financing scheme in place. There are also other projects where incremental cost was incurred in the construction phase. So the reasons differ from one project to another, but the significant cost is incurred over a long period of time and that is common to all the projects, several trillions of yen. How this significant amount that can be secured? And how it can be allocated to the process, the scheme thereof will be the most significant challenge.

Unidentified Analyst

In establishing the financing scheme of where the technical issues that you faced?

Toshiaki Higashihara

Regarding nuclear power plant technology, there were no major problems.

Unidentified Analyst

From the equity market, governance is being mentioned, so it was a high risk project, but your company has continued to pursue this project. And this is the final result of this project. You said that you cannot talk about what was discussed in the board meeting, but in general governance, you said that the final decision will be made in 2019. Why could you not exercise the decision making? Why did it come to at this juncture to make the decision?

Toshiaki Higashihara

At the 2018, the financing model was being discussed and during this process, I cannot talk about the specific timing but we have set a milestone of when to suspend if financing scheme was not made available. The original plan was within 2019 a decision will be made, that was the original plan. However, we felt that the decision must be expedited and that is the reason why we have expedited the decision to the very early months of the 2019. So we have set milestones for suspension, phase-gate had been set beforehand. And according to the governance rules we have come to the decision of suspension at January of 2019.

Unidentified Analyst

In terms of your governance scheme, we would like to have being privy to that, I know that…

Toshiaki Higashihara

We have to consider the counterparty. We cannot disclose such information, which it was impossible for us to disclose such information.

Unidentified Analyst

You said that for meanwhile you will focus on domestic nuclear power plants. Other countries excluding the UK, do you have any plans for nuclear power plants? Do you mean that you’re having intention pursuing other countries?

Toshiaki Higashihara

At the moment, we don't – we’re not pursuing accelerating our process.

Unidentified Analyst

At times of constructing nuclear power plants overseas, what type of difficulties compared to Japan?

Toshiaki Higashihara

for Japan, as it has been seen, the power utilities have a very strong leadership in leading constructions. But in foreign countries, manufacturers and consortium organizations, would be leading the project in many cases, so that is a major difference in terms of project management.

Unidentified Analyst

regarding nuclear power plant business, please talk about the future outlook going forward, domestically as the recent and decommissioning will be your major focus according to what you’ve said. There could be new builds as well. in terms of new builds, what about new reactor development?

Toshiaki Higashihara

If you’re talking about new reactor, there is SMR, small modular reactor. So SMR is being developed. But this will also incur costs. therefore, how we can collaborate with other companies will have to be considered and we are in the process of considering the development of such technologies.

Unidentified Analyst

Are you making progress yet?

Toshiaki Higashihara

With GE, GE-Hitachi, we have established a joint venture company and in that entity, we are making progress in terms of development.

Unidentified Analyst

I have three brief questions. You said suspension and you consulted with the British government. And you said, you wanted to wait for their financing review and the British government can make loans, but cannot provide investments, but seems to be tough for private sector is also to make investments. And we don’t know what would be the price to purchase. And under such situation from your position, even it’d be difficult to disclose the details. But at Hitachi, what are the changes necessarily to be able to expect the restart of developments?

Toshiaki Higashihara

I mentioned three points; one is that as a business, as a project, the project must be profitable. And number two, Horizon Project is owned 100% by Hitachi. And it must be off a balance sheet at least below 50% to be excluded from consolidation. And number three, we made $200 billion investment for development if you are to proceed furthermore. We must order some reactor vessels in advance or site license, the loafer [ph] site construction license must be acquired. So, this will require future additional costs.

So before making investment decisions, the economic rationality must be considered. The three points I mentioned instead of the manufacturer bearing all of the investment costs, which is the finance scheme. The scheme must be able to absorb those costs; otherwise it’s not possible to move to the construction stage.

Unidentified Analyst

We’ve seen the finance scheme. What was the factor that would measure for you?

Toshiaki Higashihara

to make it off the balance sheet, by doing so, there will be more investors to be able to make decisions. And as a project, it will become attractive, so whether disposable to put off balance or not is a question.

Unidentified Analyst

At the moment, you’re considering possibilities of withdrawal or to restart that. Which has the larger possibility?

Toshiaki Higashihara

It’s a very difficult question. We will be discussing with the UK government to decide our direction. So, it’s often negotiations are still which side we’re going to move.

Unidentified Analyst

So, you’re going to minimize that as a Horizon or consider sales and would use the human resources. Do you have any timeframe?

Toshiaki Higashihara

We want to be able to do so as soon as possible, because we want to minimize costs. And in parallel, we want to move forward with the negotiations.

Unidentified Analyst

So, the possibility of selling is also open. Is there any proposal you’re prepared to discuss?

Toshiaki Higashihara

Yes. Next question please.

Unidentified Analyst

You have been mentioning that you will be focused on decommissioning as well as other domestic business. regarding decommissioning, this is something that will take decades. That would be the end of it. And our new builds are not being approved by the government yet. So do you think the business lacks the future? Against this backdrop, what can be pursued by a private sector company?

Toshiaki Higashihara

We have been involved in nuclear power plant business for a very long time. So, we start as well as decommissioning work will be a major focus for us. But beyond that, we want to – in order to develop the nuclear power business going forward, do we have to have the discussions with the Japanese people in terms of the environment as well as the stable supply of power as well. And what is the possibility of the renewable energies? One, it can be supplemented by nuclear power plant and using the thermal power, which it will emit CO2. So, there was more discussions to be had in this area in deciding the direction for a nuclear power plant business going forward because we are committed to tune resulting the social issues.

Unidentified Analyst

Regarding – and there’s some issues regarding safety after 3/11, that is the reason why industrial governments are not giving the green light. How can you resolve this?

Toshiaki Higashihara

You talked about it. Energy security is also very important, so we have to consider this. Renewable energies are not going to suffice. If they can cover all our energy needs, nuclear power plant may not be necessarily. But my personal view is that there is a limit to renewable energy power generation; therefore, with 3/11 we have learned lessons and safer nuclear power plant should be developed. And with the reset of the nuclear power plants that have been suspended, we can provide power at lower price. So that is the direction that should be pursued.

Unidentified Analyst

you mentioned is that, so you have said [indiscernible] milestone until today and my concern is that that was communicated also to the UK government?

Toshiaki Higashihara

yes, we’re proceeding on discussions talking about it.

Unidentified Analyst

unless you get the GDA, you cannot keep the asset. And you made the impairment now, but does it mean that there’ll be some off balance sheet asset remaining?

Toshiaki Higashihara

Impairment means that, well, $280 million is not cash out, $20 billion may be the cash out, but that must be settle more peer. Is there someone who wants to have GDA writing the future? This will lead to value and in that occasion, we can organize a profit as well more additional counterparty for that now. So, these are putting to zero as an impairment, but in the future, there is anyone who would like to buy. Then if you can sell, this will create value and doesn’t lead to profit. but if we don’t sell GDA, if there is nothing, then all we can do is to discard with the assets.

Unidentified Analyst

So that could be – that impairment could be sold at a price below $300 billion?

Toshiaki Higashihara

I don’t know, it depends on who is buying.

Unidentified Analyst

What’s the breakdown of impairment? $88.9 billion was Horizon equity and the development cost?

Toshiaki Higashihara

Yes.

Unidentified Analyst

You said you need a discussion among all the people. As a result of the discussion -- if a discussion conclusion was that’s something that you expected, did you mean that you will have to follow that discussion?

Toshiaki Higashihara

Even without having the discussion, there’s no meaning in talking about what would be the conclusion. There must be discussions of pros and cons. And we have to listen to views from many different peoples. There’s no meaning making judgment base of assumptions.

Unidentified Analyst

do you mean discussion within our Japanese people?

Toshiaki Higashihara

Yes. There must be discussions with our Japanese people and also globally, the organizations like IEA to discuss about this subject.

Operator

So, we’ll take the last question now.

Unidentified Analyst

You had mentioned that the project will be taken off balance. And regarding ABWR [indiscernible] power company names have been floated. How much have you discussed this? You’re talking about the investment by power utilities?

Toshiaki Higashihara

We have explained the status of the project. But I have never requested the investment to be made by the utilities. So, on the part of Hitachi, our counterparty is the UK government in terms of negotiations. So, the financing scene was discussed with the UK government accordingly advantage to the Japanese power utility. So we are explaining at the status of the Project Horizon, but I have never requested any investment from them.

Unidentified Analyst

Projects like the companies to pursue nuclear power plant business overseas, it seems very difficult, but the government is still trying to promote this export. What do you think of the government’s sense?

Toshiaki Higashihara

We don’t know what kind of nuclear power plant export will be possible. But if conditions are right, going forward, we will consider such a project about for the time being. And such projects have not come to the floor. And therefore, there is nothing for me to say at this point in time.

Toshiaki Higashihara

With this we’d like to bring this meeting to a close. Thank you very much for your attention. Thank you very much for staying with us until very late at night. Thank you.

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