Financial Summary

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

August 9, 2024

Preparation of supplementary material on quarterly financial results: Yes

Holding of quarterly financial results briefing: None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the 3 months ended June 30, 2024 (from April 1, 2024 to June 30, 2024)

2. Cash dividends

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Consolidated financial forecast for the fiscal year ending March 31, 2025 (from April 1, 2024 to March 31, 2025)

Note: Revision from the most recently announced forecast of consolidated business results: None

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1. Qualitative information for the 3 months ended June 30, 2024

1. Information of consolidated business results

During the first quarter under review (April 1 to June 30, 2024), its corporate philosophy, “Clean and comfortable environment for the next generation," the Group facilitated the resolution of social issues through its businesses and continued to work to help establish a sustainable society in the residential environment, resource circulation and energy domains. As for the sales of the ERD division, due to the big drop in the electricity market price, we changed the position to retail electricity, which is more expensive than wholesale electricity, but it did not reach the level of the previous quarter. In addition, the regular maintenance and repair of the Tomakomai power plant was carried out from March to April 2023 in the first quarter of previous period, but from April to May 2024 in the current period. For this reason, the number of working and operation days decreased from the previous quarter and net sales (down 14.1% year-on-year). As a result, the group's consolidated net sales amounted to ¥10,288 million (down 7.1% year-on-year).

The Group's consolidated profit included operating loss of ¥116 million (operating profit of ¥154 million in the same period of the previous fiscal year), ordinary loss of ¥185 million (ordinary profit of ¥73 million in the same period of the previous fiscal year) and loss attributable to owners of parent of ¥255 million (profit attributable to owners of parent of ¥63 million in the same period of the previous fiscal year) due in part to decreased revenue by big drop in the electricity market price, and maintenance and repair expenses in conjunction with the Tomakomai power plant in April and May 2024.

The consolidated results of the individual segment for the first quarter under review were as follows:

a. HS (Home Sanitation) Division

The HS Division continued to strengthen its sales policy with a focus on the development of new customers as in the previous year while also accelerating initiatives with an eye toward the enhancement of its customer foundation. As a result, net sales came to ¥3,182 million (up 5.1% year-on-year), “Underfloor / attic ventilation system" increased 1.6% year-on-year and “Foundation repair/ home reinforcement system” increased 0.2% year-on-year, although decrease of 1.9% in “Termite control construction” due to an increase in the number of contracts with new customers.

Operating profit increased 18.3% year-on-year to ¥526 million because of reducing fixed costs such as sales and general administrative expenses in addition to the increase in sales from the same period of the previous year.

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b. ES (Establishment Sanitation) Division

The ES Division has been strengthening its relationships with owners of buildings and condominiums and affiliates such as property management companies. While net sales for “Anti-rust equipment installation (product name: Daelman Shock)” increased 5.9% year-on- year, “Waterproofing and renovation of buildings” increased 6.1% year-on-year, and net sales for “Water supply and drainage repairs” rose 1.5% year-on-year. As a result, net sales for the segment totaled ¥636 million (up 2.9% year-on-year).

Operating loss stood at ¥13 million (operating loss of ¥10 million in the same period of the previous year) because of reducing fixed costs such as sales and general administrative expenses in addition to the increase in revenue from the same period last year.

c. SE (Solar Engineering) Division

The SE Division focused on the sale of photovoltaic power generation systems developed specifically for detached houses. As a result, net sales in this segment came to ¥294 million (up 0.5% year-on-year).

Operating loss totaled ¥18 million (operating loss of ¥33 million in the same period of the previous fiscal year), reflecting efforts to improve profitability.

d. PV (Photovoltaic) Division

The PV Division focused mainly on the sale and construction of self-consumption type photovoltaic power generation systems for corporate use, the provision of the PPA services to local governments and the sale of photovoltaic power generation systems with land, as well as replacement of devices and maintenance for existing photovoltaic power generation systems. In the first quarter of this fiscal year, net sales came to ¥1,760 million (down 14.7% year-on-year) due to delays in the connect with each electric power companies, in addition, longer duration from order receiving to construction due to increased size and added value, etc.

Operating loss came to ¥76 million (operating loss of ¥41 million in the same period of the previous fiscal year) due to a decrease in revenue from the same period last year, although the gross margin has improved because a decrease in material costs.

e. PPS (Power Producer and Supplier) Division

The PPS Division has been reducing its business since last year, considering that maintaining profit is difficult due to a rise in the cost of electricity procurement. As a result, net sales in this segment decreased to ¥554 million (down 5.0% year-on-year).

Operating profit stood at ¥39 million (up 19.9% year-on-year), reflecting improved profitability

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although decrease revenue.

f. ERD (Environmental Resources Development) Division

In the ERD Division, “Plastic fuel” sales increased 6.3% year-on-year, sales for “Waste liquid treatment” increased 9.5% year-on-year, and “Landfill” sales increased 16.5% year-on-year. On the other hand, However, due to the big drop in the electricity market price at Tomakomai Power plant, we changed the position to retail electricity, which is more expensive than wholesale electricity, but it did not reach level of the previous quarter. In addition, the regular maintenance and repair of the Tomakomai power plant was carried out from March to April 2023 in the first quarter of previous period, but from April to May 2024 in the current period. For this reason, the number of working and operation days decreased by 69.1% year-on- year. As a result, net sales in this segment increased to ¥3,861 million (down 14.1% year-on- year).

Operating profit for the segment amounted to ¥149 million (down 69.8% year-on-year) due to the recording of repair expenses of legally required inspection of the Tomakomai power plant.

(2) Information of consolidated financial position

Total assets at the end of the consolidated accounting period in the first quarter amounted to ¥38,041 million, increased ¥1,076 million from the FY2023(end of the previous consolidated fiscal year). The total liabilities amounted to ¥29,381 million, increased ¥1,327 million from FY2023. Net assets totaled ¥8,660 million, decreased ¥251 million from FY2023. As a result, the capital adequacy ratio stood 22.7% (24.1% at the end of the FY2023).

(Assets)

Current assets at the end of the first quarter under review amounted to ¥16,137 million, decrease of ¥74 million from FY2023. This was caused chiefly by a rise in accounts receivable increased the amount of “other current assets” by 1,031 million, but the amount of accounts receivable decreased by ¥1,231 million.

Fixed assets were ¥21,904 million, increased ¥1,150 million from FY2023. The major factors include increases of ¥1,139 million in “machinery, equipment and vehicles (net)”.

(Liabilities)

Current liabilities at the end of the first quarter under review amounted to ¥18,399 million, increase of ¥389 million from FY2023. The primary factors for the increase of ¥1,030 million in “accounts payable”, which more than offset a decrease of ¥231 million in “notes and accounts payable – trade” and decrease ¥545 million in “income taxes payable”.

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Non-current liabilities totaled ¥10,981 million at the end of the period, increased ¥938 million from the end of the FY2023. The key factor was the increase in “long-term outstanding payments”, resulting in an increase of ¥879 million in “other fixed liabilities”.

(Net assets)

Net assets totaled ¥8,660 million, down ¥251 million from the end of the FY2023. The main reason is that it recorded a quarterly net loss of ¥255 million attributable to owners of parent.

(3) Information on the outlook, including the forecasts of consolidated business results

Consolidated results forecasts for the fiscal year ending March 31, 2025, there is no change in

the consolidated results forecasts announced on May 15, 2024.

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2. Quarterly consolidated financial statements and the primary notes for the 3 months ended June 30, 2024

1. Quarterly consolidated balance sheets

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