Third Quarter of Fiscal Year Ending March 2026 (FY2025-3Q) Script of Financial Results Online Briefing by SCRIPTS Asia

Q3 Financial Results Briefing for the Fiscal Year Ending March 2026 February 12, 2026

(Total: 49 minutes, Presentation: 12 minutes, Q&A: 37 minutes)

Eiji Hosoi Representative Director, President, CEO

Yasuo Miyokawa Director, Senior Executive Officer, CFO

First, let me introduce the participants. Mr. Eiji Hosoi, Representative Director, President, and Chief Executive Officer. Mr. Yasuo Miyokawa, Director, Senior Executive Officer, and CFO, and I am Hashimoto from the Corporate Communications, Investor Relations and Corporate Strategy Division. I will serve as today's moderator. Thank you.

Today's agenda is as follows. President Hosoi will first provide an overview of the contents of timely disclosure released today, after which we will move to a question-and-answer session. Please note that we will not be able to respond to anonymous questions during today's Q&A session. With that, We will begin the presentation. Mr. Hosoi, please go ahead.

Today I will explain the revision to our consolidated earnings forecast announced in connection with our third-quarter results for the fiscal year ending March 2026. The explanation is presented across four slides.

The first slide summarizes the revision to our full-year forecast for FY2025. The second provides a bridge analysis showing the expected change in net income from the previous forecast resented at the time of our second-quarter results. The third explains in detail the deterioration in profitability related to the gas-fired power generation project in Brazil. The fourth outlines our response measures and our outlook going forward.

First, let me walk you through the revision to our full-year forecast for FY2025, shown on this slide.

The earning improvement measures we announced at the time of our Q2 results in November last year, namely, JPY 2.0 billion in cost reductions and JPY 3.0 billion in profit build-up from newly awarded projects,

have progressed broadly as planned. While certain domestic biomass projects have deteriorated, the impact has been largely offset by stronger-then-expected income brought in by an equity-method affiliate.

However, and it is very unfortunate, but based primarily on the current situation surrounding the Brazil gas-fired power generation project, we now expect related losses to reach JPY 20.5 billion. As a result, profit attributable to owners of parent is expected to be a loss of JPY 17.5 billion for 3Q and a loss of JPY 15.0 billion for the full year.

On the top-line side, order intake has already reached our full-year target of JPY 400.0 billion as of 3Q, including equity-method affiliates.

In light of these circumstances, we have decided to suspend a year-end dividend for FY2025, which had initially been expected to be JPY 25 per share. We sincerely apologize for the impact this will have on our shareholders.

I would like to explain the full-year change from our previous forecast using the waterfall chart on this slide. Please stat with the bar on the far left. This represents the full year forecast we presented at the time of our Q2 results: JPY 5.0 billion in profit attributable to owners of parent.

Moving to the next items, we have a negative JPY1.8 billion impact, mainly due to deterioration in certain domestic biomass projects. This is followed by a positive JPY 2.3 billion contribution from improvements in FPSO projects and other factors. Taken together, these items bring the forecast to JPY 5.5 billion.

However, this JPY5.5 billion excludes the impact from Brazil. The additional loss recognized for Brazil after 2Q is JPY 20.5 billion. After reflecting this, our revised full year forecast is a loss of JPY 15 billion.

On the far right, for reference, we also show our initial outlook for the next fiscal year, FY2026, which is JPY

6.0 billion in profit attributable to owners of parent.

I will now explain the deterioration in project economics related to the Brazil gas-fired power generation project, as shown on this slide.

As for the construction status, the project is currently in the commissioning phase. As of Saturday, February 7, progress was 98.9%, and the project is approaching completion.

This power plant project was contracted in July 2022 under lump sum contract. It is located in Para State in northern Brazil, and our scope covers engineering, procurement, construction, and commissioning of gas-fired power plant. The original contract delivery date was July 2025, and the latest expected delivery date is April 2026.

Turning to the background, delays and substantial additional costs arose due to a combination of factors, including matters attributable to the customer. We continued change-order discussions with the customer regarding revisions to the contract price and schedule, including an extension of time (EOT). However, we were unable to reach a final agreement last year, and as a result, we had no choice but to initiate arbitration in July 2025.

Despite these circumstances, the customer has asserted claims for delay-related damages (liquidated damages), and as a result, and has fully suspended, meaning withheld, contract payments since October 2025. This has led to a significant and growing balance of withheld receivables.

We will present our case appropriately in the arbitration proceedings and take all necessary steps to protect our contractual rights. At this stage, we expect the arbitration process to be lengthy, with final resolution likely to take approximately four to five years.

Finally, I would like to explain how we reflected this situation in our Q3 financial statements. There are three key points.

First, given the expected protracted arbitration process and our overall assessment of the customer's financial situation, we reassessed the recoverability of the withheld receivables and the remaining contract balance on