JGC Holdings Corporation

This is Ntaguchi from the Finance Unit. I would like to provide an outline of financial results. Please turn to slide 4. we have highlighted three key points for the first half of the fiscal year. First, in total engineering business, large-scale projects both in Japan and overseas have been progressing steadily. Although we are faced with challenges with one overseas project, our strengthening EPC and execution framework has helped us to lower overall risk and profitability is gradually improving. Functional materials manufacturing business has maintained stable performance. Reflecting these factors, we have revised our full year earnings forecast upward. Please move on to slide 5, which shows the consolidated income statement. Net sales for the first half of FY2025 were 381.2 billion yen down year-on-year basis. However, gross profit was up 2.9 billion yen to 30.2 billion yen. Profit ratio was 7.9%, up 1.2 points. Operating profit was up 3.3 billion yen to 15.7 billion yen, and ordinary profit was up 1.7 billion yen to 21.1 billion yen. Profit attributable to owners of the parent was down 1.1 billion yen to 11.6 billion yen, mainly due to higher tax expenses. Please turn to slide 6 for segment information. Total engineering business net sales down 27.8 billion yen year-on-year to 350.4 billion yen. As both domestic and overseas large-scale projects were nearing completion, the delay in receiving new orders resulted in lower sales. Segmental profit, however, increased by 3 billion yen to 14.8 billion yen, reflecting the positive effects of strengthened project execution, with the profit margin improving by 1.1 points to 4.2%. Functional materials manufacturing business posted both higher sales and profits compared with the previous year. Sales of catalysts increased thanks to petroleum refining and sales of fine ceramics grew thanks to semiconductor manufacturing equipment. Though profit margin went down slightly due to mainly to deterioration expenses and others, it is still in line with our initial plan.

Page 7 shows the outline of contracts of Total Engineering Business. New contracts in the first half stood at 102 billion yen. The main components were feed for future EPC and preliminary contracts. While EPC contracts with significant value are expected to be awarded in the second half. Page 8 shows outstanding contract. The outstanding contracts as of the end of September were ¥1,113.6 billion. Large-scale projects have been smoothly progressing, generating sales, resulting in a decrease of ¥291 billion from the end of the previous fiscal year. The breakdown by business area and region has not changed significantly from the end of the previous year, and the lineup of major projects remains unchanged. Turning to page 9 for consolidated financial position and cash flows. Total assets increased by 7.5 billion yen from the end of the previous fiscal year to 791.7 billion yen as investment securities rose due to variation gains on stock holdings despite decrease in cash and cash equivalent. Net assets also increased by 20.2 billion yen to 412.5 billion yen mainly reflecting variation gains of stocks with the equity ratio of 51.9%. Operating cash flow was negative 7.5 billion yen mainly due to the payments on large-scale projects in their final stages, and investing cash flow was negative 7.9 billion yen mainly due to the acquisition of property and equipment. Financing cash flow was negative 10.3 billion yen mainly due to dividend payment. As a result, the balance of cash and cash equivalent at the end of September decreased by 51.9 billion yen year-on-year to 304.1 billion yen. Finally, turning to page 11, I will explain the full-year forecast for FY 2025. We revised the forecast upward due to steady progress in project in the total engineering business and the change in the assumed exchange rate from 140 to 145 yen to a dollar. Net sales are revised up by 80 billion yen from the previous forecast to 770 billion yen. Gross profit is up by 7 billion yen to 59 billion yen. Operating profit is up by 7 billion yen to 28 billion yen. Ordinary profit is up by 16 billion yen to 38 billion yen, with foreign exchange gains in non-operating income and loss, and high interest income and dividend income. Profit attributable to owners or parent is up by 13 billion yen to 28 billion yen. The dividend per share remains unchanged at 40 yen. This concludes my presentation on outline.

This is Sato. I will cover business overview. Please turn to slide 4. First, let me explain the current market environment for total engineering business. Overseas, for the realistic transition, demand for transition energy sources, particularly natural gas and LNG, continues to show a medium to long-term growth trend, with plenty of investment plans centering around LNG, and it is progressing steadily. On the other hand, in sustainable fields such as hydrogen, ammonium, and salt, while investment plans do exist, the overall pace of project development has been delayed due to factors such as uncertainty in securing off-takers and weakening project economics. In high-technology industry sectors, in Southeast Asia, investment plans for semiconductor-related facilities and data centers are moving forward. In Japan, like overseas, investment plans in the sustainable area are generally being postponed. Meanwhile, life sciences and food sectors continue to show progress in project planning. In addition, plant maintenance activities, from routine maintenance to large-scale shutdown maintenance, continue to generate stable annual demand. Please turn to slide 5. I will now discuss the order performance for the first half and expected orders for the second half in total engineering business. For this fiscal year, against our order target, 650 billion yen, the first half orders totaled approximately 102 billion yen. Although the progress rate against the full-year target stands at about 15%, as we mentioned at the beginning of the fiscal year, in this fiscal year, major overseas project decisions are expected to be concentrated in the second half. We are therefore actively pursuing business development activities toward achieving our full-year target. Key orders received during the first half are listed on the slide. A notable feature is that we secured multiple feed contracts overseas. These feed projects are expected to lead to large-scale EPC orders in FY2026 and FY2027. By engaging from the feed stage, we can better assess project risks, secure resources, and ensure profitability. In the second half, we are expecting large overseas EPC orders, including Coral North FLNG project in Mozambique and LNG plant expansion project in Papua New Guinea. For the Corolla North FL engine project for Mozambique, our group is currently performing preliminary work. The client made the final investment decision in early October. This joint venture consortium consisting of multiple companies and each is now progressing with the internal procedures toward signing the EPC contract. In Japan, we expect to receive orders for chemical plants and food-related factories, as well as continued steady orders in the maintenance business. Please turn to slide six. Let me now provide an update on the progress of our major and ongoing projects, beginning with the LNG Canada project. In June this year, we achieved the first LNG shipment from Train 1, and on October 30, we successfully completed and handed over Train 2. This project represents one of the largest contracts ever awarded to our group, and since the EPCN contract took effect in October 2018, we have successfully overcome numerous challenges, including the global COVID-19 pandemic, over a period of approximately seven years, culminating in the safe delivery of the facilities to our clients. For this project, our group adopted our unique, innovative, and integrated modular fabrication method. We delivered and installed more than 250 modules at the construction site in Canada. The largest module measured approximately 45 meters wide, approximately 75 meters deep, and approximately 47 meters high. Successfully completing such complex and massive modular structure is something that we believe only our group could achieve, and we have received high appreciation from our client. In addition, regarding the expansion plan currently under consideration by the client, our group and Flowrunner Corporation are now executing a feed update and are working toward securing the EPC contract for the second phase. Please turn to slide 7. Here are updates on our other major ongoing projects. As Taguchi mentioned earlier, overall, both domestic and overseas projects are progressing largely as planned. For the Bastra, we are finally upgrading projects in Iraq. Commissioning work is currently underway, targeting project handover within this fiscal year. As for the chemical plant project in Thailand, for which additional costs were recognized in FY2023, all units have now been completed and operations have commenced under the client's management. Please turn to slide 8. So far, I have focused on our current business conditions. Now I'd like to briefly touch upon mid- to long-term global energy trends. Although not shown on this slide, we continue to see a clear outlook that global energy demand will expand in the medium to long term, driven by the population growth and economic development in emerging and developing countries.

According to Outlook, which was raised by the Institute of Energy Economics Japan last month, global electricity demand will increase 66% in 2050 compared to 2023. Though power generation by solar and wind power generation will increase due to location constraint and cost increase to complement a fluctuation of renewable energy generation, investment for thermal and nuclear energy and other renewable energy will be indispensable. In this overview, as shown on the slide, natural gas and LNG will continue to play important roles as transition energy sources, and their demands will continue to be robust over the medium to long term. Supported by such robust demand, LNG plant, our core business in the group, will have demand for new contraction and expansion, as well as modification of existing plants. including the low-end decarbonization measures such as electrification of new plants and CCS, investments by clients are expected to continue over the mid-to-long term. Please turn to page 9. Regions Targeted for future LNG plant investment are located globally as shown on this slide, with new construction and expansion of existing facilities of onshore and offshore LNG plants. However, depending on LNG demand, the time span varies and not all the plants will be realized. Therefore, we will select the projects that are highly feasible and lead to secure profit while securing internal resources. As one of the few lump-sum EPC contractors with a strong financial foundation in the world, we continue to contribute to stable supply of LNG and a low-end decarbonization society leveraging extensive track record in LNG, high execution capability, and technological expertise. That said, there remain uncertainties over the sustainability of investment for LNG project over the long run and as to whether it will be able to support our profit. So we'll continue to explore the next volume zone to support our profit. Please turn to page 10. This slide shows initiatives for future growth opportunities that were press released recently. Due to time constraints today, I will skip the explanation of each initiative. For more detail, please refer to the press release. In fusion energy sector among them, our group invested in Commonwealth Fusion Systems with other Japanese companies. Based on the technological capabilities that we developed in the nuclear power domain, we are promoting partnership with Kyoto Fusion Earring. Through the investment of VR corporate venture capital, This company has innovative technologies in heating system of nuclear fusion reactor and breathing blanket for heat extraction, and MIRESO, which has low-cost and energy-saving technology for refining fuels for nuclear fusion reactor, as well as cooperation in international project. It is said that fusion energy power generation will be realized in 2040s, but by evolving from the POC phase of various technologies, we'd like to contribute to the early commercialization of fusion energy power generation. Please turn to page 12. I explained the business environment and the outlook of functional materials manufacturing business. Results were already explained by Taguchi. In catalyst business, demand for petroleum refining catalysts overseas remains strong. In fine chemical business, semiconductors and electronics markets show recovery trend, and with customers' production adjustment moving toward the end, demand remains robust across the board for fine chemical products, particularly silica salt. In fine ceramics business, demand for electronic materials-related products increased for generative AI and data centers, but demand for high thermal conductivity silicon nitride substrate for EVs in the United States and European markets showed temporary slowdown. Monitoring the situation closely will develop further for Chinese market where robust demand is sustained. Please turn to page 13. I've explained the progress in capital investment of each functional materials manufacturing business company. In JCC Catalyst and Chemicals Limited, which covers the catalyst and fine chemicals business, consideration of new CapEx plan is progressing toward the catalyst for high-performance chemicals along with the progress in decarbonization and DX, as well as increasing demand for fine chemicals product for high-speed communication. Concurrently, it started to install infrastructure and utility facilities in the business site that was acquired in 2023. In Japan Fine Ceramics Company Limited, which covers fine ceramics business, new plan to respond to demand for higher production of high thermal conductivity silicon nitride substrate was completed, and completion ceremony was held in this July. As mentioned earlier, temporary decline in EV demand started to affect the sales of their silicon nitride substrates. But Chinese market is still robust, and in the mid to long term, global EV demand is expected to recover. In line with the recovery in demand, the new plant will shift to the full operation. This concludes my presentation. Thank you very much for your attention.