MITSUI E&S : Notice Regarding Recording of Prior Service Costs (Gain) in Consolidated and Non-Consolidated Results, etc.

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.

	May 14, 2024
Company name:	MITSUI E&S Co., Ltd.
Name of representative:	Takeyuki Takahashi, President,
	Representative Director, and CEO
	(Securities code: 7003, TSE Prime Market)
Inquiries:	Kazuo Hayashi, General Manager of
	Accounting Dept.
	(TEL: [phone])

Notice Regarding Recording of Prior Service Costs (Gain) in Consolidated and Non-

Consolidated Results, Recording of Share of Profit of Entities Accounted for Using Equity

Method and Deferred Tax Assets in Consolidated Results, and Differences between

Consolidated Forecasts and Actual Results for the Current Fiscal Year Ended March 31, 2024

MITSUI E&S Co., Ltd. (the "Company") hereby announces that the Company has recorded prior service costs (gain) in its consolidated and non-consolidated financial results for the current fiscal year ended March 31, 2024. Also, the Company announces the recording of share of profit of entities accounted for using equity method and deferred tax assets in its consolidated financial results, and the differences between its consolidated forecasts and actual results for the current fiscal year.

1. Recording of prior service costs in consolidated and non-consolidated financial results
   Effective April 1, 2024, the Company has made changes to its retirement benefit system in conjunction with the extension of the retirement age from 60 to 65. As a result of this change, the retirement benefit obligation decreased by 2.5 billion yen, and of the 2.0 billion yen of the prior service costs (gain) incurred was recorded in operating income in the non-consolidated financial results. The same amount was also recorded in the consolidated financial results.
2. Recording of share of profit of entities accounted for using equity method in consolidated financial results
   Mainly due to favorable results of MODEC, Inc. (Securities code: 6269), our affiliate accounted for using equity method, for the fiscal year ended December 31, 2023, the Company recorded share of profit of entities accounted for using equity method of 7.7 billion yen in non-operating income for the fiscal year ended March 31, 2024.
3. Recording of deferred tax assets in consolidated financial results
   As a result of careful consideration of the recoverability of deferred tax assets based on actual consolidated results for the current fiscal year and future business forecasts, the Company decided to record deferred tax assets to the extent that their recovery is expected.
   Accompanying the recording of deferred tax assets, the Company recorded income taxes-deferred (gain) of 8.6 billion yen.

4. Differences between consolidated financial forecasts and actual results for the current fiscal year ended March 31, 2024

				Profit
	Net sales	Operating	Ordinary	attributable	Earnings
	income	income	to owners of	per share
				parent
Previous Forecast (A)	Millions of yen	Millions of yen	Millions of yen	Millions of yen	Yen
(announced on Feb. 14, 2024)	300,000	17,000	16,000	17,000	174.60
Actual Results (B)	301,875	19,630	20,711	25,051	255.73
Change (B - A)	1,875	2,630	4,711	8,051	－
Change ratio (%)	0.6	15.5	29.4	47.4	－

Reason for the differences

Operating income and ordinary income increased mainly due to an increase in sales in the after- sales service, recording of one-time gains such as reversal of provision for losses on construction contracts and prior service costs (gain) in conjunction with the extension of the retirement age, as well as higher performances than expected at some subsidiaries, and affiliates accounted for using equity method. Profit attributable to owners of parent increased mainly due to the above reasons as well as the recording of income taxes-deferred (gain) stated in "3. Recording of deferred tax assets in consolidated financial results".

5. Impact on consolidated financial results

The aforementioned prior service costs (gain), share of profit of entities accounted for using equity method, and deferred tax assets are reflected in the "Consolidated Financial Results for the Fiscal Year Ended March 31, 2024 (Under Japanese GAAP)" released today.