Mitsui E&S : Summary of Consolidated Financial Results for the Six Months Ended September 30, 2022 (Under Japanese GAAP)

(Percentages indicate year-on-yearchanges.)

Summary of Consolidated Financial Results for the Six Months Ended September 30, 2022 (Under Japanese GAAP)

Note: This document has been translated from a part of 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.

November 10, 2022

Company name:	Mitsui E&S Holdings Co., Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	7003
URL:	https://www.mes.co.jp/
Representative:	Takeyuki Takahashi, President, Representative Director, and CEO
Inquiries:	Koichi Watanabe, General Manager of Finance & Accounting Dept.
Telephone:	[phone]

Scheduled date to file quarterly securities report:	November 11, 2022
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	Yes (for analysts)

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

1. Consolidated Financial Results for the Six Months Ended September 30, 2022 (from April 1, 2022 to September 30, 2022)

(1) Consolidated Operating Results (cumulative)

			Net sales			Operating loss		Ordinary loss		Profit attributable to
								owners of parent
	Six months ended		Millions of yen	%		Millions of yen		%	Millions of yen		%		Millions of yen		%
	September 30, 2022		111,732	(68.6)		(8,505)		-		(1,480)		-				1,414		(46.3)
	September 30, 2021		356,399	9.9		(4,489)		-		(2,265)		-				2,631		-
	Note: Comprehensive income	For the six months ended September 30, 2022:	¥ 21,011	million	[ 97.0% ]
			For the six months ended September 30, 2021:	¥ 10,667	million	[ - % ]
			Earnings per share		Earnings per share
				(diluted)
	Six months ended				Yen			Yen
	September 30, 2022				16.97		16.72
	September 30, 2021				32.55		32.51
(2) Consolidated Financial Position
			Total assets		Net assets		Shareholders' equity to
					total assets ratio
	As of		Millions of yen		Millions of yen					%
	September 30, 2022		432,617		94,792					20.6
	March 31, 2022		409,150		62,949					14.0
	Reference: Equity	As of September 30, 2022: ¥ 89,027 million	As of March 31, 2022:	¥ 57,091	million
2. Dividends
	Common stock					Annual dividend per share
		First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end		Total
	Fiscal year ended/ending			Yen	Yen		Yen				Yen				Yen
	March 31, 2022				-	0.00			-			0.00				0.00
	March 31, 2023				-	0.00
	March 31, 2023 (Forecast)								-			0.00				0.00

Note 1: Revisions to the most recently announced dividends forecast: None

Note 2: The above "2. Dividends" shows dividends for Common stock. For details of dividends for Preferred stock (unlisted), the rights of which

are different from those of Common stock issued by the Company, please refer to "Reference: Dividends for Preferred Stock" below.

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3. Forecast of Financial Results (from April 1, 2022 to March 31, 2023)

(Percentages indicate year-on-year changes.)

		Net sales	Operating income		Ordinary income	Profit attributable to	Earnings per
			owners of parent	share
	Fiscal year ending	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
	March 31, 2023	240,000	(58.6)	(3,000)	-		1,000	-	2,000	-	24.00
	Note: Revisions to the most recently announced forecast of financial results:	Yes
	Reference: Estimate is based on exchange rate of USD1.00 = JPY145.0
* Notes
(1) Changes in significant subsidiaries during the period
(changes in specified subsidiaries resulting in the change in scope of consolidation):			None

1. Application of specific accounting treatment for preparing the quarterly consolidated financial statements: Yes
2. Changes in accounting policies, changes in accounting estimates, and restatement
3. 1. ) Changes in accounting policies due to revisions of accounting standards: None

ii )	Changes in accounting policies due to other reasons:	Yes
iii )	Changes in accounting estimates:	None
iv )	Restatement:			None
(4) Number of issued shares (common stock)
i )	Number of issued shares at the end of the period (including treasury stock)
	As of	shares
	September 30, 2022	87,283,017
	March 31, 2022	83,098,717
ii )	Number of treasury stock at the end of the period
	As of	shares
	September 30, 2022	2,233,995
	March 31, 2022	2,238,851
iii )	Average number of shares outstanding during the period (cumulative quarterly consolidated period)
	Six months ended	shares
	September 30, 2022	83,334,954
	September 30, 2021	80,850,424

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters

(Notice regarding forward-looking statements)

The forecasts for financial results are based on information available at the time this report was released. These forecasts and other forward-looking statements are not guarantees of future performance. Actual operating results may differ from the above forecasts due to known and unknown risks, uncertainties, and other factors.

(Where to get the supplementary explanatory materials)

Financial results briefing for analysts is scheduled for November 11, 2022. Supplementary material, which will be distributed at the said briefing, is planned to be posted on our web site.

Reference: Dividends for Preferred Stock

Dividend per share for Class-A Preferred stock is as follows:

Class-A Preferred stock		Annual dividend per share
First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
Fiscal year ended/ending	Yen	Yen	Yen	Yen	Yen
March 31, 2022	-	-	-	-	-
March 31, 2023	-	-
March 31, 2023 (Forecast)			-	29.38	29.38

Note: Each dividend per share is rounded to the nearest thousandths place, and then converted to units of yen which are rounded to the nearest hundredth place.

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Application of International Financial Reporting Standards to the Affiliate using Equity Method

MODEC, Inc., the affiliate accounted for using equity method, used to apply Generally Accepted Accounting Principles in Japan and now has adopted International Financial Reporting Standards (IFRS) from FY2021. This adoption was made for the purposes of 1) better comparability of financial information and 2) strengthening management control by unifying the accounting standards across MODEC group, as MODEC group operates business globally. This change of accounting policy is applied retrospectively, and quarterly consolidated financial results for the prior period has been restated. Because of the partial sale of MODEC shares, they were excluded from the scope of consolidation and became affiliates accounted for using equity method on the end of 3rd quarter of FY2021.

This change has no effect on Quarterly Consolidated Statements of Operations, but reflecting the cumulative effects to the beginning balance of net assets as of April 1, 2021, beginning balances for the previous fiscal year of Retained earnings, Unrealized gains (losses) on hedging derivatives and Non-controlling interests have decreased by 2,861 million yen, 591 million yen and 4,069 million yen, respectively, and beginning balance for the previous fiscal year of Foreign currency translation adjustments has increased by 101 million yen, comparing before and after retrospective restatement.

Overview of Reportable Segment

Reportable Segment is classified into 4 segments: Ship, Ocean Development, Machinery and Engineering. Main products and services of each Reportable Segment are as follows.

Reportable Segment	Main Products and Services
Ship	Commercial ships, high speed passenger/vehicle ferries, offshore structures, underwater TV vehicles, design
engineering services, ship related equipments, steel structures
Ocean Development	FPSOs (floating production storage offloading vessels)
	Marine and stationary diesel engines, marine equipments, gas engines, steam turbines, blowers, process
Machinery	compressors, gas turbines, cogeneration system, process equipment, container cranes, industrial cranes,
container terminal management systems, HWM manipulators, equipment of radar sensing for underground
	and construction, induction heaters, wave generators
Engineering	Power generation business, overseas civil/architectural works

Note: "Ocean Development" consists of affiliates accounted for using equity method.

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Information about Sales, Segment Income and Loss and Other Items for each Reportable Segment

Reportable Segment information for the six months ended September 30, 2021 and 2022 were as follows:

from April 1, 2021 to September 30, 2021								(Millions of yen)
	Ship	Ocean	Machinery Engineering	Sub total	Others	Total	Adjustments	Consolidated
	Development
Net Sales:
Outside customers	20,388	228,180	71,308	4,723	324,601	31,797	356,399	-	356,399
Inter segment	803	-	449	29	1,282	6,735	8,017	(8,017)	-
Total	21,191	228,180	71,758	4,752	325,884	38,533	364,417	(8,017)	356,399
Segment income (loss)	48	(3,383)	1,524	(3,411)	(5,221)	731	(4,489)	-	(4,489)
Other Items:
New orders	9,394	255,324	74,157	1,201	340,076	24,083	364,160	-	364,160
Loss on impairment of non-	41	-	-	0	42	-	42	0	42
current assets

Note 1: "Others" is the segment which is not includ ed in Reportable Segment and includes Stationary diesel power generation plants, Telecommunications equipment related business, Systems development, Gas carriers engineering, Special facilities for naval ships and aircraft related business and others.

Note 2: Adjustments of 0 million yen recorded for loss on impairment of non-current assets are the impairment loss for Corporate.

Note 3: Segment income (loss) is adjusted with operating loss in Quarterly Consolidated Statements of Operations.

from April 1, 2022 to September 30, 2022								(Millions of yen)
	Ship	Ocean	Machinery	Engineering	Sub total	Others	Total	Adjustments	Consolidated
	Development
Net Sales:
Outside customers	6,598	-	75,309	5,127	87,036	24,696	111,732	-	111,732
Inter segment	32	-	217	-	250	4,973	5,224	(5,224)	-
Total	6,631	-	75,527	5,127	87,286	29,670	116,956	(5,224)	111,732
Segment income (loss)	83	1,008	1,771	(9,563)	(6,700)	(797)	(7,497)	(1,008)	(8,505)
Other Items:
New orders	8,439	-	114,190	2,079	124,708	30,864	155,573	-	155,573

Note 1: Segment income (loss) in "Ship," "Machinery," "Engineering" and "Others" represents "Operating income (loss)," and in "Ocean Development" represents "Share of profit (loss) of entities accounted for using equity method."

Note 2: "Others" is the segment which is not includ ed in Reportable Segment and includes Stationary diesel power generation plants, Telecommunication equipment related business, Systems development, Gas carriers engineering, Special facilities for naval ships and aircraft related business and others.

Note 3: Segment income (loss) is adjusted with operating loss in Quarterly Consolidated Statements of Operations.

Changes in Reportable Segment

As part of "Reform of business structure" from Mid- term Business Plan 2020, the classification of Shikoku Dockyard Co., Ltd., which engages in shipbuilding and repair, and TGE Marine Gas Engineering GmbH, which engages in engineering for gas carriers, has changed from "Ship" to "Others" from 3rd quarter of FY2021.

Comparative segment information for the prior period has been restated to reflect these changes.

Change in Calculation Method used for Segment Income and Loss for Reportable Segment

Segment income (loss) used to represent "Operating income (loss)" in Consolidated Statements of Operations. Regarding "Ocean Development," however, segment income (loss) has changed to represent "Share of profit (loss) of entities accounted for using equity method" since 1st quarter of FY2022, instead of "Operating income (loss)." This is because the management indicator has been changed after MODEC, Inc., which consists of "Ocean Development," had been excluded from the scope of consolidation and become affiliates accounted for using equity method since the end of 3rd quarter of FY2021. Taking the said change into account, segment income for "Ocean Development" for the prior period would become 3,056 million yen.

* Figures in parentheses represent negative.

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Consolidated Balance Sheets

		(Millions of yen)
	As of March 31, 2022	As of September 30, 2022
Assets
Current assets
Cash and time deposits	51,762	42,278
Notes and accounts receivables - trade,	78,563	81,344
and contract assets
Merchandise and finished goods	5,762	5,972
Work in progress	36,561	45,178
Raw materials and supplies	4,182	5,697
Others	25,202	29,138
Allowance for doubtful accounts	(213)	(366)
Total current assets	201,822	209,244
Non-current assets
Property, plant and equipment
Land	70,077	69,346
Others, net	48,261	48,193
Total property, plant and equipment	118,338	117,540
Intangible assets
Goodwill	7,995	7,889
Others	8,046	7,911
Total intangible assets	16,042	15,800
Investments and other assets
Investment securities	43,280	60,295
Others	29,965	30,023
Allowance for doubtful accounts	(299)	(285)
Total investments and other assets	72,946	90,033
Total non-current assets	207,327	223,373
Total assets	409,150	432,617

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