Notice Regarding Changes to Exercise Conditions of Performance-Linked Stock Options (20th and 21st Series Stock Acquisition Rights)

Background of Exercise Condition Change

SMS Co., Ltd. recorded impairment losses in its overseas business for the fiscal year ending March 2026, resulting in an expected annual reduction of approximately 1.5 billion yen in amortization costs related to intangible fixed assets from the fiscal year ending March 2027 onwards. Accordingly, the company has revised the calculation method of adjusted operating income for the performance-linked stock options (20th and 21st series stock acquisition rights) to adjust the amortization cost reduction arising from the impairment losses, aiming to maintain the originally intended difficulty level of the performance targets at the time of issuance.

Specific Changes to Exercise Conditions

For the exercise conditions of the 20th and 21st series stock acquisition rights regarding the calculation of adjusted operating income, the previous method was to use operating income from the consolidated income statement plus stock-based compensation expenses as a base. With this change, the amortization cost reduction owing to the impairment loss recorded in the fiscal year ending March 2026 will be deducted. This adjustment removes accounting impacts, secures the commitment of eligible persons toward performance improvement, and fosters shared interests with shareholders.