Notice Regarding the Recognition of Non-Operating Income (Derivative Valuation Gains)

Regarding the Recognition of Non-Operating Income (Derivative Valuation Gains)

In the consolidated fiscal year ending November 2025, derivative valuation gains of 1,892 million yen related to currency forward contracts were recorded as non-operating income due to fluctuations in foreign exchange rates. This is attributable to consolidated subsidiary Sala e-Power Co., Ltd. entering into currency forwards based on foreign currency-denominated import material purchase contracts, as a risk hedging measure to secure stable earnings from the wood biomass power generation business under the Feed-in Tariff (FIT) scheme. Additional currency forwards covering 2025 through 2039 have also been contracted to mitigate foreign exchange risk.

Basic Dividend Policy and Future Outlook

Dividends are planned to be maintained at least at the previous term’s level, with a policy to target a consolidated dividend payout ratio of 40% or more, excluding the effects of derivative valuation gains and losses related to currency forwards. The fair value gains and losses on currency forwards are expected to decrease as business progresses and to become zero in 2039, the final year of FIT scheme application. Cumulative valuation gains and losses will also be offset through profit and loss to net to zero.