ENEOS : Q＆A（63KB）

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• ENEOS Holdings (5020) - Analysts' Meeting Q&A for the fiscal year ended March 31, 2024
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1. Date & time: Tuesday, May 14, 2024 (18:00 - 19:00)
2. Attendees: 136
3. Principal questions: Please find below
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－This document contains forward-looking statements. A cautionary statement appears in the endnote.－

1. The ROE forecast for FY2024 is 7%, which is different from the ROE target of 10% for FY2025, the final fiscal year of the Medium-Term Management Plan. Please let me know how you are trying to achieve your goals.

1. The most important thing is to reduce the UCL (Unplanned Capacity Loss; percentage of unplanned shutdowns of refineries) and increase capacity utilization. We will pursue operations that maximize profits, including procurement of crude oil and product mix, with an awareness of overseas market conditions. In the Electricity segment, Goi Thermal Power Plant will start operating in the middle of FY2024. We believe that this is a very competitive power plant and that it will make a significant contribution to profits in FY2025.

1. The UCL situation appears to be good at 4% in the 4Q of FY2023. I would like to ask whether this can be achieved on a permanent basis and whether you are incurring a lot of cost to achieve this goal.

1. We believe 4% is still too high and would like to reduce it to at least 3%. Based on the reflection that we have not been able to make the necessary investments in the past, we have been making investments in aging facilities and other facilities. We will continue to work on making the level of UCL sustainable, in a way that will require investments of time and people, but the returns will be sufficient.

1. Please tell me about the background to the share buyback and how you came to the decision of 200 billion yen.

1. First, from the perspective of balance sheet management, the Company's financial strength has improved as a result of asset sales, the issuance of hybrid bonds, and others. Second, profits have been generated steadily in line with the Medium-Term Management Plan. The decision to

repurchase shares was made from the perspective of pursuing capital efficiency, and the amount was determined based on market impact and other factors. We will continue to pursue an optimal capital structure through balance sheet management.

SQ. Please tell me whether you considered the appropriate absolute level of equity capital when deciding on the share buyback.

SA. From the viewpoint of financial leverage, we set the net D/E ratio as a KPI and set it at 0.8× or less, but since the ratio has improved significantly to 0.46× through various measures, we decided to repurchase our own shares, considering the need to optimize the right-hand side of our balance sheet (liabilities and net worth) as well as future investment opportunities. Examining the balance between this net D/E ratio and future investments is essentially the same as examining the absolute level of equity capital, and we will continue to use the net D/E ratio as an indicator for management.

This document contains forward-looking statements. Actual results may differ materially from those expressed or implied by forward-looking statements due to various factors, including but not limited to the following:

1. macroeconomic conditions and changes in the competitive environment in the energy, resources, or materials industries
2. revision of laws and tightening of regulations
3. risk of lawsuits and other legal risks

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