Dear Investors

Turnaround from Losses in FY March 2024 to Profits in FY March 2025
Strategically Building Strong Relationships with Partners and Taking on the Challenge of Growth

First of all, I would like to thank erex Group’s shareholders for the continued support.

In the fiscal year ended March 31, 2024, we were forced to sell the relatively-expensive power sources we had procured in the previous fiscal year in the low-price power market, and regrettably, posted 18.3 billion yen ordinary loss. Reflecting on the lessons learned from the significant loss, we have implemented reforms to our business structure by drastically changing our power procurement strategy and changing our organization to strengthen risk management. Through these measures, we plan to record 4.3 billion yen pre-tax income (IFRS) in the fiscal year ending March 31, 2025, with continuous and stable profits, as we expect to eliminate the negative spread and grow our retail business.

In Southeast Asian countries, energy demands are expected to increase rapidly due to economic and population growth. In addition, the demands for de-carbonization will increase. Under these circumstances, we will implement our green energy strategy through the construction of biomass power plants and fuel conversion of coal-fired power plants, taking advantage of abundant biomass resources. We believe that this will help Southeast Asian countries to de-carbonize, increase energy self-sufficiency, increase employment, and improve the income levels in rural areas.

In the previous fiscal year, our financial strength was impaired. Under such circumstances, we discussed our growth strategy of “de-carbonization in Southeast Asia” with many of our clients and partners. As a result, we issued new shares through third-party allotment to JFE Engineering Corporation, TODA CORPORATION, KYUDENKO CORPORATION, and Sumitomo Mitsui Finance and Leasing Company Limited, all of which place a high priority on the realization of a globally de-carbonized society in their management strategies. We will continue to work with these four companies and other partners in our growth business.

We are currently constructing our first commercial biomass power plant* (20MW) in Hau Giang Province, which is planned to start operations around the end of 2024. In addition to this power plant, specific plans for the construction of biomass power plants* are underway in Yen Bai and Tuyen Quang provinces. In Yen Bai and Tuyen Quang provinces, we also plan to start operations of pellet factories by the end of the current fiscal year.

We believe that we can grow our domestic electric power business as well. In the electric power market itself, we expect to see demands for alternatives to other energy sources, as well as an increase in demands due to the spread of data centers and generative AI. Our field of business activity is expected to further expand.

Finally, I would like to talk about de-carbonization. As you might know well, de-carbonization is an economic issue, and one key word is emission rights ($/CO2t) from reducing CO2. The Global South will continue to see further population and economic growth. We will promote domestic and international de-carbonization by securing the large amount of emission rights from CO2 reductions in these countries.

Your continued and further support would be greatly appreciated.

• Power plants in Hau Giang, Yen Bai, and Tuyen Quang Provinces have been selected for the “Financing Programme for Joint Crediting Mechanism (JCM) Model Projects” (A project that utilizes superior de-carbonization technology to reduce greenhouse gas emissions in developing countries, etc., and conducts measurement, reporting, and verification (MRV). The aim is to reduce greenhouse gas emissions in developing countries and other countries, and to help Japan and partner countries achieve their greenhouse gas emission reduction targets through the JCM. Subsidy will be provided up to one-half of the initial investment cost for excellent de-carbonization technology, etc. This project is being implemented with the cooperation of the Vietnamese and Japanese governments)