Back to 2007 listThe Policy on Shareholder Return
March 27, 2007
Chubu Electric Power Co., Inc.
As CHUBU Electric Power Co., Inc. (the "Company") publicly announced in its press release entitled "Statement Regarding Receipt of a Letter Concerning an Exertion of Shareholder's Proposal Right " dated March 20, 2007, the Company has received a letter dated March 16, 2007 from The Children's Investment Master Fund ("TCI") concerning the exercise of a shareholder's proposal right for the Company's 83rd Ordinary General Meeting of Shareholders, which is scheduled to be held in June 2007. The Company intends to carefully consider such proposal and inform its shareholders of the opinion of its Board of Directors upon confirming TCI's status to exercise shareholder's proposal right meeting the applicable requirements of the Corporation Law of Japan; however, the Company today presents its current policy on shareholder return.
As the "Multi-energy Corporate Group" with its business base in the central area of Japan, the Company is aiming to achieve sustainable growth. The prominent characteristic of the Company's business is that the Company has its core business in electric utility business that intrinsically bears the responsibility for a stable supply of electricity, and as such, the Company is able to build infrastructures including power plants, substations , and power transmission/distribution lines with well-planned and continuous investment and secure returns on its investments for a long-term period through the safe and stable operation of these facilities, with appropriate and timely improvements to and maintenance of these facilities.
Due to electric power deregulation, as well as that with peers, competition with others in different sectors or different types of operation in the energy market has further intensified. Under these circumstances, the Company heretofore has been engaged in improving its general management efficiency and the promotion of cost reduction. At the same time, with sustainable growth in mind, the Company has aggressively developed its Gas/LNG wholesale business and On-site energy businesses. Thanks to these efforts, the Company has implemented electricity rate reductions of approximately 20% in total since the start of deregulation of the retail electricity market in 2000. In the meantime, for its shareholders, the Company decided to increase the annual dividend per share from 50 yen to 60 yen for the fiscal year 1999(*1) and has since maintained dividends at the same rate. As for the dividend payout ratio, it has maintained approximately 40% or more, which could be comparable with that of companies in Japan and overseas. The Company, as an entity that serves public utilities, will continue to strive, not only to ensure a stable supply of electricity while increasing the efficiency of its management operations but also to develop its business to fulfill its Corporate Social Responsibility (CSR) while also aiming to protect the global environment. This is how the Company plans to meet the expectations of all stakeholders, such as customers, shareholders/investors, and the local communities.
Based on the above-mentioned basic policies, the Company today announced its press release titled "Our FY 2007 Management Aims." In this press release, it is envisioned that the management environment of the Company will face challenges in respect of medium- to long-term development due to, among other things, unforeseeable movements of fossil fuel prices caused by structural changes in the international energy market and demands for stronger anti global warming measures. Under these circumstances, the Company announced that it would allocate approximately 1,250 billion yen on a consolidated basis by fiscal 2010 for the following areas: energy source development for more stable and efficient energy supply via state-of-the-art, highly-efficient LNG Thermal Power Plants, Shin-Nagoya Thermal Power Plant Group No. 8 and Joetsu Thermal Power Plant Group Nos. 1/ 2; improvement of fuel-related infrastructure for the purpose of stable and flexible LNG procurement; and strategic business areas to achieve further growth and development of the Company's business.
In order to maintain competitive edge while continuing such large scale investments in a challenging management environment, it is imperative for the Company to operate such that proper and stable evaluation can be made concerning its share price in the capital market. At the same time, the Company needs to further improve its financial position and maintain a high grade bond rating to enable it to continuously raise funds at lower interest rates. To this end, with the objective of "Reduction of the outstanding balance of interesting-bearing debt to 2,600 billion yen or less by the end of fiscal year 2010," it is appropriate for the Company to continue efforts to improve its financial position.
With respect to dividend policy, while maintaining its basic policy of stable dividends, the Company has decided on the dividend amount after making a comprehensive assessment of business performance and improvement of financial position and the management environments. In the above-mentioned press release titled "Our FY2007 Management Aims," the Company established fresh management/financial objectives to be completed by its target year of fiscal 2010. With this in mind, and considering previous dividends per share and dividend payout ratios, the Company hereafter intends to maintain the dividend payout ratio at approximately 40% of net income for each term. Even if the business performance deteriorates, the Company will make strenuous efforts to maintain its current level of dividend, unless the business performance deteriorates significantly, due to some unforeseeable changes in the management environment.
With this in mind, even though the Company expects a considerable decline in net income for this term for certain reasons, such as the closedown of Hamaoka Nuclear Power Plant No. 5, the Company plans to maintain its annual dividends per share for the fiscal year 2006 at a level equivalent to the previous year.
The opinion of the Board of Directors regarding the proposal submitted by TCI will be informed to our shareholders in the "Notice of the 83rd Ordinary General Meeting of Shareholders", which is scheduled to be sent in early June to its shareholders.
As described above, the Company believes that TCI's proposal differs from the Company's policy on shareholder return.
In addition, with respect to the Company's management policy, please refer to the press release, "Our FY2007 Management Aims," which was publicly announced today.
*1 : Fiscal year 1999 dates from April 1, 1999, to March 31, 2000.
Top of Page