FY2023 Financial Results and April 2024 Regular Press Conference: President Hayashi's Message

(FY2023 Financial Results)

• Consolidated revenues for FY2023 totaled 3,610.4 billion yen.
• Due to a decrease in fuel cost adjustment and other factors, net sales decreased by 376.2 billion yen compared to the previous year.
• Ordinary income totaled 509.2 billion yen.
• Income increased by 444.1 billion yen compared to the previous year as a result of the time-lag loss shifting to time-lag gain, a decrease in power supply procurement prices in Miraiz, and a decrease in expenses related to supply and demand adjustment in Power Grid.
• Consolidated ordinary income excluding the time-lag impact was 371.0 billion yen, an increase of roughly 215.0 billion yen from the previous year.
• Net income attributable to owners of the parent company amounted to 403.1 billion yen, an increase of 364.9 billion yen from the previous year.

(Business forecast for FY2024)

• Now, I would like to discuss our business outlook for FY2024.
• Consolidated sales are expected to be around 3.6 trillion yen.
• Consolidated ordinary income is expected to be around 215.0 billion yen.
• Income is expected to decrease by approximately 294 billion yen from the previous year due to reduced flexibility in power procurement at Miraiz as a result of fluctuations in market and fuel prices, increased supply and demand adjustment costs at Power Grid, and a reduction in time-lag margins.
• Net income attributable to owners of the parent company is expected to be around 170 billion yen.

(Dividends)

• Next, I will talk about dividends.
• We plan to pay a year-end dividend of 30 yen per share for FY2023, taking into consideration our policy of returning profits to shareholders based on growth in profits while maintaining a stable dividend, as well as our medium-term financial situation and capital market expectations.
• Based on the shareholder return policy mentioned above, the annual dividends for FY2024 are expected to be 60 yen per share, a level that will continue as a stable dividend for the year-end dividend of FY2023.

• I will then discuss the Group's initiatives to achieve the medium-term management plan and the review of management targets.
• In April 2022, the Group set medium-term management targets for FY2025 as an intermediate point up to Management Vision 2.0.
• As I mentioned earlier, in FY2023, the second year of the medium-term management plan, consolidated ordinary income was about 371.0 billion yen, excluding the time-lag impact, due to lower power supply procurement prices at Miraiz and lower supply and demand adjustment expenses at Power Grid.
• In FY2024, profit is expected to decline to 190 billion yen owing to factors such as that the profit at Miraiz is not expected to improve as large as in FY2023 due to the use of the wholesale power trading market, and that the temporary profit boost effect of Power Grid will fade out, in addition to cost increases due to price hikes.
• Although the business environment is expected to remain uncertain, we have decided to raise the medium-term management targets for FY2025, based on our efforts to further strengthen our market responsiveness and value-added services, as well as to expand earnings through strategic investments.
• We had previously targeted consolidated ordinary income of 180 billion yen or more and ROIC of 3.0% or more, excluding the time-lag impact, but now we have set new management targets of 200 billion yen or more in consolidated ordinary income and ROIC of 3.2% or more.
• The business environment surrounding the Group is undergoing significant changes, including uncertainty over resource prices due to geopolitical risks and other factors, as well as revisions to various systems in line with progress in electric power system reforms.
• In addition, the needs of customers and society are diversifying in order to realize a decarbonized society, transition to a recycling-oriented society, and solve regional issues.
• Responding to these changes in the environment, the Group will transform and accelerate its growth initiatives to maximize the value offered to stakeholders.
• For achieving new management targets in the midst of a drastically changing business environment, the Group is committed to resolving issues in the energy business area, new growth areas, and the management foundations that support these areas.
• In the energy business area, we will contribute to the realization of a decarbonized society by providing rates and services that meet customer needs, developing and expanding decarbonized power sources, and accelerating efforts to restart the Hamaoka Nuclear Power Station.
• In new growth areas, we will continue to deliver new services that meet customer needs and local issues, and revitalize local communities through our real estate business, aiming to quickly generate earnings and provide new value to our customers and local communities.
• To strengthen our management foundations, we will strive to meet the demands of the capital markets by realizing cost-conscious management and improving PBR, as well as to further enhance the value of human capital and ensure compliance.
• By growing together with our stakeholders and contributing to the development of a sustainable society, the Group will work as one to achieve the new medium-term management targets I mentioned today and steadily realize Management Vision 2.0, which lies ahead.

• Finally, I now talk about our executive personnel appointments.
• On January 31, we announced the candidates for directors who would be approved as Audit Committee members at the 100th Ordinary General Meeting of Shareholders scheduled on June 26 this year, but one of them was to be announced at a later date as soon as determined.
• Today, the Board of Directors has decided who that person will be, and I would like to explain about the decision.
• The nominee for Outside Director as a member of Audit Committee is Mitsumasa Yamagata of Toyota Motor Corporation.
• Mr. Yamagata has held important positions such as President of Power Train Company and President of Hydrogen Factory at Toyota Motor Corporation, and has a wealth of experience and broad insight. Therefore, we have determined that he is qualified for the position of Outside Director of the Board as a member of Audit Committee and nominated him for the position.
• This ends my presentation.