Tohoku Electric Power : Financial Results for the Fiscal Year ended March 31, 2019 (FY2018) and Financial Forecasts for the Fiscal Year ending March 31, 2020 (FY2019)

TOHOKU ELECTRIC POWER CO., INC.

April 25, 2019

Financial Results for the Fiscal Year ended March 31, 2019 (FY2018) and Financial Forecasts

for the Fiscal Year ending March 31, 2020 (FY2019)

Tohoku Electric Power Co., Inc. (the "Company") today submitted a summary of its financial statements for year ended March 31, 2019 on the Tokyo Stock Exchange.

【Consolidated financial results】

Even with a decrease in the volume of retail electricity sales due to intensifying competition caused by liberalization of electricity market, consolidated operating revenue increased to ¥2,244.3 billion (a year-on-year increase of ¥172.9 billion, or a 8.3% increase), mainly due to an increase in wholesale electricity sales beyond our franchise area and to JEPX.

Consolidated operating revenue includes ¥408.3 billion, total of grant under act on purchase of renewable energy sourced electricity and surcharge for promoting renewable energy sourced electricity based on Feed-in Tariff Scheme for renewable energy and the self-contracted portion due to introduction of the indirect auction. As this is recorded in expenses as well, it does not affect the Company's income.

Consolidated ordinary income decreased to ¥65.7 billion (a year-on-year decrease of ¥22.6 billion, or a 25.7% decrease), due to an increase in fuel cost caused by a decrease in operation of hydro power station caused by a lower-than-normal water flow rate and a rise in fuel price, despite our thorough streamlining efforts.

The Company booked an extraordinary income relating to compensation for damage of restoration delay of Haramachi Thermal Power Station caused by the accident at TEPCO's Fukushima Daiichi Nuclear Power Station and an extraordinary loss in accordance with decision of decommissioning of Onagawa Nuclear Power Station Unit 1. As a result, net income attributable to owners of parent was ¥46.4 billion, a decrease of ¥0.7 billion (or a 1.6% decrease) year-on-year.

【Electricity Sales Volume】

There was an increase in cooling demand resulting from higher temperature in this summer than last summer; nevertheless, contract switching due to intensifying competition and a decrease in heating demand due to higher temperature in this winter compared to the previous year decreased retail electricity sales to 68.9TWh, down 4.3% year-on-year.

On the other hand, an increase in wholesale electricity sales beyond our franchise area increased wholesale electricity sales to 16.2TWh, 18.8% increase year-on-year.

As a result, total electricity volume decreased 85.1TWh, down 0.6% year on year.

【Dividend】

Our basic dividend policy is to distribute stable dividends, taking into consideration the Company's business performance of the relevant fiscal year and the medium- to long-term financial prospects.

With regard FY2018 financial result, even though fuel cost was increased due to a decrease in operation of hydro power station caused by a lower-than-normal water flow rate and a rise in fuel price and an extraordinary loss was recorded in accordance with decision of decommissioning of Onagawa Nuclear Power Station Unit 1, in addition to a decrease in the volume of retail electricity sales due to intensifying competition caused by liberalization of electricity market, the Company secured certain level of profits for this period, resulting from an increase in wholesale electricity sales beyond our franchise area and to JEPX and our continuous thorough streamlining efforts.

Even with the impact of intensifying competition caused by liberalization of electricity market, we will strive to improve our corporate value under the corporate slogan "Yori, Sou, Chikara", through the challenge to new business opportunities and investment for future growth, in addition to strengthening the competitiveness of existing businesses and expanding profits by the pursuit of earning opportunities and continuous thorough streamlining efforts through the comprehensive strength of the corporate group.

Comprehensively deliberating the facts described above, the Company decided to pay the year-end dividend of 20 yen per share for FY2018. The Company paid interim dividend of 20 yen, and thus total annual dividend is expected to be 40 yen.

【Financial forecasts for fiscal 2019】

The Company projects lower electricity sales volume for FY2019; nevertheless, consolidated operating revenue for FY2019 is expected to be approximately ¥2,390.0 billion, a 6.5% increase compared to the previous year, due to an increase in wholesale electricity sales and the self-contracted portion caused by introduction of the indirect auction.

Even with the impact of intensifying competition caused by liberalization of electricity market, consolidated ordinary income for FY2019 is expected to be approximately ¥73.0 billion, a 11.0% increase compared to the previous year, mainly due to time lag between fuel cost and fuel cost

adjustment charges and a decrease in fuel cost caused by starting operation of Noshiro No.3.

Net income attributable to owners of parent is expected to be approximately ¥45.0 billion, a 3.2% decrease compared to the previous year.

【Dividend Forecast for FY2019】

With regard to the dividend for FY2019, the Company intends to pay 20 yen per share for both interim and year-end dividends by taking into account overall business environment, earnings and improvement of financial positions.

< Financial Forecasts for FY2019 (April 1, 2019 - March 31, 2020) >

Consolidated

(Billions of

yen)

Operating

Operating

Ordinary

Net income

revenue

income

income

attributable to

owners of parent

Forecast

2,390.0

90.0

73.0

45.0

Non-consolidated

(Billions of

yen)

Operating

Operating

Ordinary

Net

revenue

income

income

income

Forecast

2,170.0

69.0

55.0

39.0

<

Major factors >

Items

FY2019 Forecast

Retail

Approx.

68.1

Electricity sales (TWh)

Wholesale

Approx.

19.7

Total

Approx.

87.8

Crude oil CIF price ($/bbl.)

Approx. 65

Exchange rate (¥/$)

Approx.

110

Nuclear power utilization rate (%)

-

<

Sensitivity Analysis >

Items

FY2019 Forecast

Crude oil CIF price (per $1/bbl.)

Approx.

3.4

billion

yen

Exchange rate (per ¥1/$)

Approx.

3.3

billion

yen

April 25, 2019

Tohoku Electric Power Co., Inc.

Summary of Financial Statements (Unaudited)

(April 1, 2018 - March 31, 2019)

Information below is an English translation of the "Unaudited Financial Release" for the year ended March 31, 2019, which has been filed with the Tokyo Stock Exchange, Inc. for public inspection.

Tohoku Electric Power Co., Inc. (Code : 9506)

1-7-1 Honcho, Aoba-ku, Sendai, Miyagi, Japan (URL : http://www.tohoku-epco.co.jp)

Representative : Hiroya Harada, President

Tel : [phone]

(Note) All monetary values are rounded down to the nearest units as indicated in each table.

1. Business Results for Consolidated FY2018 (Year ended March 31, 2019)

(1) Progresses of Financial Results

	Operating revenue		Operating income		Ordinary income		Net income attributable to
							owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
Year ended Mar. 31, 2019	2,244,314	8.3	83,633	(22.3)	65,743	(25.7)	46,483	(1.6)
Year ended Mar. 31, 2018	2,071,380	6.2	107,665	(17.4)	88,433	(15.5)	47,216	(32.5)

(Note) Comprehensive income (FY2018: 55,763 million yen -14.3%, FY2017: 65,052 million yen -25.6%) Percentage figures represent changes as compared to the same period of the previous year.

		Net income per share		Net income per share			Net income / Equity		Ordinary income /			Operating income /
		(basic)		(diluted)					Total assets			Operating revenue
			Yen		Yen			%		%			%
Year ended Mar. 31, 2019			93.12	87.61				6.2		1.6			3.7
Year ended Mar. 31, 2018			94.61	89.60				6.6		2.1			5.2
(Reference)	Share of profit of entities accounted for using equity method (FY2018: 141 million yen, FY2017: 715 milion yen)
(Note) Percentage figures represent changes as compared to the same period of the previous year.
(2) Changes in Financial Positions
		Total assets		Net assets				Equity-to-asset ratio		Net assets per share
			Millions of yen			Millions of yen			%				Yen
Mar. 31, 2019			4,258,633			833,711			17.9			1,526.66
Mar. 31, 2018			4,222,163			798,705			17.3			1,463.42
(Reference)	Shareholders' Equity (March 31, 2019: 762,167 million yen, March 31, 2018: 730,361 million yen)
(3) Situations of Cash Flows
		Cash flows from		Cash flows from				Cash flows from		Cash and cash equivalents
		operating activities		investing activities				financing activities				at end of the year
			Millions of yen			Millions of yen		Millions of yen				Millions of yen
Year ended Mar. 31, 2019			262,804			(250,570)			(69,307)			184,942
Year ended Mar. 31, 2018			324,019			(273,915)			(36,280)			242,171
2. Dividends
			Cash dividends per share						Dividends paid		Dividends		Dividends /
		1Q	2Q	3Q		Year-end		Annual total	for the year		payout ratio		Net assets
		Yen	Yen	Yen		Yen		Yen	Millions of yen			%	%
Year ended Mar. 31, 2018		-	20.00	-		20.00		40.00	19,963			42.3	2.8
Year ended Mar. 31, 2019		-	20.00	-		20.00		40.00	19,969			43.0	2.7
Year ending Mar. 31, 2020		-	20.00	-		20.00		40.00				44.4
(forecast)

3. Business Results Forecast for Consolidated FY2018 (Year ending March 31, 2020)

	Operating revenue		Operating income		Ordinary income		Net income attributable		Net income per share
							to owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
FY2019	2,390,000	6.5	90,000	7.6	73,000	11.0	45,000	(3.2)	90.14

(Note) Percentage figures represent changes as compared to the same period of the previous year.

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(Reference) Summary of Non-consolidated Financial Statements

1. Business Results for Non-consolidated FY2018 (Year ended March 31, 2019)

(1) Progresses of Financial Results

	Operating revenue		Operating income			Ordinary income		Net income
	Millions of yen	%	Millions of yen		%	Millions of yen	%	Millions of yen	%
Year ended Mar. 31, 2019	2,025,559	8.4	60,284		(26.8)	46,821	(30.7)	40,320	(3.6)
Year ended Mar. 31, 2018	1,869,361	7.5	82,399		(17.7)	67,551	(16.1)	41,820	(30.2)
	Net income per share	Net income per share
	(basic)		(diluted)
	Yen		Yen
Year ended Mar. 31, 2019	80.77		75.97
Year ended Mar. 31, 2018	83.80		79.33
(Note) Percentage figures represent changes as compared to the same period of the previous year.
(2) Changes in Financial Positions
	Total assets		Net assets			Equity-to-asset ratio		Net assets per share
	Millions of yen		Millions of yen				%		Yen
Mar. 31, 2019	3,923,541		654,178			16.6		1,308.32
Mar. 31, 2018	3,906,474		636,845			16.3		1,274.13

(Reference) Shareholders' Equity (March 31, 2019: 653,164 million yen, March 31, 2018: 635,888 million yen)

2. Business Results Forecast for Non-consolidated FY2019 (Year ending March 31, 2020)

	Operating revenue		Operating income		Ordinary income		Net income		Net income per share
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
FY2019	2,170,000	7.1	69,000	14.5	55,000	17.5	39,000	(3.3)	78.12

(Note) Percentage figures represent changes as compared to the same period of the previous year.

2