Tohoku Electric Power Incorporated : Financial Results for the First Quarter of Fiscal Year ended March 31, 2021 (FY2020)

TOHOKU ELECTRIC POWER CO., INC.

July 30, 2020

Financial Results for the First Quarter of Fiscal Year ended March 31, 2021 (FY2020)

Tohoku Electric Power CO., Inc. released its financial results for the first quarter of FY2020 (April 1,2020 through March 31, 2021) today.

【Consolidated Financial Results】

Retail electricity sales volume decreased due to a decrease in operations for commercial and industrial use resulting from the spread of COVID-19. On the other hand, wholesale electricity sales volume outside Tohoku and Niigata area increased. As a result, total electricity sales volume increased to 19.4 TWh, a year-on-year increase 2.7%.

On the other hand, operating revenue decreased to ¥519.2 billion, a year on year decrease of ¥10.4 billion or 2.0%, resulting from a decrease in retail electricity sales volume.

Operating revenue includes ¥141.2 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.

Regarding ordinary income, retail electricity sales volume decreased and fuel cost of thermal power generation increased due to a decrease in the operation of hydroelectric power plants caused by drought. However, in addition to a decrease in mainenance costs due to the difference in the timing of inspections such as the power generation predetermined period, the time lag of the fuel cost adjustment system pushed up profits. As a result, ordinary income increased to ¥39.1 billion, a year-on-year increase of ¥3.9 billion or 11.3%.

Net income attributable to owners of the parent rose to ¥27.9 billion, a year-on-year increase of ¥3.1 billion or 12.5%. Consolidate cash income* for this period was ¥86.8 billion.

*We set consolidated cash income as a financial target in the Tohoku Electric Power Group's medium- to long-term vision formulated this year. (Target for 320 billion yen in FY 2024)

Consolidated cash income = Operating income + Depreciation + Amortization of nuclear fuel + Share of profit of entities accounted for using equity method (Operating income doesn't include time lag between fuel cost and fuel cost adjustment charges.)

＜Notice＞

In April 2020, Tohoku Electric Power Co., Inc. spun off the Tohoku Electric Power Network Co., Inc. that operates the power transmission and distribution business.

For this reason, " non-consolidate financial results " which was notified until financial results of FY2019 refers to the settlement of accounts for "Tohoku Electric Power Co., Inc. (operating holding company)" independently from financial results of FY2020. Due to the change in the company's form, it is no longer possible to compare it to the conventional individual financial results, and the weight of "non-consolidate financial results" (individual financial results of Tohoku Electric Power Co., Inc. which is operating holding company) in the consolidated results has decreased. Therefore, we will only announce "consolidated settlement" from financial results of FY2020.

【Financial Results】

［Consolidated］									(Billions of yen)
				FY2020/1Q			FY2019/1Q		Change
				(A)			(B)		(A) - (B)		(A)/(B)
	Operating		519.2	529.7	-10.4	98.0%
	revenue
	Operating		41.7	39.1	2.6		106.8%
	income
	Ordinary		39.1	35.1	3.9		111.3%
	income
	Net income
	attributable to		27.9	24.8	3.1		112.5%
	owners of parent

(Reference)

Operating revenue includes total of grant under act on purchase of renewable energy sourced electricity and surcharge for promoting renewable energy sourced electricity based on Feed-inTariff Scheme for renewable energy and the self-contractedportion due to introduction of the indirect auction (*). Operating revenue and operating income on operating revenue ratio excluding these factors are as follows.

				(Billions of yen)
	Operating	Operating	Operating	Operating
	revenue	revenue	income on	income on
		excluding (*)	operating	operating
			revenue ratio	revenue ratio
				excluding (*)
FY2020/1Q	519.2	378.0	8.0%	11.0%

［Changing factor of consolidated ordinary income］

	Increase in fuel		FY2019/1Q profit	+7.0
	cost for thermal		FY2020/1Q profit	+13.0
Decrease in the	power generation		Increase		6.0
resulting from
volume of retail
reduced			Others
electricity sales
operation of	Decrease in
	-5.3
-4.1	hydroelectric	maintenance
power generation		cost

Ordinary	11.1
income	-3.7

35.1

I m p a c t e x c l u d i n g t i m e l a g b e t w e e n f u e l c o s t a n d f u e l c o s t a d j u s t m e n t c h a r g e s

： d e c r e a s e o f a b o u t 2 . 0 b i l l i o n y e n ( D o w n t u r n )

(Billions of yen)

6.0

Time lag	Ordinary
between fuel	income
cost and fuel	39.1
cost adjustment
charges

FY2019/1Q

FY2020/1Q

［Segment Information］										(Billions of yen)
				Power
				Generation			Network		Construction		Others			Subtotal		Adjustment*			Total
				and Sales
	FY2020/1Q
	Operating			413.7			172.8	46.6	51.5			684.9		-165.6		519.2
	revenue
	Ordinary			35.4			6.7		-2.3		5.1			45.0		-5.8			39.1
	income

*Elimination of transactions between segments. By adding the adjustment amount to the sum of the figures for each segment, the figures are consistent with the figures for each item in the consolidated financial statements.

［Power Generation and Sales Business］

Retail electricity sales volume was 15.1 TWh, a year-on-year decrease 5.1%, due to a decrease in operations for commercial and industrial use resulting from the spread of COVID-19. Lighting (Residential) was 5.0 TWh, a year-on-year increase 0.4%. Power was 10.1 TWh, a year-on-year decrease 7.6%.

On the other hand, wholesale electricity sales volume increased to 4.3 TWh, a year on year increase of 44.5%, due to an increase in wholesale sales outside Tohoku and Niigata area.

As a result, total electricity sales increased to 19.4 TWh, a year-on-year increase 2.7%.

In addition to these electricity sales, there was an increase in fuel cost for thermal power generation resulting from reduced operation of hydroelectric power generation caused by drought; nevertheless an impact of the time lag of the fuel cost adjustment system increased profit. As a result, operating revenue was ¥413.7 billion and ordinary income was ¥35.4 billion.

［Network Business］

Electricity demand in our franchise area for this period decreased to 17.3 TWh, a year-on-year decrease 4.2%, mainly due to the spread of COVID-19. In terms of costs, maintenance costs of distribution facilities decreased. As a result, operating revenue was ¥172.8 billion and ordinary income was ¥6.7 billion.

［Construction Business］

Operating revenue decreased to ¥46.6 billion and ordinary loss was ¥2.3 billion. There was a decrease in construction for electric power and for general consumers including overseas.

In construction business, the proportion of construction completed towards the end of the fiscal year increase, so in the first quarter, the cost burden ratio to sales tend to increase.

［Other Business］

Operating revenue was ¥51.5 billion and ordinary income was ¥5.1 billion due to an increase in the information and communications business and a decrease in the gas business.

< Major factors >

Items	FY2020/1Q	FY2019/1Q
Crude oil CIF price ($/bbl.)	32.2	71.5
Exchange rate (¥/$)	108	110
Nuclear power utilization rate (%)	-	-

【Electricity Sales】

													(GWh)
				FY2020/1Q			FY2019/1Q*			Change			Change
				(A)			(B)			(A) -(B)			(A) /(B)
	Lighting		5,014	4,996	18	100.4%
	(Residential)
	Power		10,114	10,942	-828	92.4%
	Retail Electricity			15,128			15,938			-810			94.9%
	Sales
	Wholesale		4,281	2,963	1,318	144.5%
	Electricity Sales
	Total of Electricity			19,409			18,901			508			102.7%
	Sales

*FY2019/1Q(B) doesn't include sales of Tohoku Electric Power Network Co., Inc.

【Consolidated Financial Forecast for fiscal 2020】

Financial forecasts for the year ending March 31, 2021 have yet to be determined at this time, because the impact on the power demand resulting from the spread of COVID-19 is unclear and it is difficult to reasonably assess the estimates. These forecasts will be promptly disclosed as soon as certain conditions are met and we can reasonably assess the estimates of income.

【Dividend Forecast for fiscal 2020】

The dividends for both interim and year-end FY2020 have yet to be determined at this time.

July 30, 2020

Tohoku Electric Power Co., Inc.

Summary of Quarterly Financial Statements (Unaudited)

(April 1, 2020 - June 30, 2020)

Information below is an English translation of the "Unaudited Quarterly Financial Release" for three months ended June 30, 2020, 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 : Kojiro Higuchi, President

Tel : [phone]

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

1. Business Results for Consolidated First Quarter Period in FS2020 (Three months ended June 30, 2020)

(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	%
3 months ended Jun. 30, 2020	519,284	(2.0)	41,763	6.8	39,190	11.3	27,930	12.5
3 months ended Jun. 30, 2019	529,769	8.6	39,107	15.2	35,196	8.7	24,818	10.3

(Note) Comprehensive income (3 months ended June 30, 2020: 29,603 million yen 24.2%, 3 months ended June 30, 2019: 23,829 million yen -9.6%) Percentage figures represent changes as compared to the same period of the previous year.

	Net income per share	Net income per share
	(basic)	(diluted)
	Yen	Yen
3 months ended Jun. 30, 2020	55.91	51.92
3 months ended Jun. 30, 2019	49.71	46.22
(2) Changes in Financial Positions
	Total assets	Net assets	Equity-to-asset ratio
	Millions of yen	Millions of yen	%
Jun. 30, 2020	4,310,764	883,155	18.8
Mar. 31, 2020	4,323,099	864,177	18.3

(Reference) Shareholders' Equity (June 30, 2020: 811,121 million yen, March 31, 2020: 791,121 million yen)

2. Dividends

		Cash dividends per share
	1Q	2Q	3Q	Year-end	Annual total
	Yen	Yen	Yen	Yen	Yen
Year ended Mar. 31, 2020	-	20.00	-	20.00	40.00
Year ending Mar. 31, 2021	-
Year ending Mar. 31, 2021		-	-	-	-
(forecast)

(Note) Forecast revision of dividends from the latest forecast: None

Interim and year-end dividend of year ending Mar. 31, 2021 have yet to be determined at this time

3. Business Results Forecast for Consolidated FS2020 (Sear ending March 31, 2021)

Financial forecasts for the year ending March 31, 2021 have yet to be determined at this time, because the impact on the power demand resulting from the spread of COVID-19 is unclear and it is difficult to reasonably assess the estimates of income.

These forecasts will be promptly disclosed as soon as certain conditions are met and we can reasonably assess the estimates.

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(Reference) Consolidated Cash Income for the First Quarter Period in FS2020 (Three months ended June 30, 2020)

	Consolidated Cash Income
	Millions of yen
3 months ended Jun. 30, 2020	86,810

(Note) Consolidated cash income = Operating income + Depreciation + Amortization of nuclear fuel + Share of profit of entities accounted for using equity method (Operating income doesn't include time lag between fuel cost and fuel cost adjustment charges.)

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First Quarter FY2020 (as of June 30, 2020) and FY2019 (as of March 31, 2020)
Assets		(Millions of yen)
Item	June 30, 2020	March 31, 2020
Non-current assets:	3,669,125	3,679,082
Electric utility plant and equipment:	2,480,642	2,504,659
Hydroelectric power production facilities	176,025	187,035
Thermal power production facilities	391,070	402,870
Nuclear power production facilities	247,705	254,447
Transmission facilities	581,741	589,116
Transformation facilities	255,379	255,044
Distribution facilities	667,862	670,135
General facilities	133,856	118,187
Other electric utility plant and equipment	26,999	27,821
Other non-current assets	223,928	226,872
Construction in progress:	421,240	403,472
Construction and retirement in progress	375,561	357,778
Special account related to nuclear power decommissioning	24,435	24,451
Special account related to reprocessing of spent nuclear fuel	21,243	21,243
Nuclear fuel:	174,355	174,331
Loaded nuclear fuel	30,591	30,591
Nuclear fuel in processing	143,764	143,740
Investments and other assets:	368,958	369,745
Long-term investments	99,655	99,462
Net defined benefit asset	3,873	3,844
Deferred tax assets	156,021	159,568
Other	109,731	107,199
Allowance for doubtful accounts	(324)	(328)
Current assets:	641,639	644,017
Cash and deposits	231,360	244,010
Notes and accounts receivable - trade	240,213	224,649
Inventories	65,793	67,374
Other	104,578	108,450
Allowance for doubtful accounts	(305)	(466)
Assets	4,310,764	4,323,099

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Liabilities and net assets		(Millions of yen)
Item	June 30, 2020	March 31, 2020
Non-current liabilities:	2,548,378	2,457,197
Bonds payable	985,000	865,000
Long-term loans payable	1,165,291	1,190,302
Reserve for restoration costs of natural disaster	5,061	5,061
Net defined benefit liability	188,379	189,968
Asset retirement obligations	166,497	165,848
Deferred tax liabilities for land revaluation	1,330	1,330
Other	36,817	39,685
Current liabilities:	879,230	1,001,724
Current portion of non-current liabilities	366,120	372,388
Notes and accounts payable - trade	112,674	144,616
Accrued taxes	24,049	33,253
Other advances	207,548	205,984
Reserve for restoration costs of natural disaster	2,332	2,613
Other	166,504	242,869
Liabilities	3,427,609	3,458,921
Shareholders' equity:	827,627	809,454
Capital stock	251,441	251,441
Capital surplus	22,390	22,390
Retained earnings	559,991	542,187
Treasury shares	(6,195)	(6,564)
Accumulated other comprehensive income:	(16,506)	(18,332)
Valuation difference on available-for-sale securities	(57)	197
Deferred losses on hedges	(288)	(618)
Revaluation reserve for land	(895)	(895)
Foreign currency translation adjustments	(147)	(288)
Remeasurements of defined benefit plans	(15,117)	(16,727)
Subscription rights to shares	890	1,120
Non-controlling interests	71,143	71,935
Net assets	883,155	864,177
Liabilities and net assets	4,310,764	4,323,099

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QUARTERLS CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

First Quarter FY2020 (Three months ended June 30, 2020) and First Quarter FY2019 (Three months ended June 30, 2019)

			(Millions of yen)
Item	Three months ended June 30,
2020		2019
Operating revenue:		519,284	529,769
Electric utility operating revenue		472,383	485,666
Other business operating revenue		46,901	44,103
Operating expenses:		477,520	490,662
Electric utility operating expenses		432,264	446,614
Other business operating expenses		45,255	44,048
Operating income		41,763	39,107
Non-operating income:		2,404	1,752
Dividend income		370	390
Interest income		51	87
Share of profit of entities accounted for using equity method		1,511	575
Other		470	697
Non-operating expenses:		4,977	5,662
Interest expenses		4,006	4,500
Other		971	1,162
Ordinary revenue		521,688	531,522
Ordinary expenses		482,498	496,325
Ordinary income		39,190	35,196
Income before income taxes		39,190	35,196
Income taxes - current		8,075	2,286
Income taxes - deferred		3,357	8,651
Income taxes		11,433	10,937
Net income		27,757	24,259
Net loss attributable to non-controlling interests		(173)	(559)
Net income attributable to owners of parent		27,930	24,818

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QUARTERLS CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

First Quarter FY2020 (Three months ended June 30, 2020) and First Quarter FY2019 (Three months ended June 30, 2019)

			(Millions of yen)
Item	Three months ended June 30,
2020		2019
Net income		27,757	24,259
Other comprehensive income:
Valuation difference on available-for-sale securities		(227)	(892)
Deferred gains or losses on hedges		329	43
Foreign currency translation adjustments		141	(191)
Remeasurements of defined benefit plans		1,601	611
Share of other comprehensive income of entities accounted for using equity method		0	(0)
Other comprehensive income		1,845	(430)
Comprehensive income		29,603	23,829
Comprehensive income attributable to:
Comprehensive income attributable to owners of parent		29,757	24,407
Comprehensive income attributable to non-controlling interests		(154)	(578)

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(Note)

This report solely constitutes reference material for the purpose of providing the readers with relevant information to evaluate our company.

The information contains forward-looking statements based on assumptions and projections about the future with regard to our company. As such, the readers are kindly asked to refrain from making judgment by depending solely on this information.

The forward-looking statements inherently involve a degree of risks and uncertainties. Consequently, these risks and uncertainties could cause the actual results and performance to differ from the assumed or projected status of the company.

Tohoku Electric Power Co., Inc. hereby disclaim any responsibility or liability in relation to consequences resulting from decisions made by investors.

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