Chugoku Electric Power : "Message from Top Management" was last updated.

Nakagawa Kengo

Representative Director
President & Chief Executive Officer

Allow us to begin by extending our heartfelt gratitude to our stockholders and investors for your continued support of our business activities.

Chugoku Electric Power solemnly accepts the receipt of a cease and desist order from the Japan Fair Trade Commission under the Antimonopoly Act and the occurrence of a series of inappropriate conduct, including the unauthorized access to customer information managed by Chugoku Electric Power Transmission & Distribution Co., Inc. To prevent similar incidents from occurring again, we have formulated measures to prevent recurrence and are working on them in turn.
To strengthen governance, in March 2023 we established the Inappropriate Matter Recurrence Prevention and Response Division as an internal organization for responding to a series of inappropriate conduct, and in September 2023 we established the Internal Control Enhancement Committee to evaluate and provide advice on internal controls based on the expertise of external experts.
These organizations will take the lead in analyzing root causes, formulating measures to prevent recurrence, and strengthening internal controls, taking into account the corporate culture and other factors.

Consolidated financial results for the second quarter of FY2024 showed an increase in both revenues and profit.
Revenues increased from the same period of the previous year, mainly because of the revision of electricity rates.
Ordinary income increased from the same period of the previous year, mainly because of an improvement from the time lag of the fuel cost adjustment system as a result of lower fuel prices. In addition, net profit attributable to owners of the parent also increased from the same period of the previous year.
Regarding the full-year earnings forecast for FY2024, we expect a decrease in revenues due to lower total electricity sales and lower fuel cost adjustment due to lower fuel prices. On the other hand, we expect an increase in ordinary income due to an expected increase in the gain from the time lag of the fuel cost adjustment system and the price impact of fuel and electricity markets. In the second half of the fiscal year, we expect that the recent depreciation of the yen and rising fuel prices will result in a loss from the time lag of the fuel cost adjustment system and higher prices in the electricity market during the winter.
Regarding dividends, we have revised our dividend policy to adopt a performance-based policy starting in FY2024. Dividends will be paid at a payout ratio of 10% until the consolidated shareholders' equity ratio returns to 15%, as we place the highest priority on recovering and strengthening our financial base.
Based on this dividend policy, the annual dividend forecast for FY2024 has been revised to 30 yen per share in light of the revised full-year earnings forecast. The interim dividend is 5 yen per share as per the dividend forecast announced in July, and the year-end dividend forecast has been revised from 5 yen to 25 yen per share.

In light of the series of inappropriate conduct, the Chugoku Electric Power Group will place the highest priority on regaining the trust of shareholders, investors, customers, and all other stakeholders and on working toward corporate revitalization.
In addition, we are rebuilding our business performance and financial base, which have deteriorated significantly over the past several years. In addition to efforts to improve management efficiency, we will continue to address various issues to improve our income and expenditure, such as receiving approval in August 2023 for the construction plan for Shimane Nuclear Power Station Unit 2 and the prospect of restarting operations during the first half of FY2025.
We will continue to work together as a Group to enhance corporate value while steadily addressing medium- and long-term management issues, such as the promotion of sustainable management and the achievement of carbon neutrality.

We would like to ask our stockholders and investors for their continued understanding and support.

November 2023

* In this message, the term "Fiscal Year 2024" refers to the period between April 1, 2023 and March 31, 2024.