Tohoku Electric Power Incorporated: Financial Results for the Year Ended March 31, 2022 (Fiscal 2021) and Financial Forecast for the Year Ended March 31, 2023 (Fiscal 2022)

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April 28, 2022

Financial Results for the Year Ended March 31, 2022 (Fiscal Year 2021) and Financial Forecast for the Year Ended March 31, 2023 (Fiscal Year 2022)

Tohoku Electric Power CO., Inc. Released Financial Results for Fiscal Year 2021 (April 1, 2021 to March 31, 2022)

and the financial forecast for fiscal year 2022 today.

Consolidated financial results

Total electricity sales volume increased to 84.1 TWh, an increase of 1.9% year-on-year, due to an increase in retail electricity sales volume in response to the significant decline in the previous year resulting from COVID-19.

In addition, operating revenue decreased to 2,104.4 billion yen, a year-on-year decline of 182.3 billion yen or 8.0%, due to the impact of adopting “Accounting standard for revenue recognition*1.”

As for ordinary loss, although amortization decreased due to a change in amortization method, ordinary loss amounted to 49.2 billion yen, a year-on-year decrease. the other of 116.7 billion yen due not only to the impact of the mismatch between fuel cost and fuel cost. adjustment charges caused by soaring fuel prices, but also an increase in electricity supply costs resulting from the increase in JEPX prices and the shutdown of thermal power plants damaged by the earthquake off the coast of Fukushima Prefecture in February last year and March this year.

With regard to the net loss attributable to the owners of the parent company, a gain on the disposal of shares of subsidiaries and associates was recorded in exceptional income, a cost of repairing the facilities damaged by the earthquake in wide of

Fukushima Prefecture in March was recorded as an extraordinary loss and loss on return of income and expenditure imbalance*2*3 in the Tohoku power grid was recorded as an extraordinary loss. In addition, deferred income taxes increased due to a partial reversal of deferred tax assets due to recent trends in business performance. As a result, the net loss attributable to parent owners was 108.3 billion yen, a year-on-year decrease of 137.7 billion yen.

Consolidated cash result*4 for this period was 257.3 billion yen.

*1 Accounting standard for revenue recognition

With the adoption of the “Accounting Standard for Revenue Recognition” from April 2021, the “Electricity

The accounting rules for companies” have also been revised. The subsidy under the law on the purchase of electricity from renewable energies and the surcharge for the promotion of electricity from renewable energies on the basis of the feed-in tariff scheme for renewable energy, which was previously recorded as operating revenue, will no longer be adopted. The adoption of this standard resulted in a decrease of 452.9 billion yen in operating revenue for the fiscal year 2021, while expenses also decreased by the same amount, therefore there is no impact on revenue.

*2 Imbalance

The difference between forecasted and actual daily demand and supply submitted by electricity generators and retail electricity suppliers to the electricity transmission and distribution operator through the coordination organization interregional transport operators is called imbalance. The operator of the electricity transport and distribution company supplies or buys the equivalent of this difference, then settles the balance on the basis of the unit price of the imbalance rates.

*3 Loss on return of income and imbalance expenses

Since the imbalance rates soared in January 2021 due to the tight balance between electricity supply and demand,

The electricity and gas industry sub-committee held in December 2021 decided that a fixed amount of imbalance rates paid by retail electricity suppliers, which were calculated on the based on a unit price of 200 yen/kWh or higher than the market price, will be deducted monthly from the rolling charge starting in April. Based on this, Tohoku Electric

Power Network has filed an application for special approval under Article 18(2) of the

Electricity Business Act of January 27, 2022 to deal with it. Then, this adjustment is accounted for as an exceptional loss in the consolidated financial statements.

*4 Consolidated cash income

Consolidated cash income has been set as a financial target in Tohoku Electric Power Group’s medium and long-term vision “Working alongside the Next”. (FY2024 target of 320 billion yen)

Consolidated cash result = Operating result + Depreciation + Amortization of nuclear fuel + Share of result of equity-accounted entities (The operating result does not include the difference between the cost of fuel and the adjustment expenses of the fuel cost.)

Key points of financial results and forecasts

Financial result for the financial year 2021

Operating income: Impact of the adoption of the accounting standard for

Revenue recognition

Ordinary income: impact of mismatch between fuel cost and fuel cost adjustment fee, JEPX price hike, and supply and demand due to earthquake off Fukushima Prefecture

Financial and dividend forecasts for the 2022 financial year

Summary of financial results

Operating revenue

2,104.4 billion yen

(a year-over-year decline of 182.3 billion yen)

Ordinary income

-49.2 billion yen

(a year-on-year decrease of 116.7 billion yen)

  • Adjusted earnings decreased due to an impact of the mismatch between fuel cost and fuel cost adjustment charges caused by soaring fuel prices, an increase in supply costs resulting from higher JEPX prices, and the shutdown of earthquake-damaged thermal power plants off Fukushima Prefecture.

    Attributable net income to the owners of the parent

    -108.3 billion yen

    (a year-on-year decrease of 137.7 billion yen)

  • The gain on the sale of securities (shares of group companies) was recognized as exceptional income.

  • The costs of restoring facilities damaged by the earthquake off the coast of Fukushima prefecture in March 2022 and the loss on return of imbalance revenue and expenses were recorded as exceptional losses.

  • In addition, deferred income taxes increased due to a partial reversal of deferred tax assets due to recent trends in business performance.

Summary of Consolidated Financial Statements

(billion yen)

FY2020

(A)

FY2021

(B)

Change (B) – (A)

Change (B) / (A)

Operating revenue*1

[

2,286.8 1,867.2

]

[

2,104.4 2,104.4

]

[

(182.3) 237.1 ]

[

92.0 % 112.7 %]

Ordinary income*1

[

67.5 53.5

]

[

(49.2) 56.7

]

(116.7)

[

3.2 ]

[

106.1 %]

Net income attributable to owners of the parent company

29.3

(108.3)

(137.7)

– %

Consolidated cash income*2

302.3

257.3

(45.0)

85.1%

*1 The lower operating revenue figures are based on the accounting standard for revenue recognition. The subsidy under the law on the purchase of electricity produced from renewable energies and the surcharge for the promotion of electricity produced from renewable energies on the basis of the feed-in tariff scheme for renewable energy, which was previously recorded as operating revenue, will no longer be recorded.

Those with ordinary income exclude the mismatch between the cost of fuel and the fuel cost adjustment fee.

*2 Consolidated cash = Operating profit + Depreciation + Amortization of nuclear fuel + Share of profit of equity-accounted entities

(Operating profit does not include the fuel cost lag and the fuel cost adjustment fee.)

Factors for changes in consolidated ordinary income for the corresponding period last year

Decrease of -116.7 billion yen (67.5 -49.2)

(billion yen)

1.7

-16.6

Decrease in

44.1

retail volume Impact of electricity supply, sales and demand due to the earthquake off

Change of depreciation method

Fukushima Prefecture

-50.0

OthersMismatch between fuel cost and fuel cost adjustment fee

24.1

67.5

Impact of JEPX price increase

-120.0

-49.2

Ordinary income excluding the difference between the cost of fuel and fuel cost adjustment charges 53.5

Impact excluding mismatch between fuel cost and fuel cost adjustment feeincrease of about 3.2 billion yen

Ordinary income excluding jet lag between the cost of fuel and fuel cost adjustment fee 56.7

Decrease in pension costs 8.2

Reduction in repair expenditure 7.9

Decrease in pension costs 3.3

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