Chugoku Electric Power : Consolidated Financial Statements

Year ended March 31, 2025 with Independent Auditor's Report

The Chugoku Electric Power Company, Incorporated and Consolidated Subsidiaries

Consolidated Financial Statements Year ended March 31, 2025

Consolidated Balance Sheets 1

Consolidated Statements of Income 3

Consolidated Statements of Comprehensive Income 4

Consolidated Statements of Changes in Equity 5

Consolidated Statements of Cash Flows 7

Notes to Consolidated Financial Statements 9

Independent Auditor's Report 45

Consolidated Financial Statements and Primary Notes

Consolidated Balance Sheets

(Millions of yen)

As of March 31, 2025 As of March 31, 2024

Special account related to reprocessing of spent nuclear fuel

Loaded nuclear fuel and nuclear fuel in processing

34,085 30,298

151,398 138,488

(Millions of yen)

As of March 31, 2025 As of March 31, 2024

Consolidated Statements of Income and Comprehensive Income

Consolidated Statements of Comprehensive Income

For the fiscal year ended March 31, 2025

(Millions of yen)

For the fiscal year ended March 31, 2024

Profit 98,146 132,820

Other comprehensive income

Valuation difference on available-for-sale securities (1,156) 3,584

Deferred gains or losses on hedges (216) 7,439

Foreign currency translation adjustment 7,684 5,047

Remeasurements of defined benefit plans, net of tax 112 1,383

Share of other comprehensive income of entities

10,745 8,027

accounted for using equity method

Total other comprehensive income 17,169 25,483

Comprehensive income 115,316 158,303 Comprehensive income attributable to

Comprehensive income attributable to owners of parent

Comprehensive income attributable to non-controlling interests

115,876 158,886

(560) (582)

Consolidated Statements of Changes in Equity

For the fiscal year ended March 31, 2025

(Millions of yen)

For the fiscal year ended March 31, 2024

(Millions of yen)

Cash flows from financing activities

For the fiscal year ended March 31, 2025

(Millions of yen)

For the fiscal year ended March 31, 2024

Proceeds from issuance of bonds 260,660 194,356

Redemption of bonds (163,185) (118,228)

Proceeds from long-term borrowings 196,400 329,000

Repayments of long-term borrowings (122,213) (98,531)

Proceeds from short-term borrowings 173,670 196,328

Repayments of short-term borrowings (167,355) (223,395)

Proceeds from issuance of commercial papers - 140,000

Redemption of commercial papers - (441,000)

Dividends paid (12,612) (1,801)

Dividends paid to non-controlling interests (121) (88)

Proceeds from share issuance to non-controlling shareholders

- 9,246

Other, net (4,061) (3,011)

Net cash provided by (used in) financing activities 161,182 (17,126)

Effect of exchange rate change on cash and cash equivalents

600

615

Net increase (decrease) in cash and cash equivalents (11,033) 52,859

Cash and cash equivalents at beginning of period 298,465 245,605

Decrease in cash and cash equivalents resulting from exclusion of subsidiaries from consolidation

(759) -

Cash and cash equivalents at end of period (Note 18) 286,672 298,465

The Chugoku Electric Power Co., Inc. and Consolidated Subsidiaries

1. Basis of Presenting Consolidated Financial Statements

   The accompanying Consolidated Financial Statements of The Chugoku Electric Power Co., Inc. ("the Company") and its consolidated subsidiaries (together with the Company, "the Companies") have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations and the Electricity Business Act and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.

   The accounts of the Company's overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. The accompanying Consolidated Financial Statements have been translated into English from the Consolidated Financial Statements of the Company prepared in accordance with Japanese GAAP and filed with the Director-General of the Kanto Local Finance Bureau as required by the Japanese Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language Consolidated Financial Statements, but not required for fair presentation, is not presented in the accompanying Consolidated Financial Statements.

   Until the year ended March 31, 2024, the Company prepared Consolidated Financial Statements that were partially restructured from the Consolidated Financial Statements prepared in accordance with Japanese GAAP or filed with the Director-General of the Kanto Local Finance Bureau in accordance with the provisions of the Japanese Financial Instruments and Exchange Law. However, beginning with the year ended March 31, 2025, the restructuring has been discontinued, and started to translate the Consolidated Financial Statements filed with the Director-General of the Kanto Local Finance Bureau into English.

   Due to this change in presentation, the English translation has changed for some items in the Consolidated Financial Statements. Numerical values less than one million yen are rounded off, excluding per share information.

   As a result, total values and numerical values obtained by summing each item will not necessarily match.

2. Significant Accounting Policies

   The following is a summary of the significant accounting policies used in the preparation of the Consolidated Financial Statements.

   Consolidation

   The accompanying Consolidated Financial Statements include the accounts of the Company and significant companies over which the Company has power of control through majority voting rights or existence of certain other conditions evidencing control by the Company. In the elimination of investments in subsidiaries, all the assets and liabilities of a subsidiary, not only to the extent of the Company's share but also including the non-controlling interest share, are evaluated based on fair value at the time the Company acquired control of the subsidiary.

   Investments in non-consolidated subsidiaries and affiliated companies over which the Company has the ability to exercise significant influence over the operating and financial policies of the investees are accounted for using

   
   
   

   the equity method.

   For the year ended March 31, 2025, 20 subsidiaries (22 in 2024) were consolidated and 6 (7 in 2024) subsidiaries were excluded from consolidation due to their immateriality for the consolidated total assets, sales, profit, retained earnings, and etc., in the Consolidated Financial Statements.

   For the year ended March 31, 2025, 5 non-consolidated subsidiaries (6 in 2024) and 13 affiliated companies (12 in 2024) were accounted for by the equity method.

   For the year ended March 31, 2025, 16 affiliated companies and 1 subsidiary (19 affiliated companies and 1 subsidiary in 2024) were stated at cost without applying the equity method of accounting. Even if the equity method had been applied to these investments, the amounts of profit and retained earnings, etc., would individually have had only a slight effect and together would have had no material impact on the Consolidated Financial Statements. The consolidated subsidiaries whose accounting closing date differs from the consolidated closing date are Chugoku Electric Power Australia Resources Pty. Ltd., Chugoku Electric Power International Netherlands B.V., Chugoku Electric Power America, LLC and Chugoku Electric Power Singapore Pte. Ltd.. These companies have December 31 as their closing dates. In drawing up the Consolidated Financial Statements, the Company uses these consolidated subsidiaries' financial statements as of their closing dates and makes the necessary adjustments, in consolidated terms, for their important transactions that take place between the date and the consolidated closing

   date.

   Inventories

   Inventories are stated at cost, determined principally by the weighted average method. Inventories with lower profitability have been written down.

   Securities

   Available-for-sale securities for which market value is readily determinable are stated at market value as of the end of the period with unrealized gains and losses, net of applicable deferred tax assets/liabilities, not reflected in earnings but directly reported as a separate component of net assets. The cost of securities sold is determined by the moving average method. Available-for-sale securities for which market value is not readily determinable are stated primarily at moving average cost.

   If the market value of equity securities issued by unconsolidated subsidiaries or affiliated companies is not accounted for by the equity method, or the market value of the available-for-sale securities declines significantly, the securities are stated at fair market value, and the difference between the fair market value and the book value is recognized as a loss in the period of the decline. If equity securities issued by unconsolidated subsidiaries or affiliated companies not accounted for by the equity method do not have any market value, the securities should be written down to net asset value with the corresponding loss recorded in the Consolidated Statements of Income in the year that the net asset value declined significantly. In these cases, the fair market value or the net asset value will be the carrying amount of the securities at the beginning of the next year.

   Property and depreciation

   Depreciation and amortization of tangible and intangible fixed assets are calculated by the straight-line method, mainly based on the useful life stipulated by the Corporation Tax Act.

   
   
   

   Nuclear fuel and amortization

   Nuclear fuel is stated at cost less accumulated amortization. The amortization of loaded nuclear fuel is calculated based on the quantity of heat produced for the generation of electricity.

   Allowance for doubtful accounts

   The allowance for doubtful accounts is provided in an amount sufficient to cover possible losses on collection. It consists of the estimated uncollectible amount with respect to identified doubtful receivables and an amount calculated based on the Companies' historical rate of loss with respect to the remaining receivables.

   Reserve for water shortage

   Based on the Act for Partial Revision of the Electricity Business Act, pursuant to the provisions prior to the revision of this Act, the Company provides drought reserves against fluctuation in water levels in the sums stipulated by the Ministry of Economy, Trade and Industry ordinance.

   Accounting policy for recognition of significant revenues and expenses

   The Companies' main businesses are power generation and electric power sales business by the Company and power transmission and distribution business by the Chugoku Electric Power Transmission & Distribution Co., Inc. The Company takes obligation to supply electricity based on electricity supply and demand contracts with customers. The electric revenue from transactions is recorded as revenue based on the electricity usage determined

   by monthly meter readings.

   The Chugoku Electric Power Transmission & Distribution Co., Inc. takes obligation for consignment supply and electricity supply adjustment in the service area. The electric revenue from consignment supply is recorded as revenue based on the electricity usage determined by monthly meter readings. The electric revenue from electricity supply adjustment is recorded as revenue based on the electricity usage determined as of the last day of each month.

   Accounting methods pertaining to retirement benefits

   To prepare for employees' retirement benefits, the figure obtained by subtracting plan assets from retirement benefit obligations from the estimated sums at the end of the consolidated accounting year is recorded as retirement benefit liability (or as retirement benefit asset when the plan asset amount exceeds the retirement benefit obligations).

   For attributing the estimated retirement benefits to the period until the end of the fiscal year in determining the retirement benefit obligations, the benefit formula basis is principally followed.

   Past service costs are amortized by the straight-line method using a certain number of years (mainly 1 year) within the employee's average remaining service period when the costs occurred.

   Actuarial gains/losses are apportioned into sums by the straight-line method using a certain number of years (5 years) within the employee's average remaining service period from the consolidated accounting year in which the difference occurred, and each sum is amortized from the consolidated accounting year following the year of occurrence.

   Unrecognized actuarial gains/losses and unrecognized past service costs are recorded as remeasurements of defined benefit plans in accumulated other comprehensive income in the Net Assets section, after adjusting for tax effects.

   
   
   

   Derivatives and hedge accounting

   The Companies state derivative financial instruments at fair value and recognize changes in the fair value as gains or losses unless the derivative financial instrument is used for hedging purposes. If used for hedging purposes and meet certain hedging criteria, recognition of gain/loss is deferred until the loss/gain on the hedged item is recognized. Under Japan's accounting standards, interest rate swap transactions, forward foreign exchange transactions and currency swap transactions are processed together with the hedged items and are not recognized in terms of

   losses/gains in derivative transactions.

   Hedging effectiveness is evaluated by comparing the total cash flow change of the hedging instrument and the total cash flow change of the hedged item. However, assessment of hedge effectiveness is not carried out for interest rate swap transaction or currency swap transactions that meet certain requirements.

   Amortization method and amortization period for goodwill

   Goodwill is amortized uniformly over a period not exceeding 20 years. However, when the amount is insignificant, the entire amount is amortized in the period in which it is incurred.

   Cash and cash equivalents

   Cash and cash equivalents in the Consolidated Statements of Cash Flows also include all highly liquid investments with original maturities of three months or less that are readily convertible to known amount of cash as they present insignificant risk of change in value.

   Capitalization of interest expenses

   Interest expenses related to debt incurred for the construction of power plants has been capitalized and included in the cost of the related assets pursuant to the accounting regulations under the Electricity Business Accounting Regulations.

   Method of recording expenses necessary for decommissioning of commercial power reactors

   With regard to expenses necessary for decommissioning of commercial power reactors, in accordance with the "Act on Reprocessing of Spent Fuel in Nuclear Power Generation, etc., and Promotion of Decommissioning of Power Reactors" (Act No. 48 of 2005) as amended by Article 3 of the "Act for Partial Revision of the Electricity Business Act and Other Acts for Establishing Electricity Supply Systems for Realizing a Decarbonized Society" (Act No. 44 of 2023), the contribution for decommissioning of reactors is paid to the Nuclear Reprocessing and Decommissioning facilitation Organization of Japan (hereinafter, "NuRO") and recorded in the electric utility operating expenses.

   Nuclear power companies fulfill their obligations to fund these costs by paying an annual contribution for decommissioning of reactors to NuRO, and NuRO is financially responsible for securing, managing and paying the funds required for decommissioning of the reactors.

   (Additional Information)

   "Act for Partial Revision of the Electricity Business Act and Other Acts for Establishing Electricity Supply

   Systems for Realizing a Decarbonized Society " (Act No. 44 of 2023; hereinafter, "Revised Act") and "Ministerial Order on Arrangement of Related Ministerial Orders in Conjunction with Enforcement of the Act for Partial Revision of the Electricity Business Act and Other Acts for Establishing Electricity Supply Systems for Realizing

   
   
   

   a Decarbonized Society" (Order of the Ministry of Economy, Trade and Industry No. 21 of 2024; hereinafter "Revised Ministerial Order") were enforced on April 1, 2024. As a result, the "Ministerial Ordinance concerning Reserve Fund for Dismantling Nuclear Power Facilities" (Ordinance of the Ministry of International Trade and Industry No. 30 of 1989; hereinafter, "Ministerial Ordinance concerning Dismantlement") was abolished and the Electricity Business Accounting Regulations were amended.

   Expenses necessary for decommissioning of reactors of commercial power reactors had been previously recorded as asset retirement obligations. And, in accordance with provisions of the Ministerial Ordinance concerning Dismantlement, the asset cost equivalent of asset retirement obligations had been calculated by applying the straight-line method to the estimated total decommissioning cost for the period equal to the facilities' forecasted operating period and recorded as electric utility operating expenses. However, on and after the date of enforcement of the Revised Ministerial Order, contribution for decommissioning of reactors stipulated in Article 11, Paragraph 2 of "Act on Reprocessing of Spent Fuel in Nuclear Power Generation, etc., and Promotion of Decommissioning of Power Reactors" as amended by Article 3 of the Revised Act, is recorded as electric utility operating expenses.

   Nuclear power companies had been responsible for securing the fund required for the decommissioning of reactors of commercial power reactors that they own. However, in accordance with the Revised Act, their obligation to shoulder the costs will be fulfilled by paying a contribution for decommissioning of reactors to NuRO every year, and NuRO is financially responsible for securing, managing and paying the funds required for decommissioning of reactors.

   As a result, in the year ending March 31, 2025, the asset cost equivalent of asset retirement obligations of ¥6,185 million and asset retirement obligations of ¥103,197 million are reversed.

   Pursuant to the provision of Article 10, Paragraph 1 of the Supplementary Provisions of the Revised Act, in order to provide for expenses necessary for the decommissioning promotion work of reactors, the Company recorded

   ¥97,012 million, which is a total of cash payable to NuRO, as contribution payable for nuclear reactor decommissioning and treated the amount as expenses in accordance with the provision of Article 7 of the Supplementary Provisions of the Revised Ministerial Order. However, pursuant to the said provision, an amount of reversal of asset retirement obligations is deducted from the said expenses.

   There are no impacts on profit and loss. Of the amount mentioned above, ¥3,233 million is transferred to longterm debt due within one year.

   Burden charge for smooth decommissioning of reactors

   In order to smoothly decommission reactors, the "Decommissioning Accounting Scheme" was established. By applying this decommissioning accounting scheme, the remaining book value of the nuclear reactors decommissioned due to changes in energy policies or changes in safety regulations, etc. can be recovered through the structure of consignment supply service fees for general power transmission and distribution businesses.

   Conventionally, the recovery was permitted through collecting retail regulation fees. However, since October 2020, the recovery was shifted to the current scheme considering the continuance of the system.

   Pursuant to the stipulations of Article 45, Paragraph 21, Item 12 of the "Regulation for Enforcement of the Electricity Business Act" (Ministry of International Trade and Industry Ordinance No. 77 of 1995) prior to its amendment by the "Ministerial Order on Arrangement of Related Ministerial Orders in Conjunction with Enforcement of the Act for Partial Revision of the Electricity Business Act and Other Acts for Establishing Electricity Supply Systems for Realizing a Decarbonized Society" (Order of the Ministry of Economy, Trade and Industry No. 21 of 2024), the Company has submitted an application regarding the required reserve amount for the

   
   
   

   book value of specified nuclear power assets and reserve fund for dismantling nuclear power facilities (hereinafter, "burden charge for smooth decommissioning of reactors"), and this application was approved by the Minister of Economy, Trade and Industry.

   In response to this and pursuant to the stipulations of Article 45, Paragraph 21, Item 11 of the "Regulation for Enforcement of the Electricity Business Act" (Ministry of International Trade and Industry Ordinance No. 77 of 1995), the Chugoku Electric Power Transmission & Distribution Co., Inc. altered its general clause for consignment supply services effective October 1, 2020, and is thereby collecting the burden charge for smooth decommissioning of reactors.

   Method of recording the contributions required for spent nuclear fuel reprocessing

   For expenses required in the reprocessing of spent nuclear fuel from commercial power reactors, in accordance with the "Act on Reprocessing of Spent Fuel in Nuclear Power Generation, etc., and Promotion of Decommissioning of Power Reactors" (Act No. 48 of 2005; the "Reprocessing Act") as amended by Article 3 of the "Act for Partial Revision of the Electricity Business Act and Other Acts for Establishing Electricity Supply Systems for Realizing a Decarbonized Society" (Act No. 44 of 2023), the nuclear power company's obligation to shoulder costs will be fulfilled by paying a contribution to NuRO, which will then implement the reprocessing, etc. Furthermore, based on Article 5, Paragraph 2 of the Reprocessing Act, the contribution calculated based on the amount of spent nuclear fuel generated during operation of commercial nuclear power reactors are recorded in the electric utility operating expenses.

   Furthermore, contributions related to processing involved in reprocessing are recorded as special account related to reprocessing of spent nuclear fuel.

   Foreign currency transactions

   Receivables and payables denominated in foreign currencies are translated into Japanese yen at the year-end rate.

   Application of the group tax sharing system

   The Companies apply the group tax sharing system.

3. Significant Accounting Estimates

   Deferred tax assets

   1. Carrying amount

      Millions of yen

      2025 2024

      ¥61,047 ¥75,406

   2. Information that assists users of the Consolidated Financial Statements in understanding the nature of the accounting estimates

      ① Method used for calculating the amount recorded in the Consolidated Financial Statements for the year ended March 31, 2025

      The Companies record the deferred tax assets for the amounts deemed to be recoverable through future taxable income estimated in the mid-to-long term management plan.

      
      
      

      ② Main assumptions used in calculating the amounts recorded in the Consolidated Financial Statements for the year ended March 31, 2025

      For the taxable income estimates, the Companies make assumptions such as unit sales prices based on the information available at present, taking into account market trends for fuel costs, electricity market prices, projection of the electricity sales volume, power generated and received, and etc.

      ③ Effects on the Consolidated Financial Statements for the year ending March 31, 2026

      In the event that important changes occur to these assumptions and there is a decrease in the Companies' future taxable income resulted from factors that could not be predicted, such as changes in the competition environment or fluctuations in fuel costs, the recoverability of deferred tax assets may be affected.

4. Standard and Guidance not yet Adopted

   "Accounting Standard for Leases" (ASBJ Statement No. 34, September 13, 2024)

   "Implementation Guidance on Accounting Standard for Leases" (ASBJ Guidance No. 33, September 13, 2024) Other revisions related to Accounting Standards, Implementation Guidance on Accounting Standards, Practical Solutions, and Transferred Guidance.

   1. Outline

      To be consistent with international accounting standards, the standard prescribes lessees to recognize assets and liabilities for all leases.

   2. Effective date

      The standards and guidance will be effective from the beginning of the year ending March 31, 2028.

   3. Effects of application of the standards and guidance The impact is yet to be determined at this time.

5. Changes in Presentation

   As stated in "1. Basis of Presenting Consolidated Financial Statements", until the year ended March 31, 2024, the Company prepared Consolidated Financial Statements that were partially restructured from the Consolidated Financial Statements prepared in accordance with Japanese GAAP or filed with the Director-General of the Kanto Local Finance Bureau in accordance with the provisions of the Japanese Financial Instruments and Exchange Law. However, beginning with the year ended March 31, 2025, the restructuring has been discontinued, and started to translate the Consolidated Financial Statements filed with the Director-General of the Kanto Local Finance Bureau into English.

   Due to this change in presentation, the English translation has changed for some items in the Consolidated Financial Statements.

   
   
   

6. Additional Information

   Introduction of performance-based stock compensation plan

   Based on the resolution passed at the 100thannual stockholders' meeting held on June 26, 2024, the Company has introduced a performance-based stock compensation plan "Board Benefit Trust (BBT)" (hereinafter "the Plan") for the Company's directors who are not external directors (excluding directors of Audit and Supervisory Committee) and executive officers (excluding those who concurrently serve as directors. Hereinafter, collectively "Directors, etc.").

   1. Plan overview

      The Plan is a performance-based stock compensation plan that is funded by money contributed by the Company. The Company's stock will be acquired through the trust (hereinafter the trust set up based on the Plan will be called "the Trust"). In accordance with "Officer Stock Benefit Rules" established by the Company, the Company's stock and money equivalent to the current market value of the Company's stock (hereinafter "Chugoku Electric stock") will be provided to Directors, etc. through the Trust.

      As a general rule, Directors, etc. will receive their Chugoku Electric stock benefits when they resigned from the positions of Directors, etc.

   2. Shares of the Company remained in the trust account

      Shares of the Company remained in the trust account are recorded as treasury shares under net assets with the book value (excluding the amount of incidental expenses) in the trust account. As of March 31, 2025, the book value of such treasury shares was ¥674 million, and the number of shares of such treasury shares was 658 thousand.

      (Related to the Consolidated Balance Sheets)

7. Reduction Entry from Acceptance of Contributions in Aid for Construction within Fixed Assets (accumulated)

   Millions of yen
   2025	2024
   ¥139,042	¥131,515

8. Accumulated Depreciation of Tangible Assets

   Millions of yen
   2025	2024
   ¥4,559,830	¥4,579,705

   
   
   

9. Shares, etc. of Non-Consolidated Subsidiaries and Affiliated Companies

   	Millions of yen
   	2025	2024
   Shares (Amount invested in jointly controlled companies)	¥206,544 (28,094)	¥187,140 (26,347)
   Investments in capital	-	302
   Available-for-sale securities (Amount invested in jointly controlled companies)	10,458 (285)	9,477 (316)

10. Bonds Payable, Long-term Borrowings and Lease Obligations

    Millions of yen

    	2025	2024
    Bonds payable due through 2061 at rates of 0.04% to 5.742% Long-term borrowings from the Development Bank of Japan Inc., other banks and insurance companies due through 2062 Lease obligations	¥1,326,290 1,747,568 2,094	¥1,227,785 1,675,959 2,504
    Less amounts due within one year	¥3,075,953 (218,867)	¥2,906,248 (288,662)
    Total	¥2,857,085	¥2,617,586

    The annual maturities of bonds payable and long-term borrowings at March 31, 2025 and 2024 were as follows:

    At March 31,2025

    Year ending March 31

    Millions of Yen

    2025	¥	218,439
    2026		256,227
    2027		190,577
    2028		281,681
    Thereafter		2,126,932

    2024	¥	288,216
    2025		221,284
    2026		256,192
    2027		190,542
    Thereafter		1,947,508

    At March 31,2024 Year ending March 31

    Millions of Yen

    (Note) Excluding lease obligations.

    
    
    

11. Pledged Assets and Pledged Debt

    1. The Company Pledged assets

       All assets are pledged as general collateral for bonds payable and borrowings from the Development Bank of Japan Inc.

       Pledged debt

       Millions of yen

       2025 2024

       Bonds payable(Including those due within 1 year) ¥1,226,290 ¥1,127,785 Borrowings from the Development Bank of Japan Inc.

       (Including those due within 1 year)

       130,000 180,000

    2. Consolidated subsidiaries Pledged assets

       Millions of yen

       2025 2024

       Other non-current assets ¥605 ¥615

       Current assets

       Cash and deposits 6 −

       Other 7,161 4,743

       Pledged debt

       Millions of yen

       Long-term borrowings

       (Including those due within 1 year) Current liabilities

       2025 2024

       ¥300 ¥462

       Other 5,795 3,823

    3. Assets pledged as collateral for loans from financial institutions in the certain consolidated subsidiaries' invested companies

       Millions of yen

       2025 2024

       Investments and other assets

       Long-term investments in subsidiaries and associates ¥20,947 ¥21,688

       When consolidated subsidiaries' invested companies default on debts, the liable amounts on consolidated subsidiaries are limited to their invested amounts.

       
       
       

12. Assets generated from Contracts with Customers and Contract Assets included in Receivables and Contract Assets

    Millions of yen

    	2025	2024
    Notes receivable	¥918	¥2,191
    Accounts receivable	127,428	108,616
    Contract Assets	723	3,571

13. Contingent Liabilities

    At March 31, 2025 and 2024, the Companies were contingently liable as guarantors for loans of other companies and employees in the amount of ¥76,409 million and ¥80,374 million, respectively.

    (Related to the Consolidated Statements of Income)

14. Revenue from Contracts with Customers

    Revenue from contracts with customers and other revenue are not classified in separate accounts under operating revenue. For the amount of revenue from contracts with customers, please refer to Note 27 "Segment Information".

15. Research and Development Expenses

    Research and development expenses charged to operating expenses were ¥6,798 million and ¥6,731 million for the years ended March 31, 2025 and 2024, respectively.

16. Content of Extraordinary Losses

    The year ended March 31, 2025

    1. Loss on sale of non-current assets

       The Company recorded a loss on sales of property due to the transfer of the land, buildings and equipment of the former Shimonoseki Power Station.

    2. Impairment losses

       An impairment losses was recorded by Chugoku Electric Power Australia Resources Pty. Ltd., a consolidated subsidiary of the Company, due to the transfer of interests in the Boggabri coal mine in Australia.

       ① Grouping method

       Among the electric power business, property, plant and equipment used in the power generation and electric power sales business are considered as a single asset group due to the fact that all assets from power generation to sales activity are used together to generate a cash flow.

       Among the electric power business, property, plant and equipment used in the power transmission and distribution business are considered as a single asset group due to the fact that all assets from power

       
       
       

       transmission, power transformation and power distribution, etc. are used together to generate a cash flow.

       Property, plant and equipment used in businesses other than the electric power business are grouped by business or by location.

       Property, plant and equipment other than those described above are grouped by location or by individual asset, in principle.

       ② Assets overview and amounts

       Usage	Place	Type	Impairment loss (Millions of yen)
       Coal mine interests (Chugoku Electric Power Australia Resources Pty. Ltd.)	Australia	Land Buildings Machinery and others	¥184 1,585 5,200
       Total			¥6,970

       Impairment losses recognized based on the grouping were ¥6,970 million (Other non-current assets, construction and retirement in progress) and the details of the fixed assets were as follows:

       ③ Method for calculating recoverable amount

       A net realizable value is used for the recoverable amount of the applicable assets. The net realizable value is measured based on reasonable estimates, such as a sales value.

       The year ended March 31, 2024

       The future recoverability of ENERGIA POWER YAMAGUCHI CORPORATION and Chugoku Electric Power Australia Resources Pty. Ltd., which are consolidated subsidiaries of the Company, were considered following the deterioration of the business environment, etc. As a result, the Company determined that they are unable to recover its investments and recorded an impairment loss of ¥9,532 million.

       1. Grouping method

          Among the electric power business, property, plant and equipment used in the power generation and electric power sales business are considered as a single asset group due to the fact that all assets from power generation to sales activity are used together to generate a cash flow.

          Among the electric power business, property, plant and equipment used in the power transmission and distribution business are considered as a single asset group due to the fact that all assets from power transmission, power transformation and power distribution, etc. are used together to generate a cash flow.

          Property, plant and equipment used in businesses other than the electric power business are grouped by business or by location.

          Property, plant and equipment other than those described above are grouped by location or by individual asset, in principle.

          
          
          

       2. Asset outlines and amounts

          Usage	Place	Type	Impairment loss (Millions of yen)
          Hofu Biomass Power Station (ENERGIA POWER YAMAGUCHI CORPORATION)	Hofu city, Yamaguchi	Buildings Machinery and others	¥538 6,036
          Subtotal			¥6,574
          Coal mine interests (Chugoku Electric Power Australia Resources Pty. Ltd.）	Australia	Land Buildings Machinery and others	¥87 733 2,136
          Subtotal			¥2,957
          Total			¥9,532

          Impairment losses recognized based on the grouping were ¥9,532 million (Other non-current assets, construction and retirement in progress) and the details of the fixed assets were as follows:

       3. Method for calculating recoverable amount

       Either a value in use or a net realizable value is used for the recoverable amount of the applicable assets. The value in use is measured by applying a discount rate based on cost of capital to the future cash flows. The net realizable value is measured based on reasonable estimates, such as a sales value.

       (Related to the Consolidated Statements of Changes in Equity)

17. Related to the Consolidated Statements of Changes in Equity

    Year ended March 31, 2025

    1. Matters concerning issued shares

       Class of shares	At the beginning of the year ended March 31, 2025	Increase	Decrease	At the end of the year ended March 31, 2025
       Common stock (shares)	387,154,692	-	-	387,154,692

    2. Matters concerning treasury shares

       Class of shares	At the beginning of the year ended March 31, 2025	Increase	Decrease	At the end of the year ended March 31, 2025
       Common stock (shares)	26,920,110	669,694	335	27,589,469

       (Note) Treasury shares at the end of the year ended March 31, 2025 includes 658,000 shares of the Company held by the "Board Benefit Trust (BBT)."

       
       
       

       (Reasons of the increase / decrease) Breakdown of increases

       Increase in treasury shares (shares of the Company) acquired by BBT 658,000 shares Increase due to purchase of shares of less than one unit 11,359 shares

       Increase in treasury shares (shares of the Company) attributable to the Company due to an increase in the shareholding ratio of an equity method affiliated company 335 shares

       Breakdown of decreases

       Decrease due to sales of shares of less than one unit 335 shares

    3. Matters concerning dividends

       ① Cash dividends paid

       Resolution	Class of shares	Total dividends (million yen)	Dividends per share (yen)	Record date	Effective date
       Annual stockholders' meeting held on June 26, 2024	Common stock	¥10,807	¥30.00	March 31, 2024	June 27, 2024
       Board of Directors' meeting held on October 31, 2024	Common stock	1,801	5.00	September 30, 2024	November 29, 2024

       (Notes) 1 The total dividend amounts are the amount after the elimination of intercompany transactions.

       2 The total dividend amount resolved by the Board of Directors' meeting held on October 31, 2024 includes

       ¥3 million of dividends for shares held by the "Board Benefit Trust (BBT)."

       Resolution	Class of shares	Dividends source	Total dividends (million yen)	Dividends per share (yen)	Record date	Effective date
       Annual
       stockholders' meeting held on	Common stock	Retained earnings	¥7,924	¥22.00	March 31, 2025	June 27, 2025
       June 26, 2025

       ② Dividends for which the record date belongs to the year ended March 31, 2025 but the effective date comes after the year-end

       (Note)1 The total dividend amount is the amount after the elimination of intercompany transactions.

       2 The total dividend amount resolved by the Annual stockholders' meeting held on June 26, 2025 includes

       ¥14 million of dividends for shares held by the "Board Benefit Trust (BBT)."

       
       
       

       Year ended March 31, 2024

       1. Matters concerning issued shares

          Class of shares	At the beginning of the year ended March 31, 2024	Increase	Decrease	At the end of the year ended March 31, 2024
          Common stock (shares)	387,154,692	-	-	387,154,692

       2. Matters concerning treasury shares

          Class of shares	At the beginning of the year ended March 31, 2024	Increase	Decrease	At the end of the year ended March 31, 2024
          Common stock (shares)	26,904,338	16,237	465	26,920,110

          (Reasons of increase / decrease) Breakdown of increases

          Increase due to purchase of shares of less than one unit 13,363 shares

          Increase in treasury shares (shares of the Company) attributable to the Company due to an increase in the shareholding ratio of an equity method affiliated company 2,874 shares

          Breakdown of decreases

          Decrease due to sales of shares of less than one unit 465 shares

       3. Matters concerning dividends

       ① Cash dividends paid

       Resolution	Class of shares	Total dividends (million yen)	Dividends per share (yen)	Record date	Effective date
       Board of Directors' meeting held on October 31, 2023	Common stock	¥1,801	¥5.00	September 30, 2023	November 30, 2023

       (Note) The total dividend amount is the amount after the elimination of intercompany transactions.

       Resolution	Class of shares	Dividends source	Total dividends (million yen)	Dividends per share (yen)	Record date	Effective date
       Annual
       stockholders' meeting held on	Common stock	Retained earnings	¥10,807	¥30.00	March 31, 2024	June 27, 2024
       June 26, 2024

       ② Dividends for which the record date belongs to the year ended March 31, 2024 but the effective date comes after the year-end

       (Note) The total dividend amount is the amount after the elimination of intercompany transactions.

       
       
       

       (Related to the Consolidated Statements of Cash Flows)

18. Cash and Cash Equivalents

    The relationship between the balance of cash and cash equivalents at the end of the period and the amount recorded in the Consolidated Balance Sheets was as follows:

    Millions of yen

    	2025	2024
    Cash and deposits	¥286,731	¥301,352
    Time deposits with maturities exceeding 3 months	(58)	(2,886)
    Cash and cash equivalents	¥286,672	¥298,465

19. Financial Instruments

    1. Matters concerning financial instruments

       ① Approach to financial instruments

       Most of the Companies' business consists of electric power business and funds that are necessary for capital investment and operations are raised from bonds payable, long-term borrowings, short-term borrowings and commercial paper ("CP") according to the Companies' plans for financing.

       The Companies' fund management involves only highly safe monetary assets pursuant to these plans.

       The derivative transactions are only for receivables and payables (actual demand transactions) arising from the business of the Company and certain consolidated subsidiaries. There are no transactions for speculative purposes.

       ② Details and risks of financial instruments and our risk management structure

       Long-term investments (available-for-sale securities) consist of stocks of companies that share business interests with us, and the fair value of the stocks and the financial condition of the relevant companies are investigated on a regular basis.

       The majority of the Companies' notes and accounts receivable consist of receivables related to the electric power business and are exposed to customer credit risk. For the relevant risk, each customer's due date and balance are controlled in accordance with power supply conditions.

       Bonds payable and loans payable are procured mainly for capital investment. Since many interest-bearing debts consist of long-term funds with fixed interest rates (bonds payable and long-term borrowings), the fluctuation of market interest rates may have limited impact on our business results. Some long-term funds are used for derivative transactions (interest rate swaps and currency swaps) as a means to hedge risk to mitigate or avoid market fluctuation risk.

       Due dates of the most notes and accounts payable are within one year.

       The Company utilizes interest rate swap contracts, commodity swap contracts, currency swap contracts, and forward foreign exchange transactions to mitigate and avoid market fluctuation risk. The Company has adopted hedge accounting for these instruments.

       The Company believes that the related credit risk arising from the event of contract nonperformance by counterparties is extremely low, since the Company uses highly creditworthy financial institutions as counterparties to its derivative transactions and determines fair values and credit information on a periodic

       
       
       

       basis.

       The Company has established a management function independent from the execution function of derivatives and manages derivative transactions in accordance with internal regulations providing authorization limits, methods of execution, reporting and management, etc.

       Although bonds payable and loans payable are exposed to liquidity risk, the Companies manage liquidity risk by monthly cash management ensuring liquidity that is necessary for operation of the Companies and diversifying financing methods.

       ③ Supplemental explanation for financial instruments' fair value

       Since fair value calculation of financial instruments reflects variable factors, the relevant value may change depending on preconditions.

       Note that the contract amount for derivative transactions in Note 21, "Derivatives and Hedge Accounting," does not reflect the market risk for the derivative transaction itself.

    2. Matters concerning fair value of financial instruments

       The followings are the book values, the fair values and the differences at March 31, 2025 and 2024.

       Millions of yen

       	2025
       	Book value	Fair value	Difference
       Assets ①Long-term investment: Available-for-sale securities	¥9,419	¥9,419	¥ −
       Liabilities ②Bonds payable ③Long-term borrowings	¥1,326,290 1,747,568	¥1,225,347 1,699,309	¥(100,942) (48,259)
       ④Derivative transactions	¥(1,721) 9,355	¥(1,721) 9,355	¥ − -

       1. Hedge accounting is not applied

       2. Hedge accounting is applied

       (*a) Since "Cash and deposits", "Notes and accounts receivable", "Notes and accounts payable" and "Short-term borrowings" are cash and are settled in a short period of time, their fair values approximate the book values and therefore notes are not presented.

       (*b) Equity securities without fair value

       	2025
       Unlisted stocks	¥37,176
       Investments in capital	9,351
       Total	¥46,528

       Millions of yen Book Value

       The above securities are not included in "① Long-term investment: Available-for-sale securities".

       
       
       

       (*c) Descriptions for investments in unions or related business entities where the equity is recorded on the Consolidated Balance Sheets as a net amount are not presented. The amount recorded on the Consolidated Balance Sheets for the investment was ¥332 million as of March 31, 2025.

       Millions of yen

       	2024
       	Book value	Fair value	Difference
       Assets ①Long-term investment: Available-for-sale securities	¥12,041	¥12,041	¥ −
       Liabilities ②Bonds payable ③Long-term borrowings	¥1,227,785 1,675,959	¥1,173,709 1,665,794	¥(54,075) (10,164)
       ④Derivative transactions	¥1,311 9,520	¥1,311 9,520	¥ − -

       1. Hedge accounting is not applied

       2. Hedge accounting is applied

       (*a) Since "Cash and deposits", "Notes and accounts receivable", "Notes and accounts payable", "Short-term borrowings", and "Commercial paper" are cash and are settled in a short period of time, their fair values approximate the book values and therefore notes are not presented.

       (*b) Equity securities without fair value

       	2024
       Unlisted stocks	¥ 37,273
       Investments in capital	8,606
       Total	¥ 45,879

       Millions of yen Book value

       The above securities are not included in "① Long-term investment: Available-for-sale securities".

       (*c) Descriptions for investments in unions or related business entities where the equity is recorded on the Consolidated Balance Sheets as a net amount are not presented. The amount recorded on the Consolidated Balance Sheets for the investment was ¥368 million as of March 31, 2024.

       
       
       

       (Note 1) Anticipated redemption schedule for monetary claims and debt securities held to maturity subsequent to the fiscal year-end

       Millions of yen

       Within 1 year

       	2025	2024
       Cash and deposits	¥286,731	¥301,352
       Notes receivable	918	2,191
       Accounts receivable	128,008	108,955
       Total	¥415,658	¥412,498

       (Note 2) Anticipated redemption schedule for bonds, long-term borrowings and other interest-bearing debt subsequent to the fiscal year-end

       Millions of yen

       	2025
       	Within 1 year	1 year - 2 years	2 years - 3 years	3 years - 4 years	4 years - 5 years	Over 5 years
       Bonds payable	¥84,600	¥65,000	¥70,000	¥131,000	¥105,000	¥870,690
       Long-term borrowings	133,839	191,227	120,577	150,681	174,210	977,031
       Short-term borrowings	76,295	-	-	-	-	-
       Commercial paper	-	-	-	-	-	-
       Total	¥294,734	¥256,227	¥190,577	¥281,681	¥279,210	¥1,847,721

       Millions of yen

       2024

       Within 1 year

       1. year

          - 2 years

       2. years

          - 3 years

       3. years

          - 4 years

       4. years

       - 5 years

       Over 5 years

       Bonds payable	¥163,185	¥84,600	¥65,000	¥70,000	¥131,000	¥714,000
       Long-term borrowings	125,031	136,684	191,192	120,542	150,666	951,842
       Short-term borrowings	70,345	-	-	-	-	-
       Commercial paper	-	-	-	-	-	-
       Total	¥358,561	¥221,284	¥256,192	¥190,542	¥281,666	¥1,665,842

       (Note 3) Bonds payable and long-term borrowings include items whose payment is due within one year. (Note 4) Receivables and liabilities generated from derivative transactions are shown in net amounts. When

       the total amount is negative (liabilities), the amount is shown in parentheses ( ).

       
       
       

    3. Fair value information of financial instruments by level of inputs

Based on the observability and the significance of the inputs used to determine fair values, fair value information of financial instruments is presented by categorizing measurements into the following three levels: Level 1 fair value: the fair value measured by quoted prices of identical assets or liabilities in active markets. Level 2 fair value: the fair value measured using observable inputs other than Level 1.

Level 3 fair value: fair values measured using unobservable inputs.

When multiple inputs of different categories are used in measuring fair value, the Company and its subsidiaries classified fair values into a category to which the lowest priority is assigned.

①Financial instruments measured at fair values in the Consolidated Balance Sheets

Millions of yen