Chugoku Electric Power Co., Inc. TSE:9504

Chugoku Electric Power : CORPORATE VISION 2040

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Chugoku Electric Power Gro

CORPORATE VISION 2040



Analysts and Institutional Investors Briefing

In 2020, five years ago, we formulated our previous Chugoku Electric Power Group Corporate Vision, ENERGIACHANGE 2030. During this period, in addition to the accelerating tide of decarbonization and expanding volatility in fuel and wholesale electricity market prices, progress has also been made in electricity system reforms, including the development of various electricity markets. In addition, the environment surrounding the energy business is changing drastically, as the Japanese government's Strategic Energy Plan has been revised in order to achieve both energy supply stability and decarbonization amidst the expected increase in electricity demand.

In our home Chugoku region, electricity demand is expected to increase at a faster pace than the national average due to the progress of digital transformation (DX) and the expansion of electrification for green transformation (GX) in the manufacturing industry. Meeting these energy supply and decarbonization needs is the mission of the Group, and represents an opportunity for significant growth.

As a major step in this direction, we were able to restart Shimane Nuclear Power Station Unit 2 last December after being offline for about 13 years. With the consensus of the local community, we will continue to make utmost efforts to ensure stable operations with safety as our main premise. Now, in order to stabilize our revenue and financial base and finances and move on to the next stage of decarbonization, we are doing our utmost to get Shimane Nuclear Power Station Unit 3 up and running. Although it is a great challenge from a financial perspective to work on nuclear power plant projects in sequence, which require advance investments, we will continue to steadily improve profits during this period through measures such as enhancing our customer services, enhancing power source value, and evolving our trading. Furthermore, we will actively utilize sustainable financing to secure necessary funds, thereby building a foundation for growth. After the launch of operations at Shimane Unit 3, we will steadily reap the rewards of our investments up to that point. Leveraging our high capital profitability and stable financial base, we will grow sustainably and further enhance our corporate value. By doing this, we will also contribute to the sustainable development of the region.

We have formulated the Chugoku Electric Power Group Corporate Vision 2040 to share our thoughts and vision for the future toward growth with our customers, local communities, society, shareholders, investors, and Group employees, and to achieve growth together.

In this vision, we have taken our management philosophy of "Trust. Creation. Growth." and established a clear value creation story in which we will "create economic and social value based on the capital generated from the trust of our stakeholders, and return that value to our stakeholders, leading to the next stage of growth." We will meet the expectations of our stakeholders and contribute to the creation of a sustainable society by sincerely tackling challenges, whether today or a hundred years from now, and by realizing our value creation story looking out over these long horizons to the fruits of our efforts each day over the many

years to come.

Nakagawa Kengo

Representative Director, President & Chief Executive Officer

September 30, 2025

Chugoku Electric Power Group

Corporate Vision 2040

Message from the President

1

Review of the Past P3

Chugoku Electric Power Group Corporate Vision 2040 P7

01

02

03

The World We Seek in the Chugoku Electric Power Group Corporate Vision 2040 Future Prospects and Business Opportunities for the Chugoku Electric Power Group Overview of the Chugoku Electric Power Group Corporate Vision 2040

04

05

06

Our Desired Outcomes Management Targets Materiality

P8 P9 P12

P13 P14 P16

Business Portfolio and Financial Strategy

to Realize the Chugoku Electric Power Group Corporate Vision 2040 P１7

Initiatives To Realize the Chugoku Electric Power Group Corporate Vision

P25

Value Creation Story P48

Chugoku Electric Power Group

Corporate Vision 2040

Contents

2

3

Review of the Past


Chugoku Electric Power Group

Corporate Vision 2040 4

Review of the Past

Changes in the Business Environment to Date

  • Since the formulation of "ENERGIACHANGE 2030", the nature of the energy business itself has undergone major changes, including accelerated trends toward decarbonization, expanding volatility in fuel and wholesale electricity market prices, and progress in electricity system reforms, such as the development of various electricity markets. Furthermore, in the 7th Strategic Energy Plan decided by the Cabinet in February 2025, the previous assumption that "future electricity demand will decrease" was revised, and an outlook was presented that "future electricity demand will increase," reflecting progress in digital transformation and green transformation.

  • Turning to the internal environment, the start of operations of Shimane Nuclear Power Station Units 2 and 3, which had been scheduled by FY 3/2026, has been delayed. In addition, a series of inappropriate conduct occurred, resulting in a significant deviation from the scenario initially envisioned.



    FY 3/2021

    FY 3/2022

    FY 3/2023

    FY 3/2024

    FY 3/2025

    FY 3/2026

    ▼Japanese government's 2050 Carbon Neutral Declaration

    External environment

    ▼Tight power supply and demand due to severe winter conditions

    ▼Seventh Strategic Energy Plan

    ▼GX 2040 Vision

    ▼Soaring resource and electricity market prices triggered by the crisis in Ukraine

    ▼ Request from the Tokyo Stock Exchange for business management that is conscious of capital cost and stock price

    Intensified competition in the electricity retail market

    ▼Spin-off of the power transmission and distribution division

    ▼Commitment to fair wholesale dealings both internally and externally

    ▼Regional expansion of wholesaling

    ▼Start of delivery in the capacity market

    ▼Supply/demand adjustment market (all product categories)

    ▼Thorough implementation of fair wholesale dealings both internally and externally

    Internal environment

    ▼Electricity rate revisions

    ▼Misumi Power Station Unit 2 start of commercial operation

    ▼Series of inappropriate conduct

    ▼Shimane Unit 2*1 restart of commercial operation

    ▼Shimane Unit 3*2 planned to start commercial operation by FY 3/2031

    Initiatives to prevent recurrence and restore trust

    Transformation of corporate culture

    *1: Shimane Nuclear Power Station Unit 2, *2: Shimane Nuclear Power Station Unit 3

    Chugoku Electric Power Group

    Corporate Vision 2040

    Review of

    the Past

    Vision

    01

    The World We Seek

    02

    Future Prospects

    03

    Overview

    04

    05

    Our Management Desired Targets

    Outcomes

    06

    Materiality

    Business Portfolio

    and Financial Strategy

    Initiatives toward Value Creation Realization Story

    4

    Chugoku Electric Power Group

    Corporate Vision 2040 5

    Review of the Past

    Progress Toward Management Targets

  • Although each organization and Group company has implemented various measures, such as enhancing services for customers and local communities, ensuring stable facility operations, and improving efficiency, the Group recorded its largest-ever losses for two consecutive years in FY 3/2022 and FY 3/2023. This was due to sharp increases in fuel and wholesale electricity market prices amid delays in the start of operations at the Shimane Nuclear Power Station, resulting in significant impairment of shareholders' equity.

  • Subsequently, in FY 3/2024, we implemented the first electricity rate revisions since FY 3/2009. Combined with gains from the accounting period lag arising from the decline in fuel prices, our consolidated ordinary income has remained above the target level. However, our consolidated shareholders' equity ratio continues to remain well below the target.

  • Meanwhile, initiatives for the introduction of renewable energy and the promotion of active participation by human resources, which have been

set as our non-financial targets, are making steady progress.

(Billions of yen)

Profit and financial targets

200

150

100

50

0

-50

-100

-150

19.4%

30.0

Consolidated ordinary income



17.0%

-61.8

Consolidated



shareholders' equity ratio

14.6% 16.2%

11.1%

194.0 128.5

-106.7

20.0%

50.0 or higher

25.0%

60.0 or higher

3/2021 3/2022 3/2023 3/2024 3/2025

3/2026 3/2031

（FY）

Non-financial targets

Newly installed renewable -

energy capacity

Approx. 170MW

Results

Approx. 280MW

Approx. 320MW

Approx. 370MW

Targets under the previous vision

By FY 3/2031:

300 to 700MW

(including projects outside the region and overseas)

Active

participation by

human resources

  • "The Policy for Promoting Active Participation of Diverse Human Resources" and "the Chugoku Electric Power Group Human Rights Policy" have been established as comprehensive, Group-wide policies.

  • Each Group company has set and implemented targets aligned with the common themes of "Increasing the number of female managers," "Improving the childcare leave acquisition rate among male employees," and "Continuously implementing human rights education activities."

    Further enhancement of work environments for diverse human resources

    Chugoku Electric Power Group

    Corporate Vision 2040

    Review of

    the Past

    Vision

    01

    The World We Seek

    02

    Future Prospects

    03

    Overview

    04

    05

    Our Management Desired Targets

    Outcomes

    06

    Materiality

    Business Portfolio

    and Financial Strategy

    Initiatives toward Value Creation Realization Story

    5

    Chugoku Electric Power Group

    Corporate Vision 2040 6

    Review of the Past

    Initiatives for Restoring Our Revenue and Financial Base

    • To date, we have worked to improve profit margin and asset efficiency in our efforts to restore our revenue and financial base.

    • Recently, we have improved profit margin through the restart of Shimane Unit 2 and advanced asset streamlining by decommissioning aged thermal power plants and selling assets. Although our retail electricity business and power generation and wholesaling business continue to face a challenging environment due to declining market prices and intensifying competition, we are implementing measures based on the strategies formulated by the project established in FY 3/2025 to strengthen profitability and optimize supply and demand. We are beginning to see positive results from these initiatives.

      Improve profit margin

      Resume commercial operation at Shimane Unit 2

      Expand revenue by enhancing our trading function

      Increase amount of generated electricity by shortening the inspection period for thermal power and hydroelectric power

      generating facilities

      Implement measures to expand revenue investigated by the Power Balancing Optimization Project

      Implement measures to expand revenue investigated by the Profitability Reinforcement Project

      Reduce the amount of adjustment capability required in light of structural changes to the supply/demand adjustment market

      Review and streamline design and construction methods and expand area covered by the network center

      Improve asset efficiency

      Decommission three aged thermal power station units (Mizushima Unit 2 (coal), Shimonoseki Units 1 and 2 (coal, heavy oil))

      Slim down our assets by selling cross shareholdings, uranium, and the former Shimonoseki Power Station and the like

      Perform stricter cash management by carefully selecting investments and the like

      • Expand wholesale electricity sales volume during the term using negotiated transactions and market transactions

      • Reduce performance fluctuation risks and improve expected profits using fuel and electricity market prices that also utilize financial transactions

      • Shorten the construction period for the Matanogawa Pumped Storage Hydroelectric Power Station Etc.

      • Formulate an optimal wholesales strategy and optimize fuel procurement in light of market trends and other factors

      • Set new wholesale rate plans in light of customer needs (such as plans linked to market prices)

      • Formulate a retail sales strategy and an optimal power source procurement strategy

      • Develop and expand diverse rate plans in light of customer needs (such as rate plans linked to market prices)

      Chugoku Electric Power Group

      Corporate Vision 2040

      Review of

      the Past

      Vision

      01

      The World We Seek

      02

      Future Prospects

      03

      Overview

      04

      05

      Our Management Desired Targets

      Outcomes

      06

      Materiality

      Business Portfolio

      and Financial Strategy

      Initiatives toward Value Creation Realization Story

      6

      7

      7

      Chugoku Electric Power Group Corporate Vision 2040


      Chugoku Electric Power Group

      Corporate Vision 2040 8

      01

      The World We Seek in the Chugoku Electric Power Group Corporate Vision 2040

    • The Chugoku Electric Power Group has technology, experience, and expertise cultivated over many years with the support of customers and

      local residents. We see the current trend of increasing demand for electricity and growing needs for decarbonization as an opportunity for the Chugoku Electric Power Group to grow. Therefore, we will support energy in the Chugoku region and further strengthen our business foundation by shifting our business model while staying close to the issues faced by our customers and those in the community, and by creating new services through the ingenuity of our employees. Furthermore, we will leverage our strengths to grow outside the Chugoku region and overseas.

    • Through co-creation with Group companies and external partners, including local governments, we will develop businesses to solve regional and social issues such as regional GX, resilience improvement, and digital evolution. The Chugoku Electric Power Group is committed to maximizing corporate value by improving the social and economic value of the Group through contributing to the revitalization and sustainable development of local communities and society.

      Revitalizing communities and society

      Developing sustainably

      Enhancing

      ×

      the Chugoku Electric Power Group's corporate value

      Strengthening infrastructure

Leading GX

Using energy to support local industry/lifestyles

Evolving digital technology

Solving community and social

issues

Improving resilience

Developing and providing

services that leverage our strengths

Social infrastructure services

Energy services

Lifestyle and safety services

Information and telecommunications services

Technology, experience, expertise

Chugoku Electric Power Group

Corporate Vision 2040

Review of

the Past

Vision

01

The World We Seek

02

Future Prospects

03

Overview

04

05

Our Management Desired Targets

Outcomes

06

Materiality

Business Portfolio

and Financial Strategy

Initiatives toward Value Creation Realization Story

8



Chugoku Electric Power Group

Corporate Vision 2040 9

02

Future Prospects and Business Opportunities for the Chugoku Electric Power Group

Growing Decarbonization Needs in the Chugoku Region

  • In the Chugoku region, which is home to some of Japan's leading manufacturers, there is a growing need for decarbonization, including low-carbon energy and energy efficiency for GX.

  • There is a growing trend, centered on the Setouchi Industrial Complex, to switch energy sources for production use from mainly coal to receiving grid power and LNG as part of corporate efforts toward GX.

Chugoku region potential

(decarbonization of manufacturing)

Chugoku region potential

(expansion of electrification)

  • The Chugoku region is home to some of Japan's leading manufacturers in steel, chemicals, automobiles, and more. This region is second only to the Tokyo metropolitan area in terms of CO2emissions from the industrial sector.

  • In the Chugoku region, there are many coal-fired private power plants used by manufacturers, and there is an accelerating trend toward receiving grid power

    Drafted based on the Ministry of Economy, Trade and Industry's Energy Consumption Statistics by Prefecture (FY2021)



    CO2

    Energy consumption by fuel type in the

    emissions by sector by region Chugoku region

    and switching to LNG toward GX.

  • In addition, steelmakers are increasingly shifting from coal-based blast furnaces to electric furnaces, which is expected to generate power needs equivalent to around 0.5 to 1 nuclear power station units.

    Drafted based on the Ministry of the Environment, Current Estimates of CO2 Emissions by Sector, Data by Prefecture (FY2021)

    Illustration of electricity demand in the Chugoku region



    Chugoku Electric Power Group

    Corporate Vision 2040

    Review of

    the Past

    Vision

    01

    The World We Seek

    02

    Future Prospects

    03

    Overview

    04

    05

    Our Management Desired Targets

    Outcomes

    06

    Materiality

    Business Portfolio

    and Financial Strategy

    Initiatives toward Value Creation Realization Story

    9

    Chugoku Electric Power Group

    Corporate Vision 2040 10

    02

    Future Prospects and Business Opportunities for the Chugoku Electric Power Group

    Projected Increase in Electricity Demand in the Chugoku

    Region Above the National Average

    • The Chugoku region, which is the business base of the Chugoku Electric Power Group, has a relatively low risk of natural disasters, making it an ideal location for data centers. Data centers are currently concentrated in the Tokyo and Osaka metropolitan areas, but decentralizing to regional areas is becoming increasingly important for resilience, and demand for electricity is expected to increase in the Chugoku region due to construction of data centers.

    • In the Chugoku region, electricity demand is expected to increase at a faster pace than the national average due to increased demand for data

      centers and other facilities in line with advancing DX, as well as the expansion of electrification for GX in the manufacturing industry.

      Electricity demand outlook for the Chugoku region

      (Index: FY 3/2025 = 100)

110

108

106

Chugoku



Japan



Potential for further

advancement in DX, GX, and

electrification expansion

104

102

100

98

2024 2025 2026 2027 2028 2029 2030 2031 2032 ２０４０ (FY)

Drafted based on the Organization for Cross-regional Coordination of Transmission Operators' Explanation of FY2025 Demand Forecasts by Supply Region and on a National Level

Chugoku Electric Power Group

Corporate Vision 2040

Review of

the Past

Vision

01

The World We Seek

02

Future Prospects

03

Overview

04

05

Our Management Desired Targets

Outcomes

06

Materiality

Business Portfolio

and Financial Strategy

Initiatives toward Value Creation Realization Story

10

Chugoku Electric Power Group

Corporate Vision 2040 11

02

Future Prospects and Business Opportunities for the Chugoku Electric Power Group

Expectations for Problem Solving in the Chugoku Region

  • In the Chugoku region, the effects of population decline and other factors are becoming apparent, and we believe that promoting initiatives to resolve these regional issues is what the Chugoku Electric Power Group, as a corporate group rooted in the Chugoku region, is expected to do in the region.

  • The Chugoku Electric Power Group will use its collective capabilities to support local industries and customer lifestyles, growing sustainably together with the region.

    Issues in the Chugoku region (highlights)

    Shrinking local economy

    Local problem-solving/value creation by the Chugoku Electric Power Group



    Using energy to support local industry/lifestyles and attract companies

    Growing need for decarbonization Leading GX

    Labor shortages Evolving digital technology

    Aging infrastructure facilities

    Increasing frequency and severity

    of natural disasters

    Strengthening infrastructure Improving resilience

    Sustainable development of the Chugoku region and growth of the Chugoku Electric Power Group

    Chugoku Electric Power Group

    Corporate Vision 2040

    Review of

    the Past

    Vision

    01

    The World We Seek

    02

    Future Prospects

    03

    Overview

    04

    05

    Our Management Desired Targets

    Outcomes

    06

    Materiality

    Business Portfolio

    and Financial Strategy

    Initiatives toward Value Creation Realization Story

    11

    Chugoku Electric Power Group

    Corporate Vision 2040 12

    1. Overview of the Chugoku Electric Power Group Corporate Vision 2040

  • The Chugoku Electric Power Group Corporate Vision 2040 was formulated with the desire to grow together with all our stakeholders, with a

    focus on our energy business that has our domestic electricity business as a growth pillar, and by viewing major changes in the business environment and regional challenges, such as increased demand for electricity and growing needs for decarbonization, as opportunities for significant growth for the Chugoku Electric Power Group.

  • We have established our desired outcomes for FY 3/2041, and have set management targets and materiality (priority initiative themes) to bring

    these outcomes to fruition.

    Our Desired Outcomes



Management targets

Materiality

Financial targets

(Economic value)

*All financial targets in this document are on a consolidated basis unless otherwise stated

FY 3/2031

FY 3/2041

ROE

8% or more

10% or more

ROIC

3% or more

WACC+1% or more

Equity ratio

20% or more

Approx. 25% to 30%*



*Target for FY 3/2036 to FY 3/2041

Sustainability targets

(Social value)

E

Integrated actions toward carbon neutrality, creation of a recycling-oriented society, and coexistence with nature

Supply chain GHG emissions (Scope 1, 2, and 3) 50% reduction by FY 3/2031 (vs. FY 3/2014) 60% reduction by FY 3/2036 (vs. FY 3/2014)

S

Earning the trust of our community and society

Diverse personnel achieve empowerment and greater engagement

G

Building fair, transparent, and effective governance

Chugoku Electric Power Group

Corporate Vision 2040

Review of

the Past

Vision

01

The World We Seek

02

Future Prospects

03

Overview

04

05

Our Management Desired Targets

Outcomes

06

Materiality

Business Portfolio

and Financial Strategy

Initiatives toward Value Creation Realization Story

12

Chugoku Electric Power Group

Corporate Vision 2040 13

  1. Our Desired Outcomes

    • We have set our desired outcomes for FY 3/2041.

    • Founded in the trust of our stakeholders, the Chugoku Electric Power Group will meet their expectations and maximize our corporate value by

      continuously building greater economic and social value through our business activities.



      Chugoku Electric Power Group

      Corporate Vision 2040

      Review of

      the Past

      Vision

      01

      The World We Seek

      02

      Future Prospects

      03

      Overview

      04

      05

      Our Management Desired Targets

      Outcomes

      06

      Materiality

      Business Portfolio

      and Financial Strategy

      Initiatives toward Value Creation Realization Story

      13

      Chugoku Electric Power Group

      Corporate Vision 2040 14

  2. Management Targets (Financial Targets )

  • We have set our financial targets toward FY 3/2041 with the aim of achieving sustainable growth with high capital profitability and a stable financial base.

  • Through FY 3/2031, we will steadily increase profits while controlling asset and liability growth even as we invest in Shimane Unit 3 and

    the new Yanai Power Station Unit 2* for future growth, transforming to a sound financial structure.

    * Replacement of Unit 2 at Yanai Power Station



    Note 1: All financial targets are on a consolidated basis.

    Note 2: WACC for FY 3/2026 is expected to be approximately 1.6%. WACC for FY 3/2031 is assumed to be just under 3%.

    Chugoku Electric Power Group

    Corporate Vision 2040

    Review of

    the Past

    Vision

    01

    The World We Seek

    02

    Future Prospects

    03

    Overview

    04

    05

    Our Management Desired Targets

    Outcomes

    06

    Materiality

    Business Portfolio

    and Financial Strategy

    Initiatives toward Value Creation Realization Story

    14

    Chugoku Electric Power Group

    Corporate Vision 2040 15

    05 Management Targets (Sustainability Targets )

  • To achieve sustainability for the Chugoku Electric Power Group, we have set sustainability targets from an ESG perspective.

  • Each Group company will set targets in the Group Medium-term Management Plan and work toward achieving the Group's goals.



    Chugoku Electric Power Group

    Corporate Vision 2040

    Review of

    the Past

    Vision

    01

    The World We Seek

    02

    Future Prospects

    03

    Overview

    04

    05

    Our Management Desired Targets

    Outcomes

    06

    Materiality

    Business Portfolio

    and Financial Strategy

    Initiatives toward Value Creation Realization Story

    15

    Chugoku Electric Power Group

    Corporate Vision 2040 16

    06 Materiality

  • We have set 4 materialities as priority initiative themes to realize our desired outcomes. We will address the major issues corresponding to

these materialities in the Group Medium-term Management Plan.

Materiality

Major issue



Chugoku Electric Power Group

Corporate Vision 2040

Review of

the Past

Vision

01

The World We Seek

02

Future Prospects

03

Overview

04

05

Our Management Desired Targets

Outcomes

06

Materiality

Business Portfolio

and Financial Strategy

Initiatives toward Value Creation Realization Story

16

17

17

Business Portfolio and Financial Strategy to Realize the Chugoku Electric Power Group Corporate Vision 2040


Chugoku Electric Power Group

Corporate Vision 2040 18

Business Portfolio and Financial Strategy to Realize the Chugoku Electric Power Group Corporate Vision 2040

Business Portfolio

  • We will position our domestic electricity business, centered on the Chugoku region, as a pillar of growth for the entire Group.



  • In the domestic electricity business, we aim to increase profits to 1.5 to 2 times the profit level in FY 3/2026 by shifting from a conventional business model of supplying electric power to a model providing solutions and maximizing the value of power sources by utilizing the electricity trading market and other tools.

  • In our international and group businesses, we will work to raise profit levels of existing businesses and allocate resources to highly-profitable businesses, aiming to expand profits to about double the level of profits from FY 3/2026.

    FY 3/2041

    FY 3/2031

    FY 3/2026

    Shifting our business model from supplying electricity

    Domestic electricity business

    Retail electricity business

    Power generation and wholesaling business Power transmission and distribution business

    International/ group

    businesses

    International business Gas wholesaling business Information and telecommunications business Social infrastructure Lifestyles/safety

    to providing solutions

    Maximizing the value of power sources, including expansion of the nuclear power ratio and utilization of thermal power generation as a regulating power source

    Operating a stable and efficient regulated power

    transmission and distribution business

    Elevating profits from existing businesses and allocating resources to businesses with high profitability

    Profit growth of about 1.5x to 2x

    Profit growth of about 2x

    Chugoku Electric Power Group

    Corporate Vision 2040

    Review of

    the Past

    Vision

    01

    The World We Seek

    02

    Future Prospects

    03

    Overview

    04

    05

    Our Management Desired Targets

    Outcomes

    06

    Materiality

    Business Portfolio

    and Financial Strategy

    Initiatives toward Value Creation Realization Story

    18

    Chugoku Electric Power Group

    Corporate Vision 2040 19

    Business Portfolio and Financial Strategy to Realize the Chugoku Electric Power Group Corporate Vision 2040

    Initiatives to Strengthen Profitability and Optimize Our Business Portfolio

    • Utilizing ROIC and other indicators, we will work to strengthen profitability while increasing asset efficiency and optimizing our business portfolio in light of future changes in conditions.

      Domestic electricity business

      Retail electricity business

      Power generation and wholesaling business

      Further expanding trading opportunities and increasing profits with a highly competitive power supply mix

      Nuclear Power Station construction plan to achieve carbon neutrality and increase profits

      Power transmission and distribution business

      International / group

      businesses

      International business

      Gas wholesaling business

      conversion for GX

      Information and

      telecommunications business

      Social infrastructure、

      Lifestyles/safety

      Business portfolio optimization

      • Developing value-added rate plans and services and expanding energy solutions

      • Capturing increasing demand for electricity due to electrification of the manufacturing industry and new construction of data centers, expanding retail electricity sales through aggressive business development outside the Chugoku region

      • Strengthening our power source procurement function

      • Through FY 3/2031, enhancing profitability by maximizing the use of Shimane Unit 2* and improving the option value of thermal power generation by utilizing the power trading market, and by evolving trading

      • From FY 3/2031 onward, improving competitiveness by starting operations at Shimane Unit 3 and Yanai Power Station Unit 2

      • Developing offshore wind power, transitioning from and replacing thermal power, and working toward the Kaminoseki

      • Building a next-generation electricity network to attract large-scale demand to the Chugoku region

      • Efficiently forming facilities and improving utilization of network equipment

      • Securing stable profits in light of institutional trends

      • Through FY 3/2031, enhancement of profitability of existing projects and optimization through asset replacement

      • Contributing to the expansion of international business revenue and decarbonization in Japan and overseas by working on new projects in FY 3/2031 and beyond

      • Strengthening solution proposals integrating electricity and gas to meet customers' needs for electrification and fuel

      • Capturing new business opportunities by contributing to evolving digital technologies for communities and society

      • Enhancing infrastructure- and security-related services, effectively utilizing real estate and other assets

      • Evaluating and improving businesses and assets using ROIC and other indicators

      • Realigning the business portfolio to streamline assets and quickly recover funds

      Chugoku Electric Power Group

      Corporate Vision 2040

      Review of

      the Past

      Vision

      01

      The World We Seek

      02

      Future Prospects

      03

      Overview

      04

      05

      Our Management Desired Targets

      Outcomes

      06

      Materiality

      Business Portfolio

      and Financial Strategy

      Initiatives toward Value Creation Realization Story

      19

      Chugoku Electric Power Group

      Corporate Vision 2040 20

      Business Portfolio and Financial Strategy to Realize the Chugoku Electric Power Group Corporate Vision 2040

      Cash Allocation Toward FY 3/2031

    • Through FY 3/2031, we will use debt financing to invest in the Shimane Unit 3 and New Yanai Power Station Unit 2, which are essential for the Group's future growth, including stabilized management and greater competitiveness, decarbonization, and more.

    • In our efforts to curb an increase in liabilities, we will steadily increase profits by enhancing customer services, increasing the value of power sources, evolving trading, and more, while carefully selecting investments outside of Shimane Unit 3 and the new Yanai Unit 2 to the extent that they do not interfere with a stable supply of energy, among other efforts.



      注：図中の値はグループ経営ビジョン策定時の前提であり、その確実性を保証するものではありません。

      Note 1: Values in the chart are rounded to the nearest whole number. Information on liabilities other than interest-bearing liabilities has been omitted. Note 2: Graph values are assumptions made at the time the Group Corporate Vision was formulated, and do not constitute a guarantee.

      Chugoku Electric Power Group

      Corporate Vision 2040

      Review of

      the Past

      Vision

      01

      The World We Seek

      02

      Future Prospects

      03

      Overview

      04

      05

      Our Management Desired Targets

      Outcomes

      06

      Materiality

      Business Portfolio

      and Financial Strategy

      Initiatives toward Value Creation Realization Story

      20

      Chugoku Electric Power Group

      Corporate Vision 2040 21

      Business Portfolio and Financial Strategy to Realize the Chugoku Electric Power Group Corporate Vision 2040

      Approach to Capital Procurement Toward FY 3/2031

    • We have worked to secure a stable base for capital procurement by improving our equity ratio and also by utilizing the long-term decarbonized power resource auction program for Shimane Unit 3 and the new Yanai Unit 2 to increase the predictability of investment returns.

    • With regard to capital procurement, we have actively utilized sustainable finance, achieving a transition-linked loan primarily for a megabank, transition-linked loans for regional banks throughout Japan, and transition-linked bonds with proceeds used for investment in Shimane Unit 3, among others.

    • We will continue to work to raise the funds needed for investments for future growth and diversify our financing sources, including the use of project financing to reduce debt.

      Overview of long-term decarbonized

      power resource auctions

Capital procurement efforts to date





Drafted based on the Organization for Cross-regional Coordination of Transmission Operators' Long-Term Decarbonized Power Resource Auction (Bidding Year: FY2025) Program Overview Briefing Materials

Syndicated loans for regional banks throughout Japan, managed by financial institutions in the Chugoku region

Originating transition-linked loans in September 2024 and September 2025, jointly managed by five Chugoku region financial institutions (September 2024: 29 banks, total 53.9 billion yen

/ September 2025: 46 banks, total 109.5 billion yen)

Syndicated loans primarily for a megabank

In March 2025, signed a transition-linked loan agreement with Mizuho Bank, Ltd. as the lead arranger (total amount: 109.5 billion yen)

Transition-linked bonds used for investment in Shimane Unit 3

In May 2025, issued transition bonds to fund safety measures, etc. for the Shimane Unit 3 reactor (total amount: 40 billion yen)

Chugoku Electric Power Group

Corporate Vision 2040

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Vision

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The World We Seek

02

Future Prospects

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Overview

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Our Management Desired Targets

Outcomes

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Materiality

Business Portfolio

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Initiatives toward Value Creation Realization Story

21

Chugoku Electric Power Group

Corporate Vision 2040 22

Business Portfolio and Financial Strategy to Realize the Chugoku Electric Power Group Corporate Vision 2040

Cash Allocation for FY 3/2031 and Beyond

  • From FY 3/2031 onward, our fundamental view is that this will be a period for reaping the rewards of our investments; therefore, we will adapt our approach to

    cash allocation up to that point, placing more emphasis on debt repayment and shareholder returns.

  • We intend to pursue growth investments while also utilizing project financing for investment opportunities that can be expected to generate adequate returns for sustainable growth.



    注：図中の値はグループ経営ビジョン策定時の前提であり、その確実性を保証するものではありません。

    Note 1: Values in the chart are rounded to the nearest whole number. Information on liabilities other than interest-bearing liabilities has been omitted. Note 2: Graph values are assumptions made at the time the Group Corporate Vision was formulated, and do not constitute a guarantee.

    Chugoku Electric Power Group

    Corporate Vision 2040

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    The World We Seek

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    Chugoku Electric Power Group

    Corporate Vision 2040 23

    Business Portfolio and Financial Strategy to Realize the Chugoku Electric Power Group Corporate Vision 2040

    Future Direction of Shareholder Returns

  • In formulating the Chugoku Electric Power Group Corporate Vision 2040, we will review our dividend policy from FY 3/2027 in the

    interest of alignment with our financial strategy and enhancing predictability of dividends.

    Direction of shareholder returns

    • In order to provide shareholders with stable dividends even during the process of rebuilding our financial base, we will introduce the concept of dividend on equity (DOE) in deciding dividends from FY 3/2027 onward, when we will begin to carry out the Chugoku Electric Power Group Corporate Vision 2040.

    • Specific dividend levels will be determined based on a comprehensive consideration of factors such as the status of rebuilding our financial base, while aiming for a DOE of 2% until the start of commercial operation at Shimane Unit 3.

    • After the commencement of commercial operation of Shimane Unit 3, we plan to further enhance shareholder returns in light of improved business performance and stable positive free cash flow expected.

    【配当方針のイメージ】

    Illustration of the direction of shareholder returns



    Chugoku Electric Power Group

    Corporate Vision 2040

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    Chugoku Electric Power Group

    Corporate Vision 2040 24

    Business Portfolio and Financial Strategy to Realize the Chugoku Electric Power Group Corporate Vision 2040

    Steps to Realize the Chugoku Electric Power Group Corporate Vision 2040

  • Through FY 3/2031, when we will be investing in Shimane Unit 3 and the new Yanai Power Station Unit 2, we will continue with transformation

    and foundation building for sustainable growth.



  • From FY 3/2031 onward, we aim to reap the rewards of our investment and continue to grow sustainably with a high return on capital and a stable financial base, and to achieve a PBR consistently over 1x.

    Chugoku Electric Power Group

    Corporate Vision 2040

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    25

    25

    Initiatives To Realize the Chugoku Electric Power Group Corporate Vision 2040


    Chugoku Electric Power Group

    Corporate Vision 2040 26

    Initiatives To Realize the Chugoku Electric Power Group Corporate Vision 2040

    Evolution to a Competitive Power Source Composition

  • Shimane Unit 2 restarted operations in December 2024, a major step toward stabilizing our operating results and achieving carbon neutrality.

  • After Shimane Unit 3 starts commercial operation, our nuclear power ratio as a share of power generated ourselves is expected to exceed the corresponding ratio in the 7th Strategic Energy Plan*1. In addition, with the increased introduction of renewable energy and the replacement of LNG-fired power generation, the Chugoku Electric Power Group's power source composition will be highly competitive, both economically and in environmental friendliness.

  • Furthermore, in order to achieve carbon neutrality by 2050, we will promote co-firing of ammonia and hydrogen in thermal power plants, CCS*2, and efforts to develop offshore wind power and the Kaminoseki Nuclear Power Station.

    Proportion of generated electric power (generated ourselves)

Water pumping

Water pumping 3%

and utilization

Oil

Oil

Ensuring continued stable operation

Expansion of co-firing ratio; moving toward 100%

Utilization of IGFC*５+ CCUS*6,etc. (including replacing thermal power)



＊4

*1 Cabinet decision in February 2025

*3 Hydropower, solar, and thermal (co-combustion with biomass)

*5 IGFC: Integrated Coal Gasification Fuel Cell Combined Cycle Technology

*2 CCS: Carbon (CO2) capture and storage technology

*4 Nuclear power ratio

*6 CCUS: Carbon (CO2) capture, utilization and storage

Chugoku Electric Power Group

Corporate Vision 2040

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Chugoku Electric Power Group

Corporate Vision 2040 27

Initiatives To Realize the Chugoku Electric Power Group Corporate Vision 2040

Maximizing the Use of Nuclear Power While Making Safety the Top Priority

  • At Unit 3, meanwhile, we are currently responding to conformity reviews for new regulatory requirements and provided we can ensure safety,

    we aim to have safety measure work completed at some point in FY 3/2029, and to start commercial operation by FY 3/2031.

  • Looking ahead to achieving carbon neutrality by 2050, we own the Kaminoseki site, to host a new nuclear power station, and we are working on a construction plan to meet the needs for further decarbonized power sources.

  • The measures we have in place for storing used fuel have contributed to the long-term stable operation of Shimane Nuclear Power Station, and so we are running investigations into installing interim storage facilities for used fuel at our Kaminoseki site.

    Response to conformity reviews for new regulatory requirements at Shimane Unit 3 (as of the end of July 2025)

Surveys and investigations into interim storage facilities for used fuel at the Kaminoseki s ite

Review of



Preparations for reactor startup

    • Between August 2023 and August 2025, we conducted a survey in order both to assess the site's potential and to gather data needed to study plans.

    • The results of our analysis and checks, based on the objective data we gained through this surveys, led us to assess that there are no issues standing in the way of building an interim storage facility that cannotbe surmounted with technology. As the site has been judged to be viable, on August 29, 2025 we submitted a written reportlaying out the above to Kaminoseki's mayor.

      Chugoku Electric Power Group

      Corporate Vision 2040

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      The World We Seek

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      Overview

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      Chugoku Electric Power Group

      Corporate Vision 2040 28

      Initiatives To Realize the Chugoku Electric Power Group Corporate Vision 2040

      Further Introduction of Renewable Energy

  • In order to achieve carbon neutrality by 2050, we are actively making efforts such as increasing the introduction of solar and wind power, and increasing the output of existing hydroelectric power. We will actively accumulate technologies and conduct studies for the development of the area off the San'in coast, which is well-suited for floating offshore wind power, a technology expected to be introduced and expanded in the future.

  • In line with the expansion of renewable energy, adjustment capabilities using pumped storage plants, grid storage batteries, thermal power, and other sources are growing in importance. We will therefore work to both increase introduction of renewable energy and improve our adjustment capabilities.

    Initiatives to increasing introduction of renewable energy

    And improving adjustment capabilities

Initiatives to develop floating offshore wind power

1.2 GW (0.3 x 4 units)



    • The San'in coast of the Chugoku region has many deep waters, holding great potential for developing floating offshore wind turbines.

    • In November 2024, with the goal of gaining expertise related to running floating offshore wind operations, and to tie this in to our own future development, we became an investment partner in Kitakyushu Hibikinada Offshore Wind Farm, which began commercial operation in April 2025.



    • Going forward, we will continue to study the development of floating offshore wind power based on policy and technology trends.

      Power station name

      Hibikinada Offshore Wind Farm

      (Offshore at Hibikinada, Kitakyushu City, Fukuoka Pref.)

      Overview

      Output: 3,000 kW; commercial operation started on April 22, 2025

      Chugoku Electric Power Group

      Corporate Vision 2040

      Review of

      the Past

      Vision

      01

      The World We Seek

      02

      Future Prospects

      03

      Overview

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      05

      Our Management Desired Targets

      Outcomes

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      Initiatives toward Value Creation Realization Story

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      Chugoku Electric Power Group

      Corporate Vision 2040 29

      Initiatives To Realize the Chugoku Electric Power Group Corporate Vision 2040

      Business Development of Grid Storage Batteries

  • Grid storage batteries are expected to play an expanding role as a regulating power source for the further introduction of renewable energy and as a supply power source for emergencies, and their use is expected to accelerate in the future. We aim to use this as a business opportunity to secure new revenue by linking it to aggregation business and other value-added businesses that respond to customer and regional needs.



Measures to control renewable energy output

Increase in renewable energy due to avoidance of congestion in local grids

Carbon-neutral power supply

Carbon-neutral power supply for data

centers/green hydrogen production facilities, etc.

Renewable energy

Data center

Customers

Power grid

Hydrogen production

Long-term energy storage

Combination with LDES*3 to maximize the use of large-scale decarbonized power sources

*3 Long duration energy storage technology

Renewable energy tracking

LDES*3

H2

H2

H2

Supply of renewable energy to customers

Support for DER*1

Long-term utilization of post-FIT power sources, etc.

*1 Distributed energy resources

Community

Regional LCP*2 support

Emergency power supply

Large-scale power sources

*2 Lifestyle continuity plan

Chugoku Electric Power Group

Corporate Vision 2040

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Vision

01

The World We Seek

02

Future Prospects

03

Overview

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05

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Outcomes

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Business Portfolio

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