Since it is now the scheduled time, we will now begin The Kansai Electric Power's Kanden Investor Day. Thank you very much for taking the time to join us today despite your busy schedule. We would also like to express our sincere gratitude to everyone who are attending the event in- person, as well as to those who are participating online. I am Tanaka, Executive Vice President of The Kansai Electric Power Company. Today, presentation will be given by Toru Kuwahara, Managing Executive Officer, The Kansai Electric Power, and Kenichi Fujino, Executive Vice President, The Kansai Electric Power, and I myself, Toru Tanaka, Executive Vice President. Now, we would like to start. Before going into each of the sessions, I would like to share my thoughts on the current situation. We have the screen. We have disclosed the management plan at the end of April, and what I would like to emphasize is the third bullet point here, creating investable energy and T&D businesses. As of the end of April, at the explanatory session, we received questions. We had explained on that occasion, so here, we are going to be making the investments and against the WACC, ROIC should be 100-150 basis points. We would like to secure such spread. 5.5% was the ROIC for 2025. ROE was 11.3%. From fiscal 2026 to 2028, we are aiming for 3.3% or more, ROE of 8% or more. This is not incorporating the inflationary price hike. We are not going to stop at 3.3%. We will review prices, refine our business, be selective with investments, and continue to secure spreads. 2040, it is a bit ahead, but ROIC 7% and ROE 12% or more, we will be achieving this. Rather than simply being mindful of cost of capital, we aim to generate returns that exceed the cost of capital through our business operations. Of course, it is not just energy and T&D. We will pursue upside in ROIC and ROE across all our businesses. As Japan's industries grow and electrification and decarbonization advance, we foresee an increase in electricity demand in the years to come. That is why we are investing in power source and network. We have a long history of developing power sources, including nuclear power, establishing networks, and managing operations. We have also strengthened our financial foundation. We will take on the responsibility of making the energy investments necessary for Japan's growth. We will demonstrate this through the quality of our investments and their returns. The key is capital allocation. We choose investments based on profitability, risk, duration, and financing. By no means is our goal to use up the entire investment amount set forth in the pillar. Rather, we will allocate capital where it will generate value that exceeds the cost of capital. This is our capital allocation. in August, we revised the wheeling charges and the standard rates for the extra high voltage and high voltage. If WACC is rising, of course, we will be raising WACC. We will be generating cash, make investments sustainable, and make the business investable. This is by no means just a matter of one-time rate adjustment. We must simply take action to keep pace with inflation. Another area is the system that supports investment in power generation. This is an area we have been focusing on quite heavily for several years now. We have been making proposals to the government. I wouldn't say it's fast, but with the understanding of the authority, we are making progress. I really feel that way. We are starting to see results, or maybe you have started to notice that. Wheeling charges, long-term decarbonized power source auctions, offshore wind power. The regulatory framework and business environment are evolving toward a state where these are investable. We will continue to build on this momentum. Rather than continuing to wait for the system to be put in place, we will make it a system that allows for investment. If the conditions for investment aren't met, we will not make investments. That much is clear. At long last, it's nuclear power and hydrogen's turn to take the stage. For the participants today, for the long-term investors who will be able to hold our shares for a long time with a sense of security and peace of mind, Japanese electric power companies are the companies to put the funds in. Otherwise, we will not be able to cover the energy needed for Japan. Without that, we will not be able to grow. In Japan, the industries will not be able to grow. What should be the return that we should be making for the investors to be able to make a decision to make investments? We are on our way, and we are currently having discussions. Japan's energy business, we'd like to make it sustainable and investable. We have a strong intention and will, and we have the capability to realize this, we believe. On the other hand, looking at the profit. For a year's time. As for the near-term profits, 2026, 2028, how is it going to be? Unit 3 at Ōi and Mihama, as you already know, have been shut down, and the situation in the Middle East remains uncertain. Therefore, it is difficult for me to state with a reasonable degree of certainty right now what our profits will be for this fiscal year or over the next three years. I will wait until the second quarter earnings report is finished, and we will let you know as soon as we are able to discuss it. Again, we do not intend to settle for the profit and ROIC levels outlined in our business plan. We will strive to achieve even better results and aim for upside. Since the capital increase, I had numerous discussions with investors both in and out of Japan. We will share the feedback we receive with our executive officers and board members, and we will implement any suggestions we agree with as part of our management strategy. Engaging with the market is the essence of the business. For us, it's as natural as breathing. Today is an Investor Day, and last year we explained about nuclear power, ICT, and real estate. Today, this is the content of the management plan, the second from the top, we will be covering overseas energy and BESS. These two will be the featured topics today. JPY 100 billion for overseas energy, JPY 20 billion for energy storage facilities, such investments will be made. How does this capital allocation translate into profits? How does it contribute to ROIC? Is our capital allocation truly investable? I hope that by taking a closer look at our specific business operations, you will gain a clear understanding of this. We would like to talk about these topics. We would like to start with Overseas Energy. Mr. Kuwahara, please. First presentations will be made by two persons, then after that we have secured time for a Q&A later. Thank you very much. Good afternoon, everybody. This is Kuwahara speaking. I am in charge of the Overseas Energy business. The Overseas Energy business of KEPCO, I have not had the opportunity to talk with you in this kind of a manner. Today I would like to have a very frank discussion and also that you can receive the information about our business. All right? I would like to go on to explanation about the Overseas Energy business at three points. The first point is about what Tanaka has said about the vision for the Overseas Energy business in the management plan. The second point is the business overview, what kind of Overseas business that we have been undertaking. The third point is about the plans that we have for the future. First we start about the management plan that Tanaka has already talked about, the positioning. In the three years term, the Overseas Energy is going to be JPY 100 billion in growth investment in FY 2026 to 2028. The capital efficiency is going to be pursued. The return is the thing that we would put in motion so that the disciplined investment. The Overseas business, I think you might have concerns about it because compared to the domestic business, there are other risks that we have to undertake in the Overseas business. We will be looking at that very carefully and then proceeding with the Overseas business by disciplined investment. I do not know whether we have talked about it, but there is a new committee that we have the discussion about the new investment. The Global X business operation, within the company, before it is going to the committee for investment, we would be internally discussing about it. That is what we begin with. There are the projects that cannot go to the investment committee, so that we are quite severe in selecting what investments that we pursue. This is for the financial planning. In 2040, by FY 2040, JPY 40 billion and ROIC is at the bottom, about 6%. This is if you make the calculation, it is going to be like JPY 660 billion. For the asset, about JPY 400 billion, it is going to grow to 1.5x. That is the kind of the activities we have in mind. In this graph, the dark part is the portfolio, the base earning power that we have in the portfolio. By keeping this portfolio, yes, we can have the earnings coming so that in 2024 it is JPY 152 billion. In 2025, it is JPY 175 billion, and about JPY 200 billion. Then in 2040, it is going to be JPY 440 billion. The light colored is the asset management, the part that can come from the asset management, so that we recycle by selling. This is from the foreign exchange. I do not think we have it here, but by the foreign exchange fluctuations, then we can have the gains. This is different from the base portfolio power that we have, but then we can have those. In the future, we can have 6%+ return that we have in ROIC basis. That is what we are aiming for. Here by the selling of the assets. One example here is in fiscal 2024, we had a very big profit. One of the breakdown of this is from the ENW in the Manchester area. This is about one fifth of the scale of a Kansai distributor. Then we have 22%, and then Nikkei course, we had Nikkei consortium. It had a 40% share in the Japanese consortium. Then after that, six years have passed, so that a part of that has been sold. There had been people who had asked us to sell. Iberdrola is the company that we decided to sell to. Iberdrola, with the other shareholders as well, we decided to sell our stake. We sold one half the stake. Iberdrola Group, then we are going to do it together with them. This is strategically speaking, that we are going to learn from how this Iberdrola Group is going to manage the company. I think there is a timing for the sales, so selling the stakes so that we were able to sell at quite a high price compared to where we bought. The asset management, if we do it in a right way, we can have the profit depending on the market. We have the timing is right. That is quite important. That is the lesson that we had about the sale of the stake in ENW. This is what we mean by plus alpha. This we say plus alpha, but it is not just us. Even if you want to sell at a certain timing, it is not necessarily true that we can sell at that timing. It is something that we have to do flexibly looking at the situation. This is the business overview. This is the total picture of how we have been managing our Overseas Energy business. All right. How we have been in history. In 1998, we participated in the San Roque Hydropower Project in the Philippines. Becoming the first Japanese utility to enter the overseas power generation business. Then in 15 years time, if I say very bluntly, we had been doing at quite a low level. If there are a good project, we can do it selectively. But it's rather that we were on the passive side, that we have the projects that are consulted, then we take what we think are good. After 2016, at this kind of a timing, we had the midterm business plan at that time, so that in the 10 years time, we decided that we're going to have the growth investment. This is the three pillars. One pillar of the three pillars is the Overseas business. That is what we had decided. So the quantitative expansion, so that we expanded investment targets and geographies pursuing quantitative expansion. For the scale, it did not go as rapidly as we thought that we had certain amount of results, so that we decided to do that for about five years. Then at that time, it's not just the quantitative expansion result, but we have to have the content. Then for the five years term, we shifted to qualitative growth. Not just to pursue the scale, but to look at the quality of the portfolio to build a more profitable portfolio. As I've been saying, about JPY 400 billion asset. 11 countries, we have 23 projects. The power generation, the net is 2,500 MW. The power generation in the overseas, the other companies do that also, but we have the transmission and distribution as well. That is three projects across three countries. Here, that's the locations that we have in the Overseas Energy business. The table, this is from the old. This is the history we had. In the blue part, the hydropower was the major ones, but then the thermal power, the orange color. But then we have also the decarbonization, so that we have the wind power and renewable energy. The renewable energy, by introducing that, then we would need to have the T&D transmission distribution. That we think is the investment opportunity for us. Okay. Also, as for the locations, in the beginning, we were focusing on asset. We were acquiring assets in Asia mainly, and then we held some assets in the U.S., and now there's more opportunity, so we are seeing an increase in assets in Europe. But it's not that we have a decision made beforehand to invest in certain geography. We will look at each of the business opportunities. I will talk about this more, what kind of business is possible where we are covering the whole world to search. We want to be able to leverage our capabilities and make sure that we are able to generate returns. As a result, these are the assets that we own. Now, looking at the concept now. We are electric power sector, and that will be the core of the business. Overseas, local economy. Would we be able to provide value locally? We would like to focus on such businesses. Through that, we would like to be able to establish one of the foundation bases of Kansai Electric Power. Risk-return characteristics of the project. We look at our strength, and we would like to participate in the most optimal way. What I want to say is that diagram below. On the X-axis, we have the age of the projects. This is the stage of development, initial development, late development, construction, and then operation. Different stages are described. Y-axis shows the profitability and risk value. As there is more advancement in the projects, the risk goes down and profitability goes up. The ideal is that we would like to focus on high return projects, but the risk is high. We look at the area and our capability, we try to strike a balance. Where shall we focus on? We are exploring that. As a result, we have the distribution as described in the prior page. When we go into an area for the first time, other company has developed and we buy such a project, or we join together with a fund at the time when the construction is about to start. If we do believe that we can accept higher risk, we can do development together with a developer. In the end, we would like to be able to receive order and do development. I will show you a video later. Hydroelectric power. We started this from scratch, and there is such a case. This is an ultimate project. If you focus just on that, it will take so much time, it takes so much money, and the return to investors will take a lot of time. There are projects we take time, and there are others where we will be able to get returns quickly. That will be a combination of the two, and that is how we build our portfolio. This is our basic concept. Looking at the portfolio from a different perspective, this diagram is exactly what it is. By area, Europe accounts for more than 50%. Wind power is increasing, and that is why the mix is like this. Asia, North America, about the same size. Investment time, including hydro, we have wind. Renewable energy exceeds 50%. We are riding on the recent trend. Thermal power has decreased very much compared to before. Thermal, depending on the project, we do believe that there is still possibility. As a transition energy, we do believe that gasified thermal power can be utilized. We will continue to make investments. Also T&D. As green energy expands, T&D investment will be needed. We would like to leverage our strength and to grow these as well. The point is earning stability. On the right side, we have a graph. Overseas business, there are various types of projects. We trade in the market and enjoy the volatility of the price and make profits. That could be one possible business that we could have. Looking at the stability of the portfolio overall in the earnings, we would like to secure that. 70%-80% should be long-term contracts, plus market-based projects. So we would like to realize this kind of a balance in earnings stability. Last of all, the strategy going forward is what I'd like to talk about. Our to-be state in 2040 is we'd like to become a major player in energy transformation overseas. In other words, no matter where we go, "Oh, we know Kansai Electric Power. They do good work. We'd like to work with them." So we'd like to continue to carry out such activities to be evaluated that way. Looking at the size of the investment in the coming three years, it's around JPY 100 billion. This is basic profit of JPY 220 billion, and plus some alpha with asset management. Currently, our ROIC is around 4.5%. I will mention it now, but this is a bit low. ROIC of 4.5%, I do believe it's low. What we are doing is infrastructure business. Also, many of the projects, we have to take out a loan. Therefore, in the first part of the project, if you look at the cash flow, we have to make repayments for the loans. That comes first, and then we will, as a business operator, will be able to enjoy profit later on, maybe 10 years or after that. Those are the main types of projects. Please try to recall the history. It's only been just 10 years since we have started to expand. So we don't have so many projects that have come to a recovery phase. But going forward, there will be accumulation of such projects. Naturally, this ROIC should improve. As of now, it's small. But please bear with us, and as time passes, we will be able to see improvements. But of course, it's boring to just wait. Sit and wait. So we will divest some of the assets and generate profits for today. This is all within the adjustment and trying to strike a balance within the portfolio. As for the strategy to achieve the to-be state, we have four strategic pillars. One is we do already have some stable earnings. We'd like to use this as a foundation. Without undermining it significantly, we would like to increase the number of projects little by little. If you continue to make investments, the profitability might drop significantly. We would like to avoid that. So while generating stable earnings, we would like to accumulate profits little by little. Renewable energy and BESS, battery storage, and T&D, we'd like to set them as the core. Also, in some cases, we will choose gas thermal power to make investments. Then discipline, investment discipline. This is important to identify risks. We'd like to be very strict. Also, within the portfolio, what is the role of each of the projects? What I mean is that in our discussion of the portfolio, all the portfolio, how much profit would they be able to generate in the future? We have a long-term perspective. How would they be if we continue until 2040 and beyond? We would like to deliberate on the role of each of the project and make a decision to make investment. We would like to rotate assets. To capture earnings and fund higher return projects. Number three, this is also very important, partner with local partnerships, collaboration with them. If you go overseas, we are non-locals. So of course, there are some parts where we can leverage our knowhow in the business, but what is difficult is having dialogue with the locals, or having dialogue with the local authorities is a challenge for us. Unfortunately, I should say, or maybe fortunately, so electricity business is regulated business. So it has been relaxed, but we need to gain deep understanding of the local rules, and we need to be able to have a partner who will be able to work on such rules. And we have some cases where we are collaborating with local companies. For example, Medco in Indonesia or in Spain, we are collaborating with Iberdrola. And the fourth is capability to build in-house development. So left top in the previous page, I think we need to be able to carry out projects ourselves, develop projects ourselves. This will be the essence of our capability to develop projects. We will show you a video at the end. Laos hydropower generation project will be shown in the video. We sent a number of people, and we are operating that business. But people who return, they look totally different. Young people, they're sent for a short period of time, and we like to give them opportunities to learn and take a look at the business there. And when they return, they're totally a different person. So we do believe that there are such capabilities and potential for projects that we build and operate ourselves. So profitability will come later, but our execution to carry out business, I think this is something that's very important, which we need to carry out. And a case in point would be what we're focusing on right now is Indonesia's. It's inter-island connection Transmission from 20 years ago, many companies have tried that between Java and Sumatra island. They were trying to connect the two islands, but it was extremely difficult. So we want to take on this challenge now anew. As I mentioned earlier, these businesses, we need to communicate very well with the local authorities. Therefore, Indonesia Jakarta office members and also local electric power company, PLN, we are collaborating with them to start to create a framework. This is a long project, but we would like to be able to develop our capability to originate projects. And this is my photo. Sorry. This is Iberdrola. This is a strategic collaboration with them. Last year, I think, we signed an agreement, MoU. And Indonesia inter-island transmission is described here in Japan, METI. We are collaborating with them strongly. AZEC, this is Asia's Decarbonization Activity Framework. And within such a framework, we would like to realize this project on the Indonesian side, government and also EPCO. We are collaborating with them, so this is a very big long-term project. We are combining this kind of a project as well in our portfolio. And last of all, this is Nam Ngiep video. I'd like to show you this video now. It's called the Second Kuroyon Project. Kurobe Number Four Power Station. This is a project that really suits us. And in the video, there will be some narrations. And it's AI that is speaking. Therefore, maybe it might be a little bit hard for you to hear. We have subtitles as well in Japanese. But please bear with us, and please watch the video. We have our spirits in the video, so please watch it. I'd like to start the play. Where did this project begin, and where is it headed? About 150 km east of the capital, Vientiane, Bolikhamxay Province, nestled along the Mekong River. Mountains, forests, and abundant water resources. It was known that Nam Ngiep River had potential for hydropower development. To achieve further progress in clean energy, we had to venture into unchartered territory. In 1998, a survey team from Kansai Electric Power set out with support from JICA, Japan International Cooperation Agency, making our way through the untrodden forest, crossing the river on a bamboo raft, venturing into land that had never been touched by humans. This is truly unchartered wilderness, and so construction began. 167 m tall, 290 MW of capacity. Nam Ngiep 1, a dam-type hydroelectric power harnessing water and converting it into energy. Its sheer size rivals that of Great Pyramid of Giza in Egypt. This is not a legacy of the past. Precise and high-speed construction using modern roller-compacted concrete, RCC technology. The fixture depicted in the blueprint has taken shape, a structure that will endure for thousands of years. A power plant stands beside the dam. Clean, reliable electricity is generated. Electricity travels through ultra-high voltage lines to Nabong Substation. It is boosted to 500,000 V and transmitted across the Mekong River to Thailand. Energy that extends across borders. It supports carbon dioxide reduction efforts across Asia. The project is more than just building a power plant. There is another major mission. It means supporting people's way of living and passing it on to the future. Due to the construction, approximately 3,500 people from five villages had to relocate to new land. Compensation for local residents was provided in accordance with Lao domestic law, along with international standards and best practices. The newly developed resettlement village. Sturdy houses, irrigated rice paddies, electricity, water, schools, clinics, bus stops, and roads that were passable even during the rainy season. The foundations that support daily life are built one by one. The laughter of children echoes through this land, and people's daily lives are beginning to take root. Moving to a new place is not enough to secure people's future. The residents have learned new agricultural technologies. The vegetables, livestock they raise are now being delivered to local markets and the cafeteria at the Nam Ngiep Power Plant. Building large-scale infrastructure. It was about building people's infrastructure, furniture, together with the community. Commitment. A 27-year concession. The Nam Ngiep 1 project aims to leave a lasting legacy in Laos. Infrastructure as roads and bridges, job creation, technology transfer, royalties, and taxes. They are a source of strength that supports Laos' future. The road is by no means smooth. Extreme weather, aging infra, and operations in remote locations. 24/7, we continue to ensure a stable power supply. What you can't see there is the efficient effort put in day in and day out together with the Lao government, together with the people of Lao, to build a more prosperous future. What we want to create is not just electricity, it is a better future for the country itself. Thank you very much. That is my presentation. Thank you so much. All right, next we would go to BESS. Of course, this is not just BESS, but it has the inclusive of the retail. We would like to have the Representative Executive Officer, Vice President Kenichi Fujino explain about this business. Yes. Good afternoon, everybody. I'm the Head of Solutions, and my name is Fujino. I'd like to talk about BESS. Today, since I have this opportunity to talk to you, I'd like to talk about the Solutions Headquarters Soso, and to talk about the overview of the Solutions business as well. All right. Today, first I start with the midterm business plan and the solution service initiatives. We say toward Energy 3.0, but we'll give you examples of solution services toward Energy 3.0. Then I go into BESS, and market outlook, and then our group's BESS business model, our competitive advantage, and then to achieve our management plan. That's the order that I'll be proceeding today. First, the solution services, how do we go about it? The overview of the solution service initiatives. First, in the midterm business plan. To answer the needs, we give the optimal products to our customers. For the energy as an axis, the solution services and also to the new business areas that we would be having a challenge. We having the best of those two, so that we have Energy 3.0 as a plan that we're pushing forward, so that we can grow as a partners' customers in a long-term business. Building long-term partnerships as you know. The needs of the society and the needs of the customers, decarbonization, and also the lowering of the energy costs. Against such needs, are the gas and electricity power, then we want to have the new services as the added value. The Energy 3.0, what is it, you might ask me. Well, this is our definition. Energy 1.0 is the energy sales, and then we can have business to help our customers. Energy 2.0 is the solution services that is developed and also to be expanded. Now, currently is Energy 3.0, so that we can have the linkage of the two and to put it in the optimal shape to the customers. Deliver optimal solutions to customers. The energy business, the strategy that we have. As you know, not just in the Kansai area, but to go all over Japan and also in the world to become a service provider. Not just the Kansai area and not just electricity. That's our Vision 2040. For customers across Japan and overseas. Energy and the solutions is in a one shape. This is the kind of a concept that we have. We had electricity in the middle, and electricity or the retail in the middle. We had various services around that circle. From now on, we have the energy management system in the middle, so that not just that electricity and gas, those kind of power, but those are going to be the supportive area. That's the definition we changed. The energy, then we have the air conditioning, and the hot water supply, and the BESS. Those are the surrounding part of the energy management system at the core. In the three years' time, I go into the BESS business and also energy peripherals are new businesses we'll be going to expand. For across Japan and overseas our customers, solution service, based on the scale, we'll be using the project financing to have the capital efficiency maximized. That is what we want to aim in the three years to come. For the Energy 3.0, the solution service, what kind of concrete examples do we have? I give you the examples of solution service towards Energy 3.0. The on-site solar, since May 2019, we had decided to go into this business. No initial cost. We provide one-stop service from installation to post-installation operation and maintenance. As this diagram shows, to have the solar power within the corporate customers, and then we would have the service fee from the customers. We have 700 locations as a track record and more across Japan. The overseas solutions, as Kuwahara-san has explained, this is different from the overseas business that has already been explained. This is rather for the customer service. From Thailand, Vietnam, and Indonesia, we had the local entities that we had set up. From 2018, we had started overseas solutions business. The solar power generation, cogeneration systems, and high-efficiency chillers so that we do from installation to operation and maintenance. What we had done in Japan, we go to Southeast Asia from Thailand, Vietnam, and Indonesia. We have a track record of more than 100 locations. Next, I talk about the CQ BANK, and this we started since November of 2025. A green bank that invests and lends all of its deposits to projects that contribute to achieving net zero emissions. It's a green bank. Tokyo Kiraboshi Financial UI Bank, we are partnering it. This is what's called business. This is what is called the-- For the average of the deposits, that's about JPY 7.21 billion eligible investments and loans allocated, and equivalent to the average deposit balance growth. This is growing nicely. This is the newest one. Since July 2026, we have what's called MoAct. MoAct is a service designed to promote social contribution activities by raising awareness and driving behavioral change among consumers, such as available on smartphones and other devices. At the press release time, we had 110,000, but in the three months we have 170,000. We had grown from 110,000- 170,000. This is also growing quite nicely. Today, I go into this agenda of BESS business. It started since December of 2024. This was the solution service of the Energy 3.0. From here, I talk about BESS. Here, as you know already, the environment has changed very drastically surrounding electric power system, with more having regenerative, renewable energy and suspension and decommissioning of thermal power plants. There is a structural shortage of balancing capacity and worsening due to the rise of variable power source. Left-hand side, we have the change in the power generation mix of 2023 is the left-hand side, and the 2040 on the right-hand side in the Energy Basic Plan. This is the thermal percentage, is like one half from 2023 to 2040. Then we have the variable power source like wind and solar and biomass. That variable power source is going to increase in 2040. There is increased risk of supply disruptions due to insufficient balancing capacity. Then, the BESS market outlook, how is it? As of our current, we have the policies work like new market entries and the long-term decarbonized power source auctions and subsidies. Last month, at the Makuhari, we had a so-called expo in Makuhari. Many BESS business came to that expo in Makuhari, but it is like a bubble. I think you know that we are currently in a bubble. In 2030, it is 6.3 GW, but in 2035, it is going to be the double, 12.6 GW. That is the estimate that we have. The market will develop in the beginning with the support from the government, and then the market will continue to grow with the renewable market growth. That is the expectation. Now, let me explain about the business model that we have for BESS business. Our business model, it might be the same with others, but there is different markets of the capacity market, a supply and demand adjustment market, and wholesale market, and adjustments are made between the three. E-Flow company In order to contribute the most for adjustment to have an optimal trade for the first time in Japan, this company has been established in 2023 to specialize in DER. From 2023, they are accumulating experience, trading, and know-how, and they are now utilizing this. Now, looking at the revenue and cost structure of the BESS business, high profitability can be expected in high voltage, and we will lower the cost and maximize the earnings. Looking at the revenue and cost structure, we have the image here. In order to create optimal plans, we would like to optimize the revenue and we would like to also maximize the group revenue by fully leveraging group functions. Also, we would like to utilize competitive procurement of materials, these capabilities. These would be the key points for us to be successful in this business. I mentioned about competitive procurement of materials, and I'd like to elaborate on this a bit. Looking at the price level of the grid. Please take a look at this part. For storage battery, the battery itself, power price accounts, cost accounts for 70%. How can we reduce that? That would be a very big point. Another point is, this is by size. This is kilowatt-hour installation cost. The larger the scale, kilowatt-hour cost will go down naturally. Therefore, even if the technology level is difficult, we would like to be able to utilize our know-how in this business, and we would like to focus on grid-scale BESS to do the development. Together with that, we would like to be able to have top-class development capabilities, and we would like to be able to secure high cost competitiveness with one of the largest development scale in Japan. Next, I'd like to talk about our development history and competitive advantages. First, starting with the history, looking at the BESS, we became very much aware of this need at an early stage. Ahead of others, we have considered promoting this business. In December 2024, we collaborated with ORIX and started operation of Kinokawa BESS plant. We were able to start operation in December 2024, and that is ensuring our competitive edge. After that, this business has been rolled out widely. In 2024/2025, we have launched Kan-denchi service. I will talk about this later. We are utilizing the group companies to maximize revenue from the group companies. At the most recent, this year, 2026, we have established Kan-denchi Fund. This is a topic for today. This is to maximize capital efficiency and also swiftly establish development foundations. With these purposes, we have established Kan-denchi Fund. Let me talk about Kinokawa BESS plant. As I mentioned earlier, this is supply and demand adjustment market. All products trade started in 2024. In line with the start of the trading market, we started operation of Kinokawa BESS plant, which is the largest in Japan. Rated output is 48 million watt, and as an operating BESS plant, this is the largest in Japan. IRR at this time was more than high- single digit, high- single digit and above. As I mentioned earlier, we have extensive data, and therefore, we are able to optimize operation with AI and humans. We create operation plans to maximize revenue. We will be managing, and we are cooperating with a venture and introduce the cutting-edge technology. By using AI, how should we do the BESS market bidding? We are utilizing data equivalent to a total of 65,000 days to verify. This is Kan-denchi services. This is a service that provides one-stop solution for everything in BESS project. At Tanagawa BESS plant, for the first time in June, we have utilized a project financing by a large bank, Tanagawa BESS plant. This is a part of the plant that we had for some other purposes, and a rated output, 99 million watt, and the scheduled operation to start in February 2028. IRR is aiming for 10% for our group or more. This is Kan-denchi overview. We are utilizing group companies to maximize revenue. For example, in EPC we have Kinden. For O&M and battery diagnosis, we have established a new company together with Kinden. It is called K2-BatOM. We established this company in December 2025. Battery diagnosis and also analysis of the operation risk, and we would like to sell this to be able to reduce the risk. E-Flow will be doing the operation. For asset management, we have Kanden Realty Estate subsidiary, Kanden Asset Management. We will be able to appeal this service to the outside saying you would be able to rely on BESS plant operation utilizing the Kanden Group. We have newly established Kan-denchi Fund this year. Needless to explain, in order to improve investment efficiency and also to optimize the funding, we have established a fund. As a major electric power company, we are the first in Japan. It was established on March 31st, 2026, and we will be focusing on grid-scale BESS, and fund size JPY 6.5 billion, fund duration 26 years. This is what we are thinking of. To maximize capital efficiency and swift business development, these are the characteristics of Kan-denchi Fund. Together with Kinden, there is unlimited partners on EPC. We will be offering them in the group. Also through funding from outside, we will be maximizing the capital efficiency. By originating the projects, in an efficient way, we would like to originate the projects. This is Kan-denchi Fund's first fund. This is Kasugai BESS Plant. We have published that this will be incorporated as a part of the fund. In Kasugai BESS Plant, the scheduled operation start is April 2028. Rated output is 39 million watts. After Fund 2 onwards, we are aiming to start operation by 2030, and we are currently in the process of promoting consideration for projects. Last of all, to achieve our management plan, I would like to touch on this. First of all, as of now, looking at the development status. We have announced the development of nine BESS plants across eight locations nationwide, securing a top-tier position in development capacity from Sapporo in the north and Aso in the south. We have all over Japan, and we had started development. We are having, with a total 455 million watts as a total of those nine BESS plants across eight locations. What is the characteristic of this is that we have Kinokawa. We are doing it together with ORIX. For Sapporo, we have JA Mitsui Lease. For SPARX Group, we are collaborating with them. For Chikugo, we have Tokyo Century as a partner. About Aso BESS Plant, Mitsui Lease and SPARX Group, we have Kyushu Mitsui Fukuoka Jisho as well. Various partners we are collaborating with in order to develop those BESS plants. I think that is our characteristic. Here, initiatives to achieve our management plan. We had already talked about that, so let's skip upon that. Lastly, the future direction that we want to take. Here, the objective is to have this as a high-yielding business and a consistently high-yielding business that we're contributing to further improving profitability across the group, and actively expand operations nationwide and aim to become Japan's top player in the BESS business. On the left-hand side, this is improving ROIC. Currently, until 2030, we want to have ROIC 5% or more, and then 2035, ROIC 10% or more. The scale we want to expand also, so that currently we have 455 million watts, and in early 2030s or maybe a little earlier than that, we want to approximately 1,000 million watts. That's what we like to have. That's all for myself. Thank you very much. Yes. Thank you so much. All right. As such, we had concluded the explanation about that two. All right. I'd like to start the Q&A session now. First, we'll take questions from those who are here with us in this room. After that, we'll take questions from those who are participating via Zoom. For those people who are on the Zoom. All right, so we start. Please tell us your name and affiliation before posing your question. Yes, please raise your hand if you have a question. Yes. All right. Okay. Thank you. Thank you so much for your explanation. From Morgan Stanley MUFG Securities, my name is Ogino. For both the businesses, I'd like to have about the numbers. Questions about the numbers for the both businesses. About the Overseas business, first of all, the current status by the free cash flow, that's JPY 100 billion, and the base profit. I don't know about the depreciation, but first, the three-year term of the mid-term business plan, how is the free cash flow? If the free cash flow is in the black, after the three years' time, is it going to go up, or is it in the red now, but then it's going to go into black after five years? How is it going to be about the free cash flow? About the numbers, 2040 perspective. So the ROIC over 7% on the consolidated business. So 7%, right? And Overseas business was either 5% or 6%, I heard. But the return for the Overseas business, is it what you are aiming for the management request? Or how is it from the image? The Overseas business, so risk and return, is it going to be higher? 7% is going to be higher. That is my personal comment. But then for the management side, they feel 6% is okay, so they do not expect to have more than 7%. Can you talk to me about that? All right. Thank you for the question. About the free cash flow. Yes. Investment free cash flow also. In that sense, I do not have the numbers with me now, so I think I will answer separately about that later on. But the project, it depends on the project. The free cash flow is quite diverse, so there can be a negative in some years and a positive in some years, so that this is a stage that we are increasing the assets. That is not something that we are particularly concerned about. And then in 2040, the return perspective. So ROIC 7%, yes, overall company. So we say 6%, but then that is for the baseline number. As I said, we want to go higher than that. That is the baseline, and we want to go higher than this. So I think you want us to show the numbers, but, well, this is something that we cannot go into specifics because we are still at an early stage, so that by having this numerical target, maybe we can bind the timing to sell the assets. There are some deadlines for the time-based fund, but we are doing as a going concern, and we would sell at the best possible time. So I think the current way of our planning is the best way. For those who are following the numbers, maybe you might think that this is rather frustrating kind of a way for me to answer. All right. And then as what you say, yes. Well, I would like to say thank you to you for that answer. So you say you have a plus alpha. And for the track record, you had this in the current stage, and then we want to aim for higher in the future. Yes. That is how it is. All right? This is my comment on that. But the 5% for the long-term rate in the United States. The fact that you buy the U.S. securities, the long-term bonds, government bonds. If just in terms of money. But by listening to you, I thought that the free cash flow, you are not so concerned about the level of the free cash flow. This is the external numbers that we can follow from the outside, so that, yes, I understand that you want to aim for higher, but you say that it is a risky thing. But from the outside, it is even more risky, so that we will not feel it is very attractive. So example, the American investors. Well, you might think it is much better to invest in this rather than the U.S. government bonds. Well, for the IR, investor relations, for the overseas investors, maybe you might think about change the presentation to make it more attractive. But in the three years' time, JPY 100 billion of investment. I think, in your case, KEPCO, in the Overseas business, if that kind of a scale, then you do not need to have much of a performance on that. But of course, every Yen is precious, so that I think you need to show the presentation in a different manner because if you really want to go into the overseas business, we cannot find the passion. Oh, thank you very much for the comment. Yes. I take it seriously, and I reflect on that. But, about the presentation, as I said, to have the plus alpha, we cannot go into this detail about the plus alpha number because I do not want to go into that in an irresponsible way. So the timing, we do not know, and it depends on the market. What I want to say is that this year, how much is it? That kind of a discussion is quite meaningful because for the long- term, we want to have a breadth to take a look at it. I think that is the way it should be to look at this from the management perspective. Thank you for the question. But since you are going into this, as a corporate, the cash flow, yes, we are looking at it from a corporate segment, but how can we go into more detail? As of now, I think you can imagine this, but the depreciation is going on quickly, and the ROICs are quite high for the OPTAGE and the information communication. So we have a positive cash flow. What are we going to do with it? I think the structural stage, I think you can understand, but then how should we show this in the different businesses then? Yes, I want to take a look at it. Thank you so much for the question. About the BESS business. For the BESS, I think everybody wants to go into a BESS, it is like a mega solar in the past, kind of a boom. What I want to ask from you is that your company, the current stage, the BESS business. I will not say to have your numbers for the business of just BESS, but yes. In the future, you say that you are going to make money, profit on this. But then the boom is now here, so everybody wants to go into BESS. As much as possible in a current stage, the ones that are already in operation, can you tell us about the return? You said IRR is a higher single digit. Is it an actual number or since this is a boom, maybe you already have two digits already, but then there are already a boom. I do not know how much is a Kinokawa profitability. Another thing I want to ask is the ROIC objective. Yes, of course, I would like to say, please do BESS about it, but for the risk side, what is the one factor that you fear the most? You have decided to have the investment already, and then in the project that you are considering, these are the risks that you have in mind. Now it's kind of like a bubble and kind of like a boom, so that maybe you are looking at the risk not too seriously. Okay. Thank you for the question. One thing, everybody's going into this, so that you don't see the business plans. Because people have not started in earnest, the investment cash flow is there, but then the return is not there. Those are the situation of the most of the players. We haven't given the concrete detailed numbers from us, but higher single digit is for the Kinokawa BESS, is the objective that we have. Actually, I cannot say this for myself, but as you have said, IRR, yes, we can have that you have alluded to higher than that. The risk, what are they? The future risks. I talked about the three markets. About the design of the three markets is going to change. In 2030s, we have the simultaneous market and also in the demand supply. The auction price, the higher limit is coming down. Upper limit is coming down. We have the BESS, but then we have the buffer as well. But then for the high voltage or the low voltage, those BESS that are very much in a bubble. Maybe the upper limit is coming down. It's not very easy to just make money in the market. I think that is the biggest risk that we can foresee at the moment. Another thing, if I may allude to, is that this is something of an issue in the data center as well. For those that you have the connectivity, so that the bubble, yes, everybody wants to have the connectivity and the interlinked T&D, transmission and distribution. The businesses are not able to catch up with that. For the power plant, we have the decarbonization auction. There are plans like that, but for the T&D, to increase the T&D under the current system is quite difficult. How we can increase that is, I think, one big challenge going forward. Thank you. Thank you. Thank you for the explanation. My name is Shinya from Mizuho Securities, and I would like to ask one question each for each of the businesses. First, starting with Overseas business. Profitability, ROIC, was mentioned a little bit, and I would like to talk about the asset recycle. What will be the alpha? In this diagram, I got the impression that it will grow bigger as time passes. As a sustainable target, is this feasible? I would like to hear your thought on this. This is my own interpretation of that diagram. It seems like it is growing, asset management, so that the asset that you have and you will be selling at the right timing, and it is supposed to increase, I think. While increasing the basic profit, is it possible to do that at the same time? If you have many projects, that could be possible maybe, but compared to real estate, the lead time is longer, and I think you will be divesting, taking more time. For asset recycling, you will be generating profit. How realistic is that? I would like to gain understanding of this. Okay, thank you very much. Looking at asset recycling, how that will be, the to-be state is we have not been able to understand the full model of this yet at this stage. As I mentioned earlier, the base profit level, so out of the total portfolio, it is still in the growth phase, the portfolio. We need to pay repayment of the loans that we have borrowed. When the profit increases, then the base will increase. We would like to accelerate that. If you think about that, I think this is possible. We talked about needing to do the simulation about this a few days ago. Looking at the portfolio overall, how would the portfolio be? We need to gain better understanding of this, but qualitatively it was, as I just explained, the basic profit. This is before being able to exert our full capability yet. Please understand that and keep that in mind. Okay, thank you. One more question, just one more please, but you talked about Iberdrola. You have a business alliance. You had your picture and the President, CEO of Iberdrola. There are not so many people who is able to have a picture with the CEO. This is the biggest player in Europe, I think. How have you been able to do that? When you made this announcement, I was surprised looking at the title. It was just too rough, and I was not sure what you were trying to do. Could you give a bit more comment on this? This is Mr. Ignacio, who is the Chairman. Famous CEO. I believe he is a very famous top CEO in the world. Originally the relationship started with ENW. At the time when we started to participate, we were competing against them. The reason is because we were interested in the project. We wanted to join, and they were already taking part in the distribution, and they were already participating in the north and west T&D, sorry, transmission. I was sure that they wanted to get somewhere in the middle as well, and we were able to win this project. But then after that, Iberdrola, they wanted to become a part of Iberdrola, and they approached us saying, "Please sell a part of your shares." There were other inquiries, and their proposal was the most attractive in terms of the financials, and also it was very clear what they were trying to do. They wanted to cover the three areas, and they wanted to operate the three areas, north, south, and the middle. That's what we were expecting, and that's what came. That's why we decided to partner with them. So we sold them. Then this was the basis, and we talked about doing some other business together as well. So this is a business alliance in Europe. At this stage, yeah, the current style is that they are doing some operation, and they're asking us to participate as well. Last of all, I'd like to ask about BESS business. I'd like to focus on the E-Flow. Many operators say that E-Flow has a lot of know-how accumulated and is very competitive, but the business is very harsh. They're doing a very harsh business. It's expensive. That's what I'm saying. Maybe I should not say this, but this is just a rumor that I'm hearing, that E-Flow. Supply and demand adjustment. I think you were talking about first mover advantage or assault, that where is your competitive edge? Is it difficult for others to catch up? For you to scale up this business? Well, thinking about the solar history, this might be a bit challenging, so. The companies that have know-how that other companies will not be able to catch up, I think that's critical. E-Flow, where's the competitive edge? Would that be maintained as a competitive edge going forward as well? So these are my questions. Thank you. As for E-Flow, let me explain the history. After Great East Japan earthquake, we have established a regional energy headquarter. So we established an organization called Regional Energy. Demand response. Nowadays, it's demand response. So demonstration in four areas had started by the government, and virtual power plant, VPP, discussion emerged. So resource aggregation business, we wanted to try this on our own once. So within the local energy, Regional Energy, resource aggregation project team was established. So that was the starting point of E-Flow. As we were operating, we felt that we will be able to grow this business because there will be an increase in solar and storage battery will continue to increase, so we will be able to utilize the know-how that we accumulated. Maybe we will be able to generate earnings coming from this and based on this idea. So rather than putting it an inside organization, we wanted to put this outside of our organization and giving them the right for decision and let them run the business on their own. Therefore, in 2023, E-Flow, this company, was established. So at the time of the establishment, resource aggregation business, they had already accumulated so much know-how. They were doing the programming on their own, and they were able to operate. Along with that, battery storage business started. So, this is different from Kan-denchi's scheme. So E-Flow will be able to take part in the supply and demand adjustment part only. Whether E-Flow is expensive or not, I'm not sure. But resource aggregation chairman company, we are that company. So in terms of the policy creation, we have contacts and touchpoints with METI, and that is the biggest strength of E-Flow now. We have track records with many, many customers, a variety of customers, and plus, we have a strong pipeline with the central government. This is the difference compared to other resource aggregation companies. Thank you. Because you're competitive, that is why you're getting a value worth that. I would like to change my expression. Thank you very much for giving us a comment like that. You're very harsh on business, and we appreciate that very much. Thank you. Yes. My name `is Yamazaki from Nomura Securities. Thank you so much. I would like to ask one question each for each of the two business. I want to start with the BESS busine`ss first. For the BESS, as we have been saying, in 2030, 1 million. 450,000 now. In 2030, 2031, 2032. How do you see it, is the first question. The other one is about the makers. I think you had been commenting about this, but we have the strength of having the conditions made. What kind of manufacturers do you want to select or are you going to select? I want your opinion on that. Okay. First, in the very honest basis, 2031, 2032, what do you see is not in the 450,000, that we are going to plan, and then it's going to be included in 2031, 2032. But now in the 2030, year 2030 is the longest, let's say, of what we are planning now. Now what we are doing is what we had already started. As I have said, but in the early part of the 2030s, but we want to go first. Rather early stage, we want to go into medium. Another thing is about the manufacturers. Well, on this basis, here, the China, maybe China or Tesla. That kind of batteries, overseas-made batteries we have introduced. Then, this price competition, we had looked at the price competitiveness. But, well, for the economic security, I think we have much talked about, and so we should take a look at that. For the domestic manufacturers, if possible. That's how I feel about it. Tesla, well, this is United States, so maybe not much of a problem issue here. But then we want to have our domestic manufacturers as well. Utilizing subsidies and other means, if we can include the domestic makers as well. In our very honest basis, well, as a unit price, compared to the Chinese-made, the domestic ones are quite a severe situation. Even if you take into subsidies, maybe we are at a par or not quite at par with the cheaper Chinese manufacturers Okay, about the overseas business. Overseas business, I looked at the list of the overseas business, but you are going in, but I think it's rather skewed. It's Asia and Europe. Two places in the U.S., but predominantly Asia and Europe. Why is it because it's unbalanced like this? If you go into places where you can have a return. In the U.S., well, maybe You don't want to go into the U.S. because you already have rather much of a trading. How do you look at the U.S. market in terms of electric power, is my question. I think it's going back to the basic discussion. ROIC 6%. The target is 6% or higher than 6% for ROIC is what you're aiming for. After you accumulate it, that's the 6% basis that you can have. But you're now in the investment phase, so that. How should I put it? 6% is there, and yes, you're going to aim higher than 6%, but for the plus alpha is what I want to ask about. It's 6% because everybody else is 7%. How can you explain about that? Or how do you think per project basis? Yes, there are some over 6% or 7%. About the United States, how we take a look at the United States market. Our portfolio, as you have looked at. The United States, we don't have much of an asset here. That is as a result by region. Yes, we do feel quite difficulty in the United States market because it's very competitive, and there are many excellent companies, so that we don't have much of a space to go into that kind of a competitive space. That's the challenge that I share with management. It's not that we don't want to go into United States, but you want to go into the United States, but because the power demand is going quite strong. Yes, we'd like to join that market as well, but we are looking for how we can get into that. But we are several projects that we are trying to have, but I don't know at what timing, but I think I can announce about that. I don't think that we are in a quite growth stage for the United States yet. About the ROIC, yes, as I have been saying, 6% is the current number that we are seeing now. 6%, it's not that we are comfortable with the 6%, but if we have more projects, then yes, of course, we can say higher than 6%. I think that this is a current stage that we are in. The infrastructure, about the first 10 years, we cannot have much of a growth. We are currently sitting at 6%. Yes. Thank you very much. Okay. Thank you. My name is Nishikawa from Daiwa Securities. I have one question for each of the businesses. Starting with BESS business. Page 23, the future direction is shown, and ROIC and development size is explained. You develop the storage battery, and you are not particular about owning this business. Including small to large size companies, many companies want to have the ownership, but your idea is good. Off-balancing the Kan-denchi, ROIC can be enhanced very much. Not only ROIC, but profit size or profitability. I think you need to have such targets. At the same time, on the right side, is that the development size on the right side? It is not that 1 million kilowatts, it is not that you would be owning them, but you have been engaged in development, so the borderline between flow and stock would be difficult. ROIC can be increased, I think, with the initiative. What about the size of profit? How are you going to trying to measure that? It is difficult to commit, so maybe it is not written here, but maybe you have a strategy built assuming a certain profit internally, or are you thinking about the combination with solutions? Not only storage battery, but 2030 or 2035, how much you will be able to generate profits in solutions. Maybe this is a part of that solution number. This is an advanced initiative. I can imagine that ROIC can be enhanced, but there is not much profit after off-balancing and ROIC improving. What is your idea? Thank you for the wonderful question. As you pointed out, rightly, ROIC will be enhanced naturally. Are we going to be using Kan-denchi Fund all the time only, or is it going to be project financing only? No, that is not the case. There will be different combinations. As I mentioned earlier, together with ORIX or JA Mitsui Leasing, or Fukuoka Jisho, we do believe we have the potential to partner with many other companies. Depending on the partner, there will be different patterns, and which land and what will be the size of development. Which pattern would that be implied? If you set a profitability profit target, this would be very similar to Overseas business budget. As a result of the combination, ROIC is expected to be 10% or more. Development size, as you rightly mentioned, once that we have been engaged in the development, it would be 1 million kilowatt. As of 2040, a Solution business, the profit target, we do have a target for 2040. Out of that, this business, we would like to accumulate this kind of a profit. We do have that number internally, but we do not disclose. I would like to refrain from mentioning that. We have some sizable amount in mind. The fund business, we have originated the fund, and we will pursue ROIC. At the same time, if we try to pursue profit, we need to have and maintain a certain size of assets, otherwise it cannot generate profits. It is exactly the same as real estate business. I was engaged in real estate business. What would be the best combination? That will be the challenge we need to address going forward. Thank you very much. The second question is Overseas business. Overseas business, in operating this business, company or the investment size. Can you carry that out by yourself on your own? If it is JPY 200 billion, you can spend that amount, and that is the size, I believe. You talked about Iberdrola earlier. If you partner, you will be able to be engaged in projects and Overseas Energy business current size. Can we think that you will be able to compete within the world global market? When we think about LNG or others, maybe you need to have a very big size to start with, otherwise you cannot get any projects. There are so many companies that want to be engaged in energy business overseas, but maybe bigger company. You want to make investments in overseas with a bigger company size, so you need to ask the corporate to give some money. Globally, if you want to leverage your strength in renewables, is that enough? What should I think about the size of the company or the business? Thank you. That is a very good question. We do not believe the current structure is the best. In investment projects that we see, it is true that there are opportunities that are beyond our size, that are not possible with our size. It is not that we do not want to take on such challenge. It might be covered by Tanaka-san, but within the portfolio of Kansai Electric Power, the balance will be decided. I do not think it is the right timing for us to bet so much on overseas right now. With the size of the business we have right now, are we facing a problem? With the current size, we have been able to capture a sufficient level of business opportunities, and I do not intend to complain that we cannot do much because of our small size. Is that okay? Yes, I was able to understand very well. JPY 100 billion, that can be used, he said. Ogino-san mentioned, and I wanted to object, but I didn't say anything. I'm not thinking that way at all. Annualized, a few tens of billions of JPY of investment. Rather, Overseas business, if you look at the profile of the businesses and if you bid against the overseas companies that still want to secure spread, that's what everybody's intending to do. We want to bring this kind of a sense to domestic, to Japan, and this is what we need to appeal to the government. Other markets are doing it this way. Regardless of whether it's offshore or wind, they are competing in the global. If we cannot capture enough spread in Japan, we need to go overseas. This is something we need to discuss with the government. I don't want to talk about the size too much because it'll be too much pressure on him. Thank you. I wanted to say that, too. From my position, or looking at it from the company's perspective, Overseas business, it's meaningless to put a borderline and say Overseas business. We are saying going beyond Kansai and going beyond electricity. Outside of Kansai, it doesn't matter whether it's in Japan outside of Kansai or whether it's outside of Japan, and we need to be able to gain proper, correct understanding of where the business opportunities are. I don't think Overseas business is something that's special, but as Tanaka-san mentioned, what is important is Japan's electricity business is no longer a Japan original business model anymore. It's not electricity business only, but various businesses. Players from outside are coming in. The supply chain are all connected, and we need to play in Japan. We need to be connected to overseas, otherwise our domestic business itself will face a risk. I do believe that we need to appropriately develop Overseas business. As for the size, this has to do with the balance of the overall portfolio. One more point, I wanted to talk about this from before, but when BESS was talked about, ROIC is good, but profit, that was mentioned earlier. This is the most exciting challenge I feel. There's so much leverage. ROIC is very high. It is true. From corporate's perspective as of now, this is great. In the management plan, we will be pursuing capital efficiency, and that's been pursued. But staffs that are originating this, people around them are saying profits should be pursued. Within the company, it was mentioned earlier as well. BESS market, we don't know how the market will be in five years' time. Supply and demand market, adjustment market, we don't know how it will be, and it's too early for us to decide whether we should go right or left. We should pursue ROIC at this moment. Fujino-san might be thinking, "We should pursue profit as well," but this is something we need to continue to discuss. Sorry for the redundancy. Thank you so much. My name is Kamichika from SMBC Nikko Securities. I want to ask one question each for the Overseas business and also BESS. About the Overseas business, the base profit. What are you making the profit by? That is one thing. Is it the thermal or T&D or is it hydroelectric? So JPY 152 or JPY 170. Who are the earners for this business? Then the plus alpha part is what I am concerned about. Now, on page four, you say about the asset rotation, and you have one concrete example about that. But if you can allude to the background a little bit more. I think that you were able to sell at a high price. But the timing was right or is it because you had the value raising or value up plus alpha kind of a sales? Is it something that has an implication for the future? Okay. This 2025 or 2024, the profit, where are we getting the profit? It is an accumulation of various, 22 projects. One thing is coming from the gas and thermal, and it is different year by year. But one thing, not gas thermal, but gas thermal and also coal thermal, and these two are the big blocks. In 2024, I think I do not see ENW here. In 2023, ENW was also earning much up until 2023. Okay. One thing, San Roque, it was in 2023. But San Roque. Yes. I think that passed the peak, San Roque. But in two years' time, it is going to be finished, so that the profit contribution is not too high now. But it is having decent figures, although it is in the last stage. It is not just that we are having big ones. But we have small ones that accumulate to this. Then about the asset rotation, about the ENW, I think your question is related to that. The one biggest factor about is the inflation and the rise in interest rate. In 2019, we went into a geopolitical kind of a shake, then the interest rate had gone up. But the British power distribution is connected to that. So it is the market traded T&D business. The stock price is automatically calculated based on that. Honestly, if you ask me whether we added value, yes, we think we did, but the index, a kind of a hike was bigger than what we had pushed up by the added value. We have the Iberdrola strategy. We were able to understand that very well, and we had the good timing also. What is our lesson that we learned from here is that we see the market and seek the proper right timing and to have very fast response. For all the assets we have to have that is the lesson learned at that time of the partial sale of ENW shares. The second question is about BESS. Here, what you had told us, the IRR target. You talked about Kinokawa and Tanagawa. On page 15, about Tanagawa, it is 10% more, but compared to Kinokawa, it is higher. What is the difference? Where does the difference come from? Is it difference in the scheme, or is it because the procurement of the batteries went well? If you can have explanation about why those two are different in terms of the IRR. About Tanagawa, as I had said, this is from the project finance. That is one thing I can say about that. This utilizes project finance, and at the same time, we have started the Kan-denchi service. In the IRR, in the group companies, so that we can have the group companies earn profit on that. That is different from Kinokawa. Having said that, Kinden and K2-BatOM, those kind of companies, and Kanden Asset Management and E-Flow also. Those are making profit. Kinokawa also has E-Flow. Okay, thank you. My name is Iokibe from JP Morgan. I would like to ask one question about Overseas business. Listening to your presentation today, IRR. Thinking about IRR, I think that fits better. Rather than looking at ROIC, lower IRR, including divestment, maybe you are thinking about the return as a project as a whole. From that perspective, IRR, when you make an investment or after the investment in managing, you are using IRR. If you are using that, please share the IRR. Maybe I do not have sufficient level of understanding, but in Overseas business, your competitiveness, how is it? You make minority investments, and you have partners that you have introduced today, and you have relationship with them, business relationship with them, and you have discerning capability as a power company. You want to join in projects at low cost, and you join at low cost and sell at high price or generate stable earnings. Can I understand that that is your strength, or is there anything else that I should understand? This is about Overseas business. He may add, but overall, as a first step, whether we make investment, whether it's a go or no-go, that internal decision is based on IRR. So what is the spread against the WACC? The hurdle rate is set by combining various risks, and we do make a judgment for investment. We're talking about ROIC today, but the staffs are looking at IRR. I believe each of the projects are considered from IRR perspective, but from management plan perspective, when we think about JPY 100 billion of investment from his perspective, he should chase after ROIC or ROE. Committing to these numbers, it would be correct. I think this is how we look at it as a company. Yes, that is totally right. For individual projects selection, IRR is the priority, and that comes first. As I mentioned from before, the portfolio overall, what should be the profitability? That is managed utilizing ROIC or ordinary profit. I think that is very important. It's not just one time. How does it change over time? We need to gain understanding of that. How would this project contribute to that? That's how we look at the investments that we make. Also, Tanaka, as for competitiveness, we are a minority shareholder, and for such cases, it is right, as you mentioned, we are an PLN, and for the market or the business, we do have full understanding. Compared to those who do not have such capability, we do have higher discerning capability. If we're not a minority for projects where we will be leading the project, we would like to run such projects in parallel. For such ones, we would like to promote the business. In Japan, all businesses from zero to 100 has been done. Utilizing such capability, we will do development and construction overseas. It's a combination. Depending on the project, how we are involved is different. Because we have both, the minority investments can make difference, and also the knowhow that is required by partners, we can contribute to live up to their expectations. Thank you. Can I ask another question? IRR and asset recycling. Let's say IRR is set at 10%, and in the middle, compared to your IRR, if you sell higher, maybe you can achieve 15%. In such a case, do you decide to divest? Is there such a possibility? Is there such a logic? Such a logic is not that strong in our culture. IRR, an instance or profit at one moment. Trying to capture that would not be our first priority. In the portfolio overall, what is the meaning of the project? In terms of the significance, in terms of the money, and also the cash flow and the profit after that. I think the judgment will be made from that perspective. Just because we want to increase IRR at one moment, we will not sell. That is not what I am thinking. It's a bit complicated. But in case of the ENW, in selling that share, in having such a discussion to sell. How much should we hold? How much shall we sell? That becomes visible from IRR perspective. Your question, your intention is, are you trying to target that and create a formula and sell if it goes beyond a certain level? That is not the case. That was his answer. Whether recycling will be done when we make such a decision. If we sell, what will be the IRR? If we continue to hold, how much of the IRR? Of course, we will be comparing that. This is something like a real estate business. We do look at it that way. He may say it is different. I would not say that. When we participate in ENW, we discussed about that. I forgot in what year, but we are making investments, assuming exit. With that cash flow, we calculate the IRR and made judgment to make a decision. We sold partially much earlier than we had expected, but we still keep the remaining half. I think we will be making a judgment about the divestment going forward, looking at the situation. Thank you. This is very similar to data center. They do not intend to hold for 40 years. At a certain point in time, they probably have the intention to do capital recycling, and IRR logic will change depending on that. We need to look at things from multiple perspectives. As was mentioned, Overseas business, how much IRR, how much spread can be captured? Then we can also think about how much can we get for a zero carbon auction. We will be able to compare very clearly with domestic business. In T&D, what will be the IRR? We need to have that kind of a perspective going forward. We need to be able to compare. We need to have such an indicator. We have been engaged in Overseas business, which was beneficial from that perspective. In the investment committee, whether it is overseas or it is a large grid or not, we are comparing evenly, but. Yes. From Resona Asset. My name is Domon. I want to ask question about the Overseas business. In the presentation material on page eight, the diagram on page eightt, on the left-hand side is a high risk, high return, and on the right-hand side it is a low risk, low return. In your company, you have the development expertise, then you want to go to the high return and then to go for an exit. I think that is how you go about it if you have expertise. For your company, for the higher left-hand corner, are there businesses that are easier to go into? For example, the ones that you have expertise about the development so that you can lower the risk. You are confident in lowering the risk. Well, if that is, for example, the power generation about the hydroelectric power, I think you have much knowledge and expertise about it, so that you go into that market with much expertise and about wind power as well. You have the knowledge and expertise. But on the other hand, the gas thermal. I think it's more of a standardized kind of equipment. EPC is many people are doing it, so there's much competition and not such a high return. If that happens in the kind of a project that you want to go into, I think in the region as well. I think you have kind of a perspective as to where you want to go in. It doesn't necessarily go the way you want, but as an ENW, in that sense. For the T&D, and also for the public transmission and the regional transmission, I think it's different. But for your company, how much was it that you had much expertise or strength? For the Indonesian submarine cable, for the transmission, I think those are not just things that you do domestically. I don't have much strong feeling that you'd go into these in Japan market. Why did you want to go into it? That's what I want to ask. ENW, this is the British power distribution, so it's a renewable energy, and I think they have ahead of us, but how is the transmission there? That I wanted to see. As you said, IPP, compared to IPP, rather IPP is limited. But transmission business is going concern. We wanted to have the portfolio stability, so that we wanted to have this portfolio, something from our going concern. That's why we went into ENW. Whether we had any strength, we didn't have any particular strengths that we can. This is how we had fared. As for T&D transmission, in Indonesia, we are doing this project. But before that, we had in U.K. and Germany, we had the NeuConnect. I think it's in the presentation material as well. The NeuConnect is the DC transmission. I don't think that there are many have that kind of an expertise. In our case, we have in Tachibana, in Shikoku. To Kansai, we have the DC transmission. We do have that kind of expertise. We wanted to use that expertise in doing this business, so that in the NeuConnect business, yes, we went into that. The NeuConnect business in France and Germany, it's really a joint venture with those financial companies. But in the technology, we are leading this group. We can have our own originality, and we can leverage our expertise. Next, we go into Indonesia. In that sense, we can leverage on the capability that we have. Yes. I think I can understand like that. Thank you so much. But on the other hand, in the hydroelectric power, in the past, for the Dengen Kaihatsu, it's also had much of a track record. The very large scale hydroelectric development, it's difficult in Japan. But in overseas, there can be more project that can happen faster than in Japan. But in Asia, I think there are issues with the environment and also the political situation as well. If you go into those kind of projects, are there any that you can increase more of? Yes, we want to increase those projects. But I think it's true for any country, we do need time. Nam Ngiep, we took 20 years in the making of this Nam Ngiep. That kind of a time, we do need to put into the project, otherwise we'll not be successful. So we have the expertise, and we want to make full use. I think that kind of a perspective is quite important, so that continuously we want to pursue opportunities like that around the world. But it might be that we are not going to make any profit. So we are limiting the projects that we decide to go into. On the list, the very end is a Philippine hydropower project. So the other business is doing that, so that it's in the midst of construction, so that we are going to this. In the last stage of that, but if we go into it's a really different variable speed pumped storage. So the pumped storage, how we can do that, we can leverage the pumped storage knowledge that we had in a domestic business. So that's why we were led to go into this. So in that sense, we can use leverage in our hydroelectric business. Thank you so much. Any more from the venue? My name is Miyajima from Norinchukin Value Investments, and I would like to ask one question about Overseas business. Page eight, in the same diagram, left top, your own development. The profit is higher, it says, and I don't have enough knowledge, so I'd like to ask. But the return is higher because you do the development on your own. Why is that? Of course, if it's greenfield and if you develop from a scratch, the asset value can go up. But this profit cannot be realized unless you sell, and long-term holding, and we continue to operate the power generator. How is the return higher in such a case? Could you explain? Yes, thank you for the question. We can say in many different ways, but this is relative. This is relative, so please look at it that way. Developers, the return that they get is based on the cost that was invested. But for players that join later, they pay premium to join the business. For the first mover, they need to give profits to the first movers, and their profit will be limited. So relatively, the return to the latecomers will be lower. Of course, depending on the project, whether the return for the greenfield is higher or not, it depends on the cost of development and the higher rate that you get. So it's case by case. But if it's the same project, whether you should join later or first, from the risk and return perspective, it is balanced. I think this is how it works. Did this answer your question? Yes. Thank you. I understood. All right, so we take another question from the venue, and then we go into the venue, Zoom, participants. All right, so one more question from the venue. Thank you so much for your explanation. My name is Tabitha from Elliott. Two questions on the overseas. First is about the future sales. I do understand that it's difficult to see forward, but in the track record of the past, I would like to ask about that. You had been telling about ENW. Until now, the ones that you had been investing, how much was the exit? For the exit, how long did you hold until you exited? By looking at the project, more than 10 years, I think, or more than 15 years. I think there's a few in number. Maybe 15 years is something that you look with the horizon to make a sale. Is that correct? Is one question. The first question. The second question is about the ROIC, how the ROIC has prospered. On page three, if I take a look at it, in 2030 until 2026 and 2028 average, it's at JPY 20 billion. The upgrade. The business profit has not grown. The asset scale probably has grown larger. Can you tell us about the background? In 2040, 66% ROIC in order to have that. How much is the ones that you had already invested and that you can go into a good state or, is it that you need to increase the quantity of the investment so that you can attain this figure? Can you give us a breakdown how you think about it? Okay, thank you for the question. First of all, about the exit, what we had already exited as a track record, other than ENW, we had in the past, in the Thailand, the IPP, SPP project. This is a thermal plant project. I forgot when it was, but we did exit that, and the holding period was 10+ years. Yes, I think 10+ years. That project, when we participated, it had increased in equipment. Maybe it came to three times the original scale, and then we exited at that point. We did have sufficient profit to make an exit. What we had thought. In the Thailand, we thought that this is all right, that we had already enough. That was kind of a decision that we made so that we do not have any project in Thailand now, but we were able to sell at adequate price. We did take a look at the future prospect of the market as well. When we went in, we did not have any perspective as to when we want to sell. Then Senoko in the Singapore thermal power, we did have a Senoko in Singapore. This we had sold several years ago. In Singapore, the power market is quite difficult. It is a small market, and the volatility is high. The COVID and then Ukraine situation after that t he market has become quite high, expensive. We thought that is the time to sell, so we did exit the market. Yes, these are the examples of exit. Maybe I should not say this, but the Secretary might say, "You should not say this," but there are exits that we made because we were not able to make a success. Yes, there are failures. I will be frank about it. That is the kind of a track record we have. It is not that we made a very detailed plan as to when we want to exit. No, we do not have that kind of a beautiful story in our track record. It is different from the funds, I think. We go into the adequate timing. Okay, about the ROIC, the figures. in 2030, it has come down a little bit. Yes. That is quite right, because the denominator is larger, and in 2040 it is going up. Yes, the projects can be sold, can be harvested. This is the accumulated figure and actual figures. It is not that we came at the figure because we wanted to come to this level. But in the future, how we want to have the portfolio and then the assets that we hold then, but to add it is a natural kind of a stage. Is that all right? Okay. Thank you so much. In 2030, we have the assets accumulated. Yes, I do understand that, but the base, the business profit is JPY 20 billion, that kind of a level, right? Then you would sell partially, and then the base profit can be subtracted out certain amount. What is the background to it? JPY 20 billion in 2026 to 2028 is the average, but in 2030 it is JPY 20 billion, but then it is not changed. Does that mean that you are going to make investments so that it is going to go up a little bit? But it is JPY 20 billion and it is constant. Okay, here in 2026 and 2028, it is not that we expect to have a profit in 2030. Those kind of projects would have a profit much more longer- term. In 2028 to 2030, there are projects that can be a source of profit. They may not have much that can produce profit. Do you understand what I am saying? This is the infrastructure return that takes time in order to have return on the P&L basis on ROIC. Yes. Thank you so much. Okay. Maybe this is similar to Kamichika-san's question, but on page four. We do have the 23 projects that we have on page seven. Kamichika-san, when you said, "Well, these are the projects." I do not know. The transparency is quite high. In 2030, maybe I can have 250. No, it cannot go like that. If you accumulate this, you cannot have the profits higher than that. You have to have the accumulation and to look at each of those projects. I will be very honest about that. You invest, but then you cannot have a profit from the next year. If you have such an idea, please tell us about it. No, it is not possible to make profit the next year immediately. Okay. Here. These are the project finance. Debt finance is now finished, and then we have the equity return. Those are the contributing projects. We are finally at that kind of a stage, so that we can have those profitable projects. For example, the [Bapa]. In 2030, we cannot have a profit. Okay. Here. We would like to go to those participants via Zoom. Are there anybody on the web who has questions? Please push the Raise Hand button. Does anybody on the web have any questions? As of now, there seems to be no questions. No questions. Is that okay? If you need to ask, please press the Raise Hand button. Okay. Seems like there are no questions from the web. We would like to go back to the venue. Please bring a microphone. My name is Eto from Simplex. I had two questions. The first question is about Overseas business, your strength, and your profitability, and the scale. From these three perspectives, going forward, which market is the sweet spot? Which would be your target market? For example, for strength, maybe hydro. And price, Europe. The capital cost concept is easy to capture, but Asia is different. In terms of scale, T&D has shrunk compared to before, so maybe wind. Can scale, but profitability, how is it? Strength, price, and scale, which would be the sweet spot for you? What would be the sweet spot? Very difficult question to answer. I cannot organize my thoughts right away and answer your question straight away. Europe. Let us say wind, on offshore market. If you look back in the past 5- 10 years, the situation has changed very much. Therefore, this market is like this. We do not want to have a fixed concept. We want to look at the changes, and the speed of change is different depending on the country. Therefore, what we are doing right now is regulation or rate changes and business opportunities. Which phase is each of the country in? We are focusing on this, trying to find a sweet spot. What I am trying to say is that I think it would be very different depending on the policy. Let us say a country has a policy to promote offshore wind, and there are some countries that want to accelerate this. There are a number of countries like that. How fast can we enter into such market? This agility. This is an approach that we can take, and we need to make this our strength. This is the approach we take in Europe. In Asia, on the other hand, it was the case in point T&D earlier. We need to grow the T&D. We need to initiate it, discuss with the government without competing against other companies. We like to have us designated as a player by collaborating with local players. We cannot compare apple to apple. We are not looking at things that way. I do not think this answered your question at all, but this is a very difficult question to answer. It is not that there is a clear formula. It is difficult for us to explain. What kind of projects would enhance your value? Was the question. Our value, from the perspective of how we have been able to raise our value. I think our value will be enhanced through projects that we took the lead and that we developed. In Europe, unfortunately, we are involved in projects with partners. We may be able to get a certain level of return, but it is not that we can say with confidence that our value has been enhanced. Naturally, the skills of our teams are on par with overseas partners. We are acquiring rights based on the discussion. I think this kind of a skill has been enhanced very much. It is improved. But creating a business ourselves, having such originality or securing high margin, I think this is very difficult to achieve. Asia, Southeast Asia, unique projects. We would like to be successful with these projects. That will clearly create value for us. Also, sorry for jumping around, but for T&D business in Europe, there are not so many players who are involved. We currently do have a project where we have the lead development, and if we have realized this, then people will think that you are a great company, but that will take time. It may not be able to live up to your return expectations, but over the long- term, such projects will be the projects that will enable us to increase the value. What kind of a company Iberdrola was mentioned earlier. Is it a relationship where you can join just a little bit, have a small stake, or you are a real partner, very important. I think this is one perspective. The level of involvement is what you can look at. There are more than 20 some projects in the table. Three years ago, let us say we got a project three years ago, and it was great, but maybe it is not generating so much profit now. That is what makes the judgment different, but from how should our stance be? That was answered by him earlier, and from the corporate perspective. In terms of relationship with Iberdrola, I think we can take a look at it that way. My second question is about IRR. What is your concept, Vice President and business unit? Between the two, how much gap is there in the concept? When you talk to investors, you say IRR will be used as decision-making, but when we talk to BU, you never know until the end. That is the majority of the case. This maybe is easy to calculate, so it may be aligned, but is this just about this or overall? Scientifically, is it adopted in the BU? Is there a gap between you and the BU? As Kuwahara-san mentioned earlier, we have investment criteria committee, investment assessment committee, and they use IRR to make decisions. Not only limited BESS or even if you want to do solar or even if you want to engage in overseas solutions, IRR is submitted, and we need to clear the hurdle. Otherwise, it is not going to be discussed. We have such a mechanism in place. But as you mentioned, for real estate business, it takes a long time to develop, or it takes three to four years till the development can start. So there might be times when IRR cannot be cleared, and in such a case, we need to discuss separately and have a different perspective. If we do this, IRR can improve this way, but the concept of IRR is the same for all businesses. Also once a year, or the board member said once a year is too few, but screening is done. How is the IRR? Of course, after one year, the situation changes, and also interest rate has been going up so that we have a mechanism in place where things are reviewed every year. Our intention is in corporate and BU. For the indicator that we need to clear, I do not think there are any gaps. Otherwise, we cannot make investments. Yes, so I think we have passed the scheduled time, but if there is anybody who would like to ask a question, I would like to entertain the question. But is it all right? Nobody else? All right. Thank you very much for your cooperation. We would like to conclude the meeting as such. Kansai Investor Day. I would like to conclude this. For those of you who have participated here and for those of you who have participated online, thank you very much for coming today. This is the end of today's session.