May 13 , 2005
Statements made in this overview of operations regarding Kyushu Electric Power’s
strategies and forecasts and other statements that are not historical facts are forward-looking
statements based on management’s assumptions and beliefs in light of information currently
available, and should not be interpreted as promises or guarantees.
Owing to various uncertainties, actual results may differ materially from these statements.
Investors are hereby cautioned against making investment decisions solely on the basis of
forward-looking statements contained herein.
Business Update
■しかく We pursue added value as Kyushu Electric Power Group by aiming to achieve the consolidated
financial targets as well as the parent ones1Midterm Financial Targets for FY2005
Midterm Financial Targets for FY2005-
-20092009【Consolidated】
FY2004 FY2005NewFinancial Targets
Results Forecasts FY2005-2009
FCF 212円.9 Billion 70円.0 Billion Avg. 120円 Billion
Ordinary Income 159円.9 Billion 106円.0 Billion Avg. 110円 Billion
ROA 3.3% 2.4% Average 3%
Shareholders'
Equity Ratio
24.2% 25.0% 30% (End of FY09)
【Non-consolidated】
FCF 200円.1 Billion 61円.0 Billion Avg. 100円 Billion
Ordinary Income 152円.9 Billion 100円.0 Billion Avg. 100円 Billion
ROA 3.4% 2.4% Average 3%
Shareholders'
Equity Ratio
24.4% 25.2% 30% (End of FY09)
Total Energy Business
(Other than Electricity)
Avg. 4円 Billion
IT/Telecom Business Avg. 4円 Billion
Environment/Recycling
& Consumer/Community Avg. 2円 Billion
Ordinary Income Targets by Business Area
Note: The numbers include incidental businesses
of the Parent.
ROA =
NOPAT
Average Total Asset
■しかく Virtual achievement of the previous financial targets has allowed us to move forward with the new
Midterm Management Plan2Previous Financial Targets and Performance
Previous Financial Targets and Performance
【Non-consolidated】
ROA =
NOPAT
Average Total Asset
ROE =
Net Income
Average Shareholder's Equity
FY2002 FY2003 FY2004
Previous
Financial Targets
Results Results Results FY2002-2006
FCF 180円.2 Billion 162円.2 Billion 200円.1 Billion Average 120円 Billion
Ordinary Income 90円.7 Billion 107円.9 Billion 152円.9 Billion Average 100円 Billion
ROA 2.8% 3.1% 3.4% Average 3%
Shareholders'
Equity Ratio
20.3% 22.3% 24.4% 25% (End of FY2006)
Reduction of
Interest-bearing Debt
- 156円.5 Billion - 148円.8 Billion - 184円.1 Billion
Total Reduction - 156円.5 Billion - 305円.4 Billion - 489円.5 Billion Total - 450円 Billion
(Balance of Interest-
bearing Debt)
(2,332円.1 Billion) (2,183円.3 Billion) (1,999円.1 Billion)
ROE 7.9% 8.5% 10.0% Average 8%
71.7 70.9 68.7 61.0 58.6 61.5 67.5
116.9 118.597.774.3 87.6 74.5 65.992.7108.575.271.6 53.9
56.0 55.3
190.0050100150200250300FY00 FY01 FY02 FY03 FY04 FY05E FY06E Target
Avg.FY05‐09
Billion Yen
Generation
Transmission & Distribution
Other
281.3
297.9
241.6
206.9 200.1
188.7
192.0
173.5 177.9 158.8 153.2 158.7 150.0
162.7 161.7
158.4 160.4 162.0
161.0
300.0050100150200250300350
FY00 FY01 FY02 FY03 FY04 FY05E Target
Avg.FY05‐09
Billion Yen Miscellaneous Cost
Maintenance Cost
336.2 339.6
317.2 313.6 320.7 311.0
■しかく Maintenance & Miscellaneous Costs (Non-
consolidated)
14,191
13,964
13,660
13,505
12,500
13,086
14,348647524 531 549 566 594 612
11,500
12,000
12,500
13,000
13,500
14,000
14,500
FY00 FY01 FY02 FY03 FY04 FY05E Target
FY06 End02004006008001,000
Number of Employees
Sales Volume Per Capital
# Employees ×ばつ 10MWh/
employee
■しかく Capex (Non-consolidated)
■しかく Numbers of Employees (Non-consolidated)3Improvement of Management Efficiency
Improvement of Management Efficiency
Specific measures to reduce labor cost:
-Reduction of 81 customer service offices to 54
-Centralization of general administration
-Business process redesign with IT
-Early retirement plan to reduce number of
employees by 60024 69 111324681012051015202530FY2004 FY2005E FY2006E FY2007E FY2008E FY2009E
Commercial/industrial
All-electric housing×ばつ100GWh4812172125
Creation of New Demand of 2,500GWh by FY2009
Creation of New Demand of 2,500GWh by FY2009
New Demand Creation Target
(incremental to FY2003)
■しかく We pursue sales growth of the electricity business, that is the center of the total energy business area
Specific Measures to Create New Demand4Creation of Additional Electricity Demand
Creation of Additional Electricity Demand
New Demand
Created as of
FY2009
Specific Measures
All-electric
housing
1,300GWh
- Strengthen tie-ups with sub-users
- Target housing complexes
- Promote with banks loan programs for all-electric
housing
- Promote enegy-saving electric water heating
system
Commercial/
industrial
1,200GWh
- Penetrate users of private power generation
system
- Promote all-electric facilities such as:
- electric air-conditioning machinery
- electric kitchen equipment
Total 2,500GWh To be accumulated from FY2004 to 2009
・To end consumers: Promoting all-electric housing for a total of 500,000 houses by FY2009
-FY2004 Result: +200GWh
-FY2009 Target: +1,300GWh
・To commercial/industrial energy users: Penetrating private power generation users and promoting all-electric facilities
-FY2004 Result: +190GWh
-FY2009 Target: +1,200GWh
Growth in All-electric Housing5-FY2004 Result: 48,641 houses (additional 200GWh to FY2003); total of approx. 220,000 houses achieved
Estimated market penetration rate in new construction of 19% (one-unit home: 39%, complex: 5%)
-FY2005 Target: 54,000 houses
Main Activities
To strengthen tie-ups with
business partners:
-Cooperate with housing-
related companies in various
promotion programs
-Build close partnership with
remodeling contractors and
consumer-electronics
retailers
-Approach condominium
builders with aim of
spreading use in multi-unit
housing
To more attract end users’
interest:
-Introduce loan programs for
all-electric housing through
tie-ups with banks
-Implement advertising
campaign using mass media
including TV and radio in
addition to promotion
programs at our showrooms
Demand Creation Strategy
Demand Creation Strategy (1) Toward Personal Customers
(1) Toward Personal Customers
■しかく We promote all-electric housing for a total of 500,000 houses (additional 1,300GWh) by FY20092.85.29.318.127.16.49.712.321.515.75.7%9.4%
12.3%
15.4%
19% (tentative)‐102030405060FY00 FY01 FY02 FY03 FY04 FY05E0%2%4%6%8%10%12%14%16%18%20%# of all-electric houses (new construction)
# of all-electric houses (refurbishment)
Penetration rate (new construction)
x1,000 houses54.048.633.821.614.99.21.941202468101214FY2004 FY2005E FY2009E
x100GWh6Demand Creation Strategy
Demand Creation Strategy (2) Toward Business Customers
(2) Toward Business Customers
We exploit additional business demand of 1,200GWh by FY2009
New Demand Creation Target
(incremental to FY2003)
・ Demand exploitation by getting corporate customers returning
from private power generation
-FY2004 Result: 120GWh
-FY2009 Target: 600GWh
-Active electricity-rate consultation service to customers having private
power generation facilities
-Our recent electricity rate cut has reduced the advantage of private power
generation
・ Exploitation of new demand by promoting air-conditioning
machinery, electric kitchen equipment, etc.
-FY2004 Result: 70GWh
-FY2009 Target: 600GWh
-Exploitation of newly created demand mainly by electrification of
commercial facilities through:
i) Enhancement of air-conditioning business to expand the share of
electric air-conditioners; and
ii) Expansion of the applicable range of electric kitchen contracts
Creation of new demand by attracting companies to Kyushu
・ New electricity demand is expected to be created by attracting
investments in Kyushu
・ A special team for this project will be set up to first strengthen the
function to collect information7・ High growth in the IT/telecom market is forecast with arrival of the "ubiquitous network society"
・ We pursue profitability of IT/telecom business by utilizing our accumulated know-how and infrastructures owned by
Kyushu Electric Power Group, such as fiber-optic network and data centers
IT/Telecommunication Business
IT/Telecommunication Business (1) Segment Overview
(1) Segment Overview
■しかく Basic strategy in IT/telecommunication business area
・ QTNet (black in FY2004): Pursuing growth in broadband service (BBIQ brand)
・ QIC (black in FY2004): Expecting growth in profit from IT consulting and data
center businesses
・ Nishimu (red in FY2004): Concentrating on larger margin areas and cutting costs
・ QBS (black in FY2004): Expanding external sales and improving profitability
\- 2.4 Billion
\- 3.0 Billion
Ordinary
Income/Loss
69円.2 Billion
71円.6 Billion
Sales
IT/Telecom
Business Segment
FY2004
FY2003
Note: Sales amount breakdown includes internal transactions.
IT/Telecom Segment
Ordinary Income: 4円 Billion
Financial Target
(average from FY2005 to FY2009)
Aiming for a single-year
profit in FY2007
IT/Telecom Segment
Lease of Fiber-Optic
Cable (Parent)
Other
(QIC, Nishimu & QBS)
QTNet
0円.8 Billion
\- 2.5 Billion
Ordinary
Income/Loss
37円.1 Billion
37円.6 Billion
Sales
0円.2 Billion
0円.4 Billion
Ordinary
Income/Loss
34円.7 Billion
35円.1 Billion
Sales
\- 3.5 Billion
\- 3.5 Billion
Ordinary
Income/Loss
2円.4 Billion
1円.4 Billion
Sales
Breakdown
■しかく Financial target for IT/telecommunication business segment
-QTNet: approx. 3円 Billion (lease lines &
VLAN: 2円 Billion, BBIQ: 1円 Billion)
-QIC, QBS & Nishimu: approx. 1円 Billion
■しかく Strategic overview of each company
■しかく Broadband service including IP telephone (BBIQ brand)8Number of BBIQ Accounts
■しかく QTNet back in the black in FY2004 Operating Results of QTNet
Ordinary Income/Loss
Ordinary Expenses
Ordinary Revenues0.8 - 2.5
36.6
40.3 1.6 2.7
Other
12.5
13.0
Kyushu Denwa2.4 1.1
BBIQ (incl. IP Phone)7.9 8.0
Outsourcing Service
13.0
13.0
Lease line & VLAN
37.4
37.8
FY2004
FY20032504824BBIQ
FY2007
Target
FY2004
FY2003
(Billion Yen)
IT/Telecommunication Business
IT/Telecommunication Business (2)
(2) QTNet
QTNet’’ss Strategies
Strategies
・ QTNet has achieved a single-year profit of 0円.8 billion in FY2004
(the first positive net income in seven fiscal years)
・ Number of customers: approx. 48 thousand accounts (as of
FY2004 end)
・ Promotion strategies:
-Started fiber-optic IP telephone service from April 2005
-Steadily expanding service area (15 cities [coverage ratio of 43%] to 25
cities [49%]).
-Introducing value-added multimedia services such as e-learning and video-
on-demand
■しかく Fixed-line telephone service (Kyushu Denwa brand)
・ Number of customers: approx. 566 thousand accounts (as of
FY2004 end)
・ Continue intensive cost cut
・ Urge current fixed-line users to switch to fiber-optic IP telephone
(Thousand)
For more information, please contact:
Investor Relations Group
Corporate Planning Office
KYUSHU ELECTRIC POWER CO., INC.
Telephone: +81 92 726 1575
Facsimile: +81 92 733 1435
URL: http://www.kyuden.co.jp/en_ir_index