Make a brighter future for generations to come
Kyuden Group Annual Report 2018
Beppu City, Oita Prefecture
Make a brighter future
for generations to come
Our brand message,
"Make a brighter future for generations to come,"
expresses our desire amid changing times to remain unchanged in
delivering a stable supply of electricity and other forms of energy, and
contribute towards a comfortable and environment-friendly lifestyle today and
for generations to come.
The phrase "comfortable and environment-friendly lifestyle"
contains the cyclical concept of "enjoying a pleasant life being connected to
bettering the global environment, which, in turn, enriches human hearts and
provides us with comfort," sustainable society that we want to contribute to.
Kyuden Group’s Mission is to contribute toward
the realization of a comfortable and
environment-friendly lifestyle today and for generations to come.
Kyuden Group’s Mission
At one with Kyushu,
Asia, and the world.
In company with the people of Kyushu,
we will work together to take action
while thinking of our children’s future
and of the prosperity of the region. And
from there, we will look to Asia and the
world.
Discovering solutions,
and putting them into
practice.
We will discover and implement
solutions that lead to a better tomorrow
through open, active discussions,
believing in people’s potential and
mutually respecting personalities.
Services that truly
satisfy.
Customer trust is our top priority. We
will listen to the various voices of our
customers in order to respond to their
needs with services that truly satisfy.
Steady and reliable,
environment-friendly
energy.
In order for our customers to lead
harmonious lives we will provide steady
and reliable, environment-friendly
energy, while anticipating global trends
and making full use of our advanced
technology and abundant experience
with energy and the environment.
Kyuden
Group’s
Mission
Beppu City, Oita Prefecture1Kyuden Group Annual Report 2018
Member of the Board of Directors,
Chairperson
Michiaki Uriu Kazuhiro Ikebe
Member of the Board of Directors,
President & Chief Executive Officer
Message from the Top
Kyuden Group Annual Report 20182MessagefromtheTopTo our shareholders and investors,
First, we would like to express our gratitude for your loyal patronage and support of the Kyushu Electric
Power Group (Kyuden Group).
In FY2017, the Kyuden Group’s efforts to reduce costs, as well as the stable operation of the Sendai
Nuclear Power Station, enabled us to record our third consecutive term of profitable operation.
In line with the Kyuden Group Medium-term Management Policy, we have made maximal efforts to achieve
early nuclear power station restart, implement policies to enhance our financial condition, and thrive under
full deregulation of the retail electricity sector.
We have also positioned independent and ongoing enhancement of nuclear power generation safety as a
top management priority, and the Group is working in unison to that end.
In FY2018, we will continue these efforts while promoting innovation across the entire Group; further
accelerating our activities relating to future business, which will generate new businesses and services;
and securing new revenue sources.
Through these and related efforts, the Kyuden Group will aim for sustainable growth and strive to further
enhance our corporate value.
We ask for the understanding and support of all our shareholders and investors as we move toward our
goals.
July 2018
Kyuden Group Annual Report 2018 3
Our Profile
Feature 1 Operating Four Nuclear Powe
4 Kyuden Group Annual Report 2018
er Stations P28
Genkai Nuclear Power Station, Saga Prefecture5Our Profile
Kyuden Group Annual Report 2018AFeature 2
Kyuden Group Annual Report 20186A Push for Innovation P34
Kyuden Group Annual Report 2018 7
Our Profile
Feature 3 Transition to an Audit and Su
Kyuden Group Annual Report 20188upervisory Committee P50
Our Profile9Kyuden Group Annual Report 2018
Kyuden Group’s Mission
Message from the Top ........................................................ 02
Contents/Editorial Policy .................................................... 10
Value Creation Process ...................................................... 12
Supply Chain ...................................................................... 14
Snapshot of Kyushu ........................................................... 16
Financial and Non-Financial Highlights .............................. 17
Interview with the President .................................................. 20
Feature 1
Operating Four Nuclear Power Stations ............................ 28
Feature 2
KYUDEN i-PROJECT: A Push for Innovation ........................ 34
Energy Service Business in the Kyushu Region ...................... 38
Growth Businesses .............................................................. 40
Our Profile Our Strategy
Interview with the President
Editorial Policy
■しかく About This Report
■しかく Reporting Period
About Kyuden Group Annual Report 2018
■しかく Scope of Reporting
Kyushu Electric Power Company, Incorporated and Group Companies
■しかく Issue Date
July 2018
Previous report: July 2017
Next report: July 2019
Since 2016, the Kyuden Group Annual Report has been published
with the objective of enabling shareholders and investors to gain an
understanding of how Kyushu Electric Power will create corporate
value on financial and non-financial information.
The International Integrated Reporting Framework released by
the International Integrated Reporting Council has been used as a
reference in editing this report.
Readers’opinionsregardingthisreportwillbeusedasareference
to create easily understandable reports in the future.
This report is a compilation of information regarding the Kyuden
Group’s business intended for shareholders and investors.
Reporting on financial information essentially covers FY2017
(April 2017 to March 2018). However, the report also contains
some data from FY2018 in the interests of providing timely
information.
Contents
Kyuden Group Annual Report 201810ESG Initiatives ...................................................................... 44
Members of the Board of Directors ........................................ 46
Feature 3
Transition to an Audit and Supervisory Committee ........... 50
Governance Initiatives ........................................................... 56
Environmental Initiatives........................................................ 60
Social Initiatives.................................................................... 62
Consolidated Eleven-year Financial Summary ........................ 64
Management Discussion and Analysis ................................... 66
Business Risks Factors ......................................................... 68
Consolidated Balance Sheet ................................................. 70
Consolidated Statement of Income ........................................ 72
Consolidated Statement of Comprehensive Income ................ 73
Consolidated Statement of Changes in Equity ........................ 74
Consolidated Statement of Cash Flows .................................. 75
Notes to Consolidated Financial Statements ........................... 76
Overview of Power Generation Facilities ................................ 98
Subsidiaries and Affiliated Companies ................................... 99
Corporate Data .................................................................. 101
ESG Section Financial Section
Note Regarding Forward-looking Statements
■しかく Website Information
IR website
For shareholders and investors
http://www.kyuden.co.jp/en_ir_index.html
Please refer to our website for more detailed information.
Kyuden Group is committed to doing its part to contribute to the
achievement of the Sustainable Development Goals (SDGs)
adopted by the UN Sustainable Development Summit in 2015.SDGsStatements made in this report regarding the Kyuden Group’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. Shareholders and investors are hereby cautioned
against making investment decisions solely on the basis of forward-looking statements
contained herein.
Contents/
Editorial
Policy
Kyuden Group Annual Report 2018 11
Our Profile
"Make a brighter future for generations to come."
The Kyuden Group’s Mission is to contribute toward the realization of a comfortable and environment-friendly lifestyle today and for generations
to come. Amid major changes in our operating environment, including major reforms of Japan’s electricity systems, the Kyuden Group will continue
delivering stable supplies of electric power and other forms of energy. By helping customers realize comfortable, environment-friendly lifestyles,
we are expanding and enhancing our corporate value.
Major Changes in Our
Operating Environment
INPUT Business
Rising competition
in the electric power
and energy fields
Worsening
environmental issues
Worsening natural
resource and
energy issues
Diversifying lifestyles
and values
Financial Objectives
Equity ratio: Approx. 20% (by e
Ordinary income: More than 11円
Growth investments: 420円bil
Vision fo
A corporate group that provide
Social and Relationship Capital
Consumer understanding of energy
(Approx. 120,000people reached
with communication activities)
(FY2017)
Manufacturing Capital
Four of five nuclear
power stations restarted
(as of July 31, 2018)
Natural Capital
Fossil fuel consumption
(oil equivalent)
Approx. 9.6 million kl
(-5.1% over previous year)
(FY2017)
Financial Capital
Total assets (consolidated)
Approx. 4円.7 trillion
(as of March 31, 2018)
Human Capital
Employees (consolidated)
20,968
(89 group companies)
(as of March 31, 2018)
FavorGrowEnviron
Kyushu is the base
for everything
Energy Services
Business in the
Kyushu Region
Evolving from a corporate group
providing electric power to one
providing energy servicesIStrong BusiIIIgrowth, new inco
Organizational c
Leveraging strengths, enhanc
management resources
Value Creation Process
Kyuden Group Annual Report 201812Activities OUTPUT OUTCOME
Electricity Business
Electric power sales
76.8 billion kWh
end of FY2021)
10billion (FY2017-2021 average)
llion (FY2017-2021, cumulative)
or 2030
esJapan’s best energy services
Gas/renewable
energy/overseas
electricity output, etc.
(Energy-related business)
Data communications/
broadband, etc.
(IT and telecommunications business)
Environmental recycling/
real estate/housing services, etc.
(Other business)
Customer-centered
Energy Services
Electricity/
gas package contracts
Approx. 55,000
Gas share in operating
area relative to major gas
providers: Approx. 7%
(as of March 31, 2018)
Stable Provision
of Electric Power
Power outage minutes/
year/household: 25
(FY2017)
Environment-friendly
Energy
*Total of nuclear power, renewable energy (excluding FIT electricity),
and hydropower (over 30,000 kW)
Non-fossil fuel energy
25%* of total output
(FY2017)
Regional Development
Nominal gross regional product
Approx. 44円 trillion
(8.5% of national total)
(FY2014)
Work-friendly Environment
Average years of service
23.8(all-industrial average, 12.1)
(FY2017)
rablewthnment
Future
Business
iness Base
Extending our business
activities to Asia and the world
Growth Field
Businesses
Overseas energy business
Energy business outside
the Kyushu region
Renewable energy businessIIome sources
capacity for evolution andcingContinuous pursuit of our vision
Kyuden Group Annual Report 2018 13
Our Profile
Value
Creation
Process
Uranium relatedCoalLNG
Crude oil
●くろまるComposition of capacity for all facilities (GW)
(Including power purchased from other companies)
(as of March 31, 2018)
●くろまるRegional fuel procurement status (FY2017)
●くろまるFuel procurement status (FY2017)(%)Indonesia89%Crude oil LNG Coal Depleted uranium
Vietnam4%Gabon1%
Malaysia5%Australia47%Uzbekistan17%USA3%Malaysia4%Indonesia19%Other2%
Other1% Other9% Niger15%
Russia18%Russia7%Canada12%Australia68%Australia72%* Solar and wind power
Fuel procurement Power generation
Note: This denotes countries from which fuel is procured, not the location of fuel production.
Indonesia7%Total
29.51 GW
Nuclear16%General hydroelectric6%Geothermal1%New energy*27%Renewable energy34%Petroleum,etc.11%
Coal 13%
LNG and
other gas18%Hydroelectric
(pumped hydroelectric
storage power generation)8%Kyushu Electric Power is strengthening its fuel procurement through
such ways as diversification of fuel procurement, participation in
resource development and production projects and introduction of
fuel trading (adjustment of fuel volume and price management). We
strive for cost reduction in fuel transportation by using our own LNG
tanker and chartered ships for shipping.
We generate power through a combination of a best balance from
various types of power sources from the perspective of securing
long-term, stable energy in such ways as taking countermeasures
against global warming and economic power supply, promoting
nuclear power on the assumption of safety and security, actively
developing and installing renewable energies such as solar, wind and
geothermal power and improving the efficiency of thermal power.
Supply Chain
Kyuden Group Annual Report 201814Transformation
Number of substations 596
Capacity 74,430,000 kVA
Transmission
Length of transmission lines 10,773 km
Supporters
Steel towers approx. 25,000
Others
(concrete poles, etc.) approx. 40,000
Distribution
Length of distribution lines 141,730 km
Supporters
Concrete poles approx. 2,411,000
Others
(steel towers, etc.) approx. 42,000
●くろまる Power transformation, diagram (as of March 31, 2018) ●くろまる Power sources (kWh) in FY2017
●くろまる Sales as a ratio of the entire electricity
business in FY2017
●くろまるPower transformation, transmission and distribution
(as of March 31, 2018)
Note 1: Feed-in tariff (FIT) system for renewable energy
Reference: Report on Electric Power Demand
(Agency for Natural Resources and Energy)
Power transmission and distribution Energy services
LNG and
other gas31%Thermal63%Coal29%Petroleum, etc.3%Solar 9% (reproduced)
FIT Power (Note 1) 11%
Renewable energy
(excluding FIT power)5%Hydroelectric
(30 MW or higher) 4%
Nuclear16%Wholesale power
exchange (Note 2) 0.4%
Others (Note 3)1%Compared to
nationwide8.9%We deliver a stable supply of electricity, sending it along transmission
lines from power stations to substations, and along distribution lines
from substations to places such as homes and factories. To be able to
deliver a low-cost, stable electricity supply to support Kyushu’s
industries and lifestyles, we operate a stable electricity system
preserving steady transmission and distribution facilities.
We provide various energy services that respond to the diverse needs
of customers, including proposals for plans and services meeting the
requirements of household customers and one-stop energy services
for corporate customers.
To Chugoku Electric Power
Shin-Yamaguchi Substation
Buzen
Sefuri
Genkai Nuclear Power Station
Chuou
Kumamoto
Kitakyushu
Nishikyushu
Nakakyushu
Higashikyushu
Miyazaki
Sendai Nuclear
Power Station
Legend
Nuclear power station
Thermal power station
Hydroelectric power station
Substation
Switchyard
500 kV power line
220 kV power line
500 kV power line (under construction)
Minamikyushu
Kyushu Electric Power’s electricity procurement costs are partially financed by a levy on all electricity users,
including non-customers. As a result, these CO2 emissions from electricity are regarded as the national average of
CO2 emissions from electricity, including that generated through sources such as thermal power.
*Subject to powers generated by solar, wind, hydroelectric (below 30 MW), geothermal, and biomass.
Note 2: Power procured from wholesale power exchange
This electric power includes hydroelectric, thermal, nuclear, FIT, and renewable energy powers.
Note 3: Others
Includes power procured from other companies for which the power station cannot be specified.
* Calculated and announced based on "Formulation of the Guidelines Concerning the Management of the Electricity
Retail Business" by the Ministry of Economy, Trade and Industry
* Calculated on the basis of power generated by Kyushu Electric Power and volume of power purchased from other
companies (excluding remote islands)
Kyuden Group Annual Report 2018 15
Our Profile
Supply
Chain
Percentage of
national total
11.2%
1. Area (As of October 1, 2017)
42,231km2
(377,974 km )23. Nominal gross regional product (FY2014)
Approx. 44円 trillion
(514円 trillion)
5. Automobile production (FY2017)
1,400,000
(9,680,000)
2. Population (As of October 1, 2017)
12,920,000
(126,710,000)
4. IC production value (FY2017)
727円.1 billion
(2,753円.2 billion)
6. Crude steel production (FY2017)
15,130,000 tons
(104,840,000 tons)
7. Non-Japanese entrants (2017)
4,940,000
(28,690,000)
Percentage of
national total
10.2%
Percentage of
national total8.5%Percentage of
national total
26.4%
Percentage of
national total
14.5%
Percentage of
national total
14.4%
Percentage of
national total
17.2%
*National total figures are in parentheses
Source: 
Geospatial Information Authority of Japan "Areas of prefectures and municipalities in Japan," Ministry of Internal Affairs and Communications "Population estimates," Cabinet
Office "Report on Prefectural Accounts," Kyushu Bureau of Economy, Trade and Industry "Main economic indicators in Kyushu," Japan National Tourism Organization "Foreign
Tourist Statistics," and Kyushu District Transport Bureau "Annual number of foreign visitors to Kyushu."
Snapshot of Kyushu
Kyuden Group Annual Report 201816Financial and Non-Financial Highlights
2014.3 2015.3 2016.3 2017.3 2018.3
(Billions of yen)
(Billions of yen)
–131.4
–73.694.290.973.6Ordinary income
Growth investments
2014.3 2015.3 2016.3 2017.3 2018.310.59.010.1475.5
431.5
479.912.013.413.4629.1
550.9
Shareholders’ equity (Billions of yen)
Equity ratio (%)
Equity ratio
Financial
Objective
(End of FY2021)
13.4%20%Financial
Objective
(FY2017–FY2021 average)
Excess of
110円 billion
420円 billion
73円.6 billion
Approx. 90円 billion
Dividends per share of common stock
20円9002018.3
Financial
Objective
(FY2017–FY2021 cumulative)
Full year
Interim
(yen)
2014.302015.302016.3 2017.3 2018.3155201010Kyuden Group Annual Report 2018 17
Our Profile
FinancialandNon-Financial
Highlights
SnapshotofKyushu
Nuclear power utilization rate
36.7%
(%) 2013.3 2014.3 2015.3 2016.3 2017.3 2018.3
3.9 2.3 0.02.50.0 0.0 0.020.75.09.131.931.936.7
National average
5 units
(Excl. Genkai Unit 1)
6 units
Kyushu
Following the increase in output at Sendai Nuclear Power Station Units 1 and 2,
the utilization rate for FY2017 recovered to 36.7%.
We expect a dramatic increase in FY2018 due to the restart of Genkai Nuclear
Power Station Units 3 and 4.
The Kyuden Group consists of Kyushu Electric Power, 56 subsidiaries and 33
affiliated companies.
The stable operation of Sendai Nuclear Power Station Units 1 and 2 throughout
FY2017, and the increase in power generated by renewable energies, enabled a
decrease of approximately 6% over FY2016 in CO2 emissions.
In FY2017, we maintained a high level of thermal efficiency (41.8% at power
generation end) due to the completion of gradual renewal work (began in 2009)
for six highly efficient gas turbines at Shin-Oita Power Station Unit 1, and by
keeping highly efficient thermal power plants operating at high levels.
Total thermal efficiency for thermal power
stations (power generation end)
41.8% (Higher heating value)
(%) 2014.3 2015.3 2016.3 2017.3 2018.3
Power transmission end
Power generation end
39.4 39.539.640.8 40.9 41.040.441.840.441.8
0.617
0.598
0.528
0.483
0.463
5,210
4,860
4,180
3,750
3,510
CO2 emissions (10,000 tons-CO2)
CO2 emissions per kWh of
Electricity Sold (kg-CO2/kWh)
2014.3 2015.3 2016.3 2017.3 2018.3
0.463kg-CO2 /kWh (Provisional value)
CO2 emissions per kWh of electricity sold
Ratio of electricity business in sales
(Includes intra-company transactions)
84.8%
Operating
Revenues
(As of March, 2018)
84.8%
Other
Electric Power1.2%IT and Telecommunications5.0%Energy-related
Business9.0%2,132円 billion
Kyuden Group Annual Report 201818Capacity of geothermal power generation
equipment
Capacity of solar and wind power equipment
(10,000 MW)
(Frequency)
2014.3 2015.3 2016.3 2017.3 2018.3
Approx.45%*208 MW
8,360 MW
Kyushu
Electric Power
(As of March, 2018)
As of the end of March 31, 2018, the capacity of solar and wind power equip-
ment on mainland Kyushu stood at approximately 8,360 MW. As of the end of
March 31, 2017, solar and wind power FIT equipment capacity on mainland
Kyushu accounts for approximately 18% of the national capacity.
In FY2017, we achieved our FY2014–FY2018 target to double the number of
female employees promoted to management positions over FY2009–FY2013.
In order to encourage safety activities throughout the company, we have imple-
mented internal measures such as the establishment of a Companywide Safety
Promotion Committee, as well as formulating the Action Plan for Companywide
Safety Promotion as a common initiative to be shared among all divisions.
The Kyuden Group owns about 45% of all Japan’s geothermal power genera-
tion facilities, including Hatchoubaru Geothermal Power Station, Japan’s
largest.
*Calculated in house based on the Agency for
Natural Resources and Energy’s "Electricity statistics survey."
*No. of accidents per one million working hours
Ratio of Kyushu Electric Power among all power businesses
2014.3 2015.3 2016.3 2017.3 2018.3
2014.3 2015.3 2016.3 2017.3 2018.30.27Frequency rate of workplace accidents*
(No. of employees)
Number of female managers
2,710
2,710
430 460 470 490 5005004,710
4,710
6,160
6,160
6,970
6,970
7,850
7,850
8,360
8,3606671799384Rate of target achieved for promoting
women to management positions111%Solar power
Wind power
(Mainland Kyushu, excl. remote islands)
Kyushu Electric Power
National industry average
0.23 0.23 0.270.300.14
1.58 1.61 1.661.631.66
*Totals may not add up as figures are rounded off to the nearest unit.
Kyuden Group Annual Report 2018 19
Our Profile
FinancialandNon-Financial
Highlights
Changes in the managing
environment provide
an opportunity
for growth.
Interview with the President
Kazuhiro Ikebe
Member of the Board of Directors
President & Chief Executive Officer
Kyuden Group Annual Report 201820Interview with the President
Kazuhiro Ikebe was born in Oita Prefecture in 1958. He joined Kyushu Electric Power Company,
Incorporated after graduating from the University of Tokyo Faculty of Law in 1981.
Following his role in frontline sales, Ikebe moved abroad to study at the Michael G. Foster
School of Business at the University of Washington, Seattle. In his time at the Kyushu Electric
Power, although predominantly in the corporate planning division, he has also been involved in
the power generation division, the personnel division, as well as spending time as secretary to the
president. He has also played a key role in spearheading the creation of medium-term management
policies and financial objectives, and has laid the foundation for company innovations.
He assumed position as President & Chief Executive Officer in June 2018, following roles as
Executive Officer and General Manager of the Corporate Planning Division; and Member of the
Board of Directors and Executive Director of the Corporate Strategy Division.
With a bright, forward-looking personality, Ikebe sees the deregulation of the retail electricity
market as a new opportunity for business, and is of the mind that, in order to strengthen the
company’s earning power, we must tackle each new challenge that comes our way.
His motto can be expressed in Japanese as wajifudo—the idea that cooperation should be
prudent, and conclusions should be drawn from thorough discussion.
His hobbies include raising Japanese rice fish, and swimming—an activity he took up five years
ago to improve his health. On his days off, he recuperates at one of the many hot spring districts of
Kyushu.
Our Strategy
Kyuden Group Annual Report 2018 21
Interviewwiththe
President
During FY2017, Kyushu Electric Power promoted important
strategies, including measures toward restarting the Genkai
Nuclear Power Station, responding to our competitive
environment, and cultivating growth businesses. At the same
time, we moved forward with the construction of a foundation for
medium- to long-term growth.
With respect to restarting Genkai Nuclear Power Station,
we received permission for a reactor installation change in
January 2017. Since then, we have undergone inspections
regarding permission for changes to construction plans and
safety regulations, as well as pre-operation inspections. As a
result, we successfully restored Unit 3 to commercial operation
in May 2018, followed by Unit 4 in July. Going forward, we will
work autonomously and continuously to enhance safety, and
strive actively to practice disclosure and engage in detailed
communication.
Next, as to our competitive environment, two years have
passed since the full deregulation of the retail electricity sector.
We are continuing to promote direct, face to face communication
with customers, through initiatives such as one-day sales
offices to conduct personable marketing in shopping malls.
Full deregulation of the retail gas sector also commenced in
April 2017, and we began offering electric and gas power
to customers as a set, reaching our first fiscal-year goal of
40,000 households in just six months. Going forward, senior
management, including myself, will take every opportunity to
engage in marketing activities to communicate Kyushu Electric
Power’s initiatives to a broader public. Through these efforts, we
will remain competitive with new electric power companies.
Regarding our cultivation of growth businesses for the
future, the Kyuden Group is moving to full-scale innovation
activities aimed at creating new businesses and services. Last
year, we solicited Group employees for business ideas, and
engaged in open innovation activities with other enterprises and
organizations. Several proposals, including monitoring services
using IoT technology, are undergoing verification testing. These
activities are opening up opportunities for Group entry into a
variety of fields, and there has been a perceptible increase in the
number of young employees with their sights set on the future.
To realize our goal of becoming a corporate group providing
Japan’s best energy services, as outlined in our vision for 2030,
each Group entity is promoting independent initiatives, and we
believe that these efforts are producing solid results.
How would you review FY2017 overall?Q1A1
We were successful in responding appropriately to immediate challenges, while
steadily building a foundation for medium- to long-term growth.
Kyuden Group Annual Report 201822Business results for FY2017, the first year of the term set for our
financial objectives, included a decline in electric power sales
amid increasing competition, while expenditures rose in the wake
of electricity market reform. However, thanks to other factors,
including a reduction in fuel costs relative to increased power
generation at the Sendai Nuclear Power Station, we posted
consolidated ordinary income of 73円.6 billion.
In FY2018, we began operating four nuclear power units,
which enabled us to operate a nuclear power generation system
upon which our current electricity pricing is based. In FY2019,
Matsuura Power Station Unit 2, an environment-friendly, highly
efficient coal-fired unit, will commence operation. We will
make maximum use of our competitive generating capacity and
undertake to further expand income from our electric power
generation business.
Costs are expected to rise temporarily due to costs
associated with electricity market reform. However, reducing fuel
fees through restart of nuclear power generation units and highly
efficient thermal power generation, as well as implementing
thoroughgoing efficiency measures throughout our business
activities, we will strive to reduce overall operating costs.
Moving forward, we are looking to increase profitability
through investments in growth businesses, including international
and renewable energy businesses, as well as efforts such as
promotion of innovation. We will therefore work to expand the
Group’s profitability from our existing electric power, energy-
related, IT and telecommunications, and other businesses, and
secure our targeted levels of income.
Please comment on progress toward the Kyuden Group’s financial objectives, as well
as efforts to achieve those targets.Q2A2
The Kyuden Group will work in unison to implement income-expansion and cost-
reduction measures to achieve its financial objectives.
●くろまる Financial Objectives for Realizing Our Vision
Interviewwiththe
President
(1) Equity ratio
Improve and strengthen financial position
Approx. 20%
(End of FY2021)
110円 billion or more
(FY2017–2021 average)
420円 billion
(Cumulative for FY2017–2021)
(2) Ordinary income
Expand profits for future growth
(3) Growth investments
Pursue further growth
Growth initiatives
Accelerate initiatives
Realize vision20212017 2030...
Financial objectivesNowVision
Kyuden Group Annual Report 2018 23
Two years have passed since the full deregulation of the
retail electricity sector. In response, we are strengthening our
marketing as cross-regional and cross-industry competition in
the electricity market intensifies.
We are convinced that the fundamental criteria for customer
choice of an electric power company, in addition to pricing,
are provider service and comprehensive capabilities, including
reliability and peace of mind.
In terms of pricing, our electric power rates for households
are 7% lower than the average rate charged by conventional
general electricity utilities. Compared to our competitors, our
rates are at lower levels as of July 2018. We also offer eight
service categories in such areas as household emergencies and
child-rearing support. These services are part of our Kyuden
Safety Support, and through this support, we are committed to
helping to provide our customers with daily peace of mind.
The reason the majority of customers contract with Kyushu
Electric Power over new providers, is based on the reliability
and peace of mind we can offer. Our activities in support of
customers create value for them that goes beyond mere price,
and we believe this is a source of power for our brand.
Going forward, we will promote personable marketing to
familiarize more customers with our energy services, and will
work to capture further demand by continuing to build reliability
and peace of mind.
Deregulation is a risk in itself, but also affords new business
opportunities. By extending sales efforts to new regions,
maximizing income from the wholesale electricity market, and
making other efforts, we will utilize every measure to expand
income.
(2) Introduction of new electricity markets is a medium- to long-term risk.
Japan is undertaking electricity market reform at a speed
unprecedented in other countries, aiming to ensure stable energy
supplies, achieve the lowest possible pricing, give consumers
the right to choose their energy provider, and expand business
opportunities for enterprises.
In the short term, Japan's government is considering the
establishment of a variety of markets, including base load
and capacity markets, to achieve economic efficiency through
promotion of further competition while meeting such public
welfare challenges as the stable provision of power supplies.
Up until now, one distinguishing feature of the public-centered
electricity business was the ability to foresee investment return
through the FCD method, which determined electricity prices
based on adding fair profit on top of necessary costs. However,
the advancement of deregulation, and the increase in electricity
transactions due to the introduction of new markets, will make
management decisions relating to facilities investment even more
difficult. And so, free of conventional business schemes, careful
monitoring of each market to maximize their potential as sources
of additional income will be critical.
We will respond flexibly to these major progressive changes
in Japan’s electricity market, and continue to secure the
profitability of its electric power business as a source of cash
flow.
Please characterize the risks associated with achieving the Kyuden Group’s financial
objectives.Q3A3
(1) 
Our electricity business is undergoing change, and while we see certain risks in both
the short and medium term, we also see them as opportunities for further growth.
Kyuden Group Annual Report 201824We will determine the dividend based on a comprehensive review
of our business performance and other factors, with maintenance
of stable dividend payments as a fundamental policy.
The dividend for the fiscal year ended March 31, 2018
was set at 20円 (10円 for the interim and full year) after a
comprehensive review of our business performance and other
factors.
For the fiscal year ending March 31, 2019, we plan to raise
the dividend by 10円 over the previous fiscal year to 30円 (15円 for
the interim and full year), subject to a comprehensive review of
this year’s business outlook, as well as such medium- to long-
term factors as our income and expenses as well as our financial
position.
Regarding future dividend levels, although we must take
into consideration the degree to which we achieve our financial
targets, as well as our mid- to long-term revenue and financial
status, we hope to return as quickly as possible to the 50円
dividend set prior to the 2016 earthquakes.
Going forward, we will continue to regard maintenance of
stable dividend payments as a fundamental policy, and work to
expand shareholder and investor income.
For the fiscal year ended March 31, 2018, the company increased its dividend for the
third consecutive term. How do you view the future dividend outlook?Q4A4
For the fiscal year ending March 31, 2019, we plan to raise the dividend to 30,円 an
increase of 10円 over the previous fiscal year, subject to a comprehensive review of a
wide range of medium- to long-term factors, including income and expenses as well
as our financial position. Going forward, we will continue to regard maintenance of
stable dividend payments as a fundamental policy, and work to expand shareholder
and investor income.
●くろまる Dividends per Share of Common Stock
Interviewwiththe
President
Full-year
Interim
(Yen)
2014.302015.302013.302016.352017.31520302012.33020
2018.31010
2019.3
(scheduled)1515
Kyuden Group Annual Report 2018 25
Recognition has been increasing of the importance of investment
that takes into account the environment (E), society (S), and
governance (G).
Our management environment is undergoing great change,
including further intensification of competition as well as
electricity market reform. Amid these changes, our goal is to
continuously enhance our corporate value. To achieve this, we
believe it will be important to build and reinforce our corporate
governance structure, and create environments to enable our
employees to achieve maximum performance.
As one example of these efforts, in June 2018 the company
transitioned to an audit and supervisory committee model, and
reviewed its director and executive officer system. These changes
will enable us to respond more flexibly as well as dynamically to
the significant changes in our management environment.
The Kyuden Group is also developing and, to the degree
possible, procuring energy from renewable energy sources
such as geothermal power and hydropower. We are also
collaborating actively with local residents in activities to
preserve the environment. These efforts have drawn a positive
response, and were recognized with the Minister of Economy,
Trade and Industry Award at the 27th Global Environment
Awards, sponsored by the Fujisankei Communications Group for
enterprises and organizations contributing to the formation of a
low-carbon society.
Going forward, we will continue to promote ESG efforts
with the goal of continuously enhancing our corporate value and
meeting the expectations of shareholders and investors.
What is your view of the importance of ESG efforts?Q5A5
We regard ESG efforts to be important as our management environment undergoes
major change.
Kyuden Group Annual Report 201826Kyushu Electric Power’s management environment has evolved
with dizzying speed since the Great East Japan Earthquake.
Competition is intensifying, and legal unbundling of our power
transmission and distribution segments will begin two years from
now in 2020. Nevertheless, our mission as an electric power
company remains the same as it was: to provide customers with
high-quality energy on a stable basis.
Furthermore, going forward we will make every use of
opportunities for growth and innovation afforded by changes in
our management environment. To achieve our goal of becoming a
corporate group providing Japan’s best energy services, outlined
in our Medium-term Management Policy as our vision for 2030,
we will carry out commercial activities with particular emphasis
on the following three areas.
First, we will strive to capture demand in a competitive
environment. Marketing activities do not bear fruit immediately,
but we believe persistence pays off, and are working to convey
the value of our energy services to customers.
Second, we will aggressively extend our efforts to growth
markets and pursue growth through creation of new businesses.
In 2021, we are aiming to raise the share of ordinary income
to approximately 30% from businesses other than our service
area electric power business, and in the future we will aim to
increase that share even further. We must therefore generate
unprecedented profits from new businesses, including
businesses we innovate. In July 2018, we launched Incubation
Lab, a specialized entity dedicated to promoting innovation,
which will accelerate the commercialization of new ideas while
absorbing external views and expertise.
Moreover, to ensure that our employees can carry out these
efforts smoothly and realize their maximum potential, we will
promote workstyle reform. We believe it will be important to raise
productivity, and we are receiving and adopting many proposals
from employees for ways to achieve this. By incorporating these
frontline recommendations for improvement, we will undertake
to maximize the Group’s organizational power by creating
workplaces that all employees will find conducive to productive
effort.
By working to promote these efforts, we will aim for continuous
growth together with our stakeholders.
Having assumed the post of president, please comment on your medium- to long-
term aspirations for Kyushu Electric Power.Q6A6
I would like to accelerate our growth by achieving the ideal set out in our Medium-
term Management Policy: to become a corporate group that provides Japan’s best
energy services.
Interviewwiththe
President
Kyuden Group Annual Report 2018 27
In 2018, Kyushu Electric Power restarted Genkai Nuclear Power Station Units 3 and 4, which had been in a state of long-term
suspension to enable government inspection under the new regulatory standards.
This brought the number of operating units to four, following the 2015 restart of Sendai Nuclear Power Station Units 1 and 2.
Two representatives of our senior management, Naoyuki Toyoshima and Makoto Toyoma, responded to questions regarding the
impact of the restart and efforts to achieve stable operation.
Naoyuki Toyoshima
Member of the Board of Directors,
Senior Managing Executive Officer
Director, Nuclear Power Division
Makoto Toyoma
Member of the Board of Directors,
Senior Managing Executive Officer
Executive Director, Corporate Strategy Division
Feature 1 Operating Four Nuclear Power Stations
Kyuden Group Annual Report 201828Kyuden Group Annual Report 2018 29
Our Strategy
Feature1OperatingFourNuclear
Power
Stations
Four of the nine nuclear power stations in Japan (Sendai Nuclear Power Station Units 1 and 2, Takahama
Nuclear Power Station Units 3 and 4, Oi Nuclear Power Station Units 3 and 4, Genkai Nuclear Power Station
Units 3 and 4, and Ikata Unit 3) that have resumed operation in the wake of the Great East Japan Earthquake
are operated by Kyushu Electric Power. What enabled the company to achieve restart comparatively earlier
than others?
Overview of Nuclear Power Stations
(Of 39 nuclear power plants in Japan, as of July 2018, nine are in operation.)
Power plant
Genkai Nuclear Power Station Sendai Nuclear Power Station
Unit 1 Unit 2 Unit 3 Unit 4 Unit 1 Unit 2
Operation
commencement
Oct. 1975 Mar. 1981 Mar. 1994 Jul. 1997 Jul. 1984 Nov. 1985
Output 559 MW 559 MW 1,180 MW 1,180 MW 890 MW 890 MW
System Pressurized water reactor (PWR)
Operational
status
Suspended
December 2011
Decommissioned
April 2015
Suspended
January 2011
Suspended
December 2010
Restarted
March 2018
Suspended
December 2011
Restarted
June 2018
Suspended
May 2011
Restarted
August 2015
Suspended
September 2011
Restarted
October 2015A1Q1
After the new regulatory standards were put into place
in 2013, Kyushu Electric Power moved quickly to obtain
all required permits for the restart of Sendai Nuclear
Power Station Units 1 and 2 and Genkai Nuclear Power
Station Units 3 and 4.
In 2014, Sendai Nuclear Power Station Units 1 and
2 were selected by the Nuclear Regulation Authority
for early inspection, and the entire company worked
diligently to accommodate all relevant government
inspection requirements. We also worked closely
with manufacturers and partners to implement safety
measures, and proceeded carefully step by step with
safety as our utmost priority.
Thanks to these efforts, the two units at Sendai
Nuclear Power Station were restarted in 2015. We
applied the experience gained from this process to the
government inspection and testing of Genkai Units 3
and 4, and by carefully implementing safety measures,
we were able to restart these units in 2018.
With regard to our restart efforts, we also strived
to gain understanding from everyone in the local
community about our safety measures. Because we
believe that peace of mind on the part of residents is of
the utmost importance, we engaged in a broad range of
face-to-face communication activities.
We believe that these "tangible" and "intangible"
efforts were behind our success in achieving a relatively
early restart.
Toyoshima
Kyuden Group Annual Report 201830We see three principal advantages.
First is a supply advantage. While power station
operation was suspended, we adopted such measures
as utilization of older thermal power facilities to secure
energy supplies. With the restart of the nuclear power
units, we no longer need to rely on these older thermal
power facilities, and can supply power on a more stable
basis.
Second is a revenue advantage. The restart will
enable us to reduce the power output at our thermal
power facilities, and the reduction in fuel and other
costs will boost revenue. The improvements will vary
with power output, fuel costs, and other changing
factors, but we are projecting a monthly positive impact
of approximately 9円 billion for Sendai Nuclear Power
Station Units 1 and 2, and 11円 billion for Genkai Nuclear
Power Station Units 3 and 4.
The third advantage is environmental. We expect a
CO2 emission reduction of approximately 14 million tons
through the restart of the four units. This represents a
roughly 30% emission reduction from the FY2014 total
of around 48.6 million tons, when operation of all four
units was suspended. As a source of power that does
not emit carbon dioxide, nuclear power is essential to
the international trend away from carbon as reflected,
for example, in the Paris Agreement. Kyushu Electric
Power is eager to do its part in contributing to carbon
emission reductions through stable operation of our
nuclear power stations.
What management advantages does Kyushu Electric Power expect to derive from the restart of these nuclear
power stations?A2Q2
Currently we are progressing with construction of
specific safety facilities, such as to prevent damage to
the reactor containment vessel from, for example, an
intentional large aircraft collision.
In 2015 we submitted an application for permission
for a change in reactor installation to the government
for Sendai Nuclear Power Station Units 1 and 2, and
received approval in 2017. Subsequently, we submitted
our application for construction planning permission
in three stages, to enable us to carry out construction
efficiently, and are now progressing steadily with
government inspections and construction activities for
which we have already received approval. We submitted
an application for permission for a change in reactor
installation for Genkai Nuclear Power Station Units 3 and
4 to the government in 2017, and are now undergoing
inspections.
Under the new regulatory standards, safety upgrade
construction must be completed within five years of
receipt of construction planning permission for the main
reactor building. We are therefore working diligently and
meticulously with respect to government inspections
and construction, so that the latter may be completed
within the specified period.
Including safety measures implemented to date in
connection with the restart of operation, Kyushu Electric
Power’s total investment in safety upgrades at the
Sendai and Genkai Nuclear Power Stations totals more
than 900円 billion.
Safety measures required for restart have been completed, but what is the status of other measures
necessary under the new regulatory standards? Also, what is the approximate cost impact of implementing
such measures?A3Q3
Feature1OperatingFourNuclear
Power
Stations
Toyoshima
Toyoma
Kyuden Group Annual Report 2018 31
Our Strategy
What future challenges do you expect in maintaining stable operation of the nuclear power stations, and what
preparations are you making to meet those challenges?Q5Spent fuel storage is one of the issues we face going
forward in maintaining safe, stable operation of our
nuclear power.
Kyushu Electric Power’s policy is to send spent fuel
to Rokkasho Low Level Radioactive Waste Disposal
Center. We are currently conducting a thorough review
of our spent fuel storage policies, with consideration of
such factors as reserve storage capacity for spent fuel
pits.
To speak to this in more detail, we have already
reracked the spent fuel rods for Sendai Nuclear Power
Station Units 1 and 2. Reracking involves reducing the
spacing between fuel assemblies to gain additional
storage capacity. The application for government
approval for Genkai Nuclear Power Station Unit 3 was
halted after the accident at the Fukushima Daiichi
Nuclear Power Station, but we are working to restart
that process as soon as possible.
In addition to pool storage, we are exploring ways to
diversify our storage strategies, such as storing spent
fuel rods in air-cooled dry casks after a fixed period.
In this and other ways, we are undertaking to further
enhance safety at our nuclear power stations, and are
evaluating our technical options.
We will continue working to improve the safety and
stability of our nuclear power stations through storage
measures for spent fuel.A5Kyushu Electric Power is making significant investments in safety measures. How effective do you believe
these investments will be? Will the company be able to maintain its cost competitiveness in nuclear power
generation?Q4The scale of investment is indeed large, but in view of
the anticipated revenue advantage mentioned earlier,
we believe the investments will prove to be fully cost-
effective.
In 2015, the Japanese government’s Power
Generation Cost Verification Working Group estimated
the unit cost for nuclear power generation at 10円.1/
kWh, compared to 12円.3 for coal-fired power generation
and 13円.7 for LNG-fired power generation.
The calculation for nuclear power generation below
does not include all costs associated with newly-
mandated safety measures. When these are also taken
into account, the cost of nuclear power is on par with
both coal-fired and LNG-fired power generation.
Going forward, by maintaining safe, stable operation
of our nuclear power generating capacity and a high
utilization rate, Kyushu Electric Power will restrict its
power generation unit cost and remain competitive in
nuclear power generation over the medium and long
term.
Generation Cost Calculation (FY2014 model plant)
Source: Materials released by the Power Generation Cost Verification Working Group.A4(\/kWh)
Nuclear Geothermal General
hydroelectric
Coal LNG Wind
(land)
Solar
(mega)OilBiomass
(mono)
10.1 12.3 13.721.616.911.029.7 30.624.2Toyoma
Toyoshima
Kyuden Group Annual Report 201832With the successful restart of Genkai Nuclear Power
Station Units 3 and 4, together with Sendai Nuclear
Power Station Units 1 and 2, we now have four nuclear
power stations in operation.
Going forward, we will cooperate with government
inspections and carry out construction sincerely and
meticulously to achieve autonomous and ongoing
enhancement of the safety and reliability of our nuclear
power stations, including installation of facilities to
address specific large-scale disasters, and measures to
deal with spent fuel storage.
Restart of our power generation units is indeed
a start, not an end goal. We are keenly aware that
enhancing nuclear power safety will always be an
ongoing effort. Into the future, safe, reliable operation
will be our highest priority.
The government’s Strategic Energy Plan, revised in July
2018, positions nuclear energy as an important base
load power source.
In view of such factors as Japan’s energy self-
sufficiency ratio, which is only 7%, and the global trend
away from carbon-based energy sources, we believe
that the importance of nuclear energy will only increase
into the future. We will therefore continue our efforts
with diligence, and with safety as our utmost priority.A6In closing, what are your hopes for the future utilization of nuclear power?Q6Lawsuits are an additional challenge. Kyushu Electric
Power has prevailed in lawsuits to date, but in some
instances, other electric power providers have been
forced to halt power station operation due to provisional
dispositions. For example, a disposition handed down
by the Hiroshima High Court in December 2017 ordered
the electric power company concerned to suspend
operation of a nuclear power station due to the risk of a
catastrophic volcanic eruption.
In accordance with the volcano threat evaluation
guide issued by Japan’s Nuclear Regulation Authority,
Kyushu Electric Power has evaluated factors such
as eruption history characteristics and magma
accumulation status at Kyushu’s caldera volcanos. The
results of this evaluation suggest an extremely low
likelihood of a catastrophic eruption at any of Kyushu’s
caldera volcanos during the period of operation of our
nuclear power stations. Nevertheless, in recognition
of the unpredictability of nature, we are continuing to
monitor these volcanos closely for possible changes,
and consulting volcanologists and other experts
to further enhance the safety and reliability of our
operations.
With respect to pending lawsuits, we will continue
to act with sincerity, complying with court instructions
and making every effort to present our case thoroughly,
to obtain understanding concerning the safety of our
nuclear power stations.
Feature1OperatingFourNuclear
Power
Stations
Toyoma
Toyoma
Toyoshima
Kyuden Group Annual Report 2018 33
Our Strategy
KYUDEN i-PROJECT: A Push for Innovation
What is KYUDEN i-PROJECT?
Project Overview
Areas
Under
ConsiderationGOALCreate Future Businesses
Create businesses in new areas and reengineer existing business models
Upgrading Organization and Systems (Foundation)
Furnish environments to promote and sustain efforts
・Promote personnel development and utilization, upgrade organization, systems, funding support, etc.
Concept Creation
Structure ways to create numerous concepts
Concept Commercialization or Deployment as Service
Structure ways to enhance promising concepts
Support
The Kyuden Group will pursue innovation through concept creation, concept commercialization or deployment as service, and by upgrading
its organization and systems.
To realize concept creation, we will adopt three systematic actions.
Energy services
Potential areas of synergy with energy service businesses
Customer and social problem-solving by mobilizing the Kyuden Group’s resources
Feature 2
Amid a changing management environment, the Kyuden Group must work to create new value demanded by customers and society, if it is
to continue to be customers’ choice.
In response, we are promoting group-wide innovation and the creation of new businesses and services with KYUDEN i-PROJECT.
KYUDEN i-PROJECT is an initiative to create future businesses through innovation. We aim to generate approximately 30% of revenue from
businesses other than regional electric power generation by FY2021, and our goal is to create businesses in new areas and reengineer
existing business models.
Identify
Promising
Concepts
Upgrade Structure, Formulate Business Plan
Theoretical Business (Service) Plan
Verification/Evaluation
Commercialization or Deployment
as Service
・Rapid theory verification through field and other testing
・Evaluate attractiveness, feasibility, etc.
I Innovation Creation Workshops
・Two approaches: customer-centered and
future-centered
II i-Challenge
・Business concept solicitation from the Group
as a whole (including joint proposals with external entities)
III Collaboration with Other Entities (Open Innovation)
・Create innovation across enterprise boundariesIII
Kyuden Group Annual Report 201834Innovation Creation Workshops
Cross-organization workshops to consider new businesses and services, promoted through two approaches.
We will conceive new businesses and services by identifying latent needs from a customer-centered perspective.
Using social issues and needs 15 years from now as a departure point, we will conceive strategies for new business areas.
Workshops
Approach ❶ : Customer-Centered
Approach ❷ : Future-Centered
Commercialization pending Two Concepts (as of July 2018)
制作中
制作中
ACTION 1
STEP 1 STEP 2 STEP 3 STEP 4
FUTURE
STEP 1 STEP 2 STEP 3 STEP 4
< Customer-centered perspective >
Stake out customer-centered
innovation area
Future defined as extension
of the present
Collect change-inducing factors Formulate future scenarios
and strategies
Presentation to senior
management
< Identify principal issues >
Identify latent needs,
clarify issues to resolve
< Delineate business model >
Concretize business
concept
< Concept screening >
Presentation to senior
management
Feature2KYUDEN
i-PROJECT:APushforInnovation
Kyuden Group Annual Report 2018 35
Our Strategy
i-Challenge presentation
Principal Resources of the Kyuden Group
Commercialization pending
In 2017, we collaborated with Creww Inc. to implement Kyushu Electric Power Accelerator 2017, a program to foster joint business creation through
open innovation with startup companies.
Ties to over 8 million customers Networked with Kyushu local governments
2.4 million Kyushu power poles Networked with local enterprises
Smart meter connections 30,000-employee network
Networked to 89 Group companies Field test locations
ACTION 2 i-Challenge(Business Concept Solicitation)
ACTION 3 Collaboration with Other Entities (Open Innovation)
We are proposing and incubating business and service innovation proposals by soliciting business concepts. We are considering
commercialization, or deployment as a service, of promising proposals from a group of 143 business concepts received.
The Kyuden Group will not rely solely on its own management resources and technology. By collaborating with external entities, we will
share technology, expertise, and concepts to jointly create new businesses and services. Our aim in creating new businesses is to generate
new value that will help solve social issues.
(as of July 2018)
Five Concepts
Commercialization pending (as of July 2018)
Ten Concepts
STEP 1 STEP 2 STEP 3 STEP 4
THEME12 3
Concept solicitation Document screening, interview Initial presentation Final presentation
Kyuden Group Annual Report 201836Concept in Action
Concept in Action
QUUN: IoT Service with Original Voice-Capable AI
• QUUN offers a wide range of useful services for enriched daily lives via a proprietary, voice-capable AI engine. For example, users can receive news and weather reports delivered by popular voice actors. Through simple voice
activation, QUUN can also operate home appliances, manage home security systems, and more.
• Service launch: July 2018
Qottaby: IoT Monitoring Service
• Monitors and guardians can use a smartphone or PC to track the location of children, seniors, or pets with a
beacon-equipped transmitter.
• Selected for full field testing support by Fukuoka municipal government; testing started March 2018.
Park Shop,
convenience store
School,
cram school
Monitor
Capture location data
⇒ Location search, arrival notification3Location transmitter (example)
●くろまる Weight: Approx. 10 g
●くろまる Size: Approx. 86 mm x 18 mm
Base stations throughout city
⇒ Detect location transmitter beacon signal2Fixed base station (example)
Simple plug-in setup
Portable location transmitter
with beacon1Mobile base station
Install app to smartphone
Smartphone, PC
Guardian, pet owner
Tracking subject
Kyushu Electric Power’s monitoring service Qottaby
Kyushu Electric Power’s voice interface device
(AI speaker)
Good morning, Halomint.
Good morning, Halomint.
Chocolat,
turn the lights on!
Chocolat,
turn the lights on!
Mekarion,
let’s play a word game.
Mekarion,
let’s play a word game.
Carrot, what’s the
morning news?
Carrot, what’s the
morning news?
Sirius, what’s my
horoscope for today?
Sirius, what’s my
horoscope for today?
High-quality voice interface with user-selectable
human/character voices.
High-quality voice interface with user-selectable
human/character voices.
Control home appliances such as air
conditioners and TVs with a single word.
24-hour home security both when user
is present and absent.
Control power usage and
monitor costs.
Monitor power usage by senior family
members remotely to gauge day’s activity.QUUNVoiceQUUNAutomationQUUNSafetyQUUNEnergyQUUNFamilyLinkFeature2KYUDEN
i-PROJECT:APushforInnovation
Kyuden Group Annual Report 2018 37
Our Strategy
2013.3 2014.3 2015.3 2016.3 2017.3 2018.30123456020406080100In our core region of Kyushu, we have evolved from a corporate group supplying electric power to one providing energy services. We are
responding to customer energy-related needs in diverse ways, and will grow along with local communities and society.
Basic Strategy
Individual Strategies
To meet expanding demand for electric power, we are actively
promoting household conversion to all-electric energy.
As of the end of FY2017, the number of
all-electric homes topped one million.
With the complete deregulation of retail gas pricing in April 2017,
we embarked on city gas sales in the Fukuoka and Kitakyushu
areas.
By leveraging our strong customer base cultivated through
our electric power business, as well as our ability to stably
procure, low-priced LNG, we are offering gas to customers at
attractive prices.
Full-scale Entry into
the Retail Gas Business
10,000 homes
Cumulative (left axis)
Principal Initiatives
Expand the Kyuden’s fan base with diversified energy services
Reinforce electric power source competitiveness and fuel procurement capabilities
Upgrade/deploy power transmission network technology123Approx.1.03 million homes
(10,000 homes)
(10,000 homes)
FY results (right axis)
Energy Service Business in the Kyushu Region
2017 2018
FY initial target
40,000 homes34 5 6 7 8 9 10 11 12 1 2
Promoting Propagation of
All-Electric Energy for the Home
Promoting
Propagation of
All-Electric Energy
for the Home
Promoting
Propagation of
All-Electric Energy
for the Home
Approx. 55,000homes
Kyuden Group Annual Report 201838Principal Energy Source Development Plan
Suspended or
decommissioned:
Heavy oil:
Decommission April 2019
Buzen Unit 1 Decommission FY2019
Buzen Unit 2 Planned suspension FY2018 onwards
Sendai Units 1 & 2 Planned suspension FY2018 onwards
Shin Kokura Unit 4 LNG Planned suspension FY2020 onwards
New construction: Matsuura Unit 2 Coal:
Ainoura Units 1 & 2 875 MW
Operation commencement December 2019
500 MW
600 MW
500 MW
1,000 MW
1,000 MW
To enhance the competitiveness and reliability of our electric power sources, we are constructing cutting-edge coal-fired thermal power
plants. Our policy is to successively decommission older, economically inefficient facilities.
The new Matsuura Power Station Unit 2 employs highly efficient ultra-supercritical (USC) power generation technology, which delivers
lower fuel costs and reduces impact on the environment.EVCharging/
discharging
station
Customer
Power station
Supply/demand
control
■しかく Concept
Since June 2018, we have begun field testing of Vehicle to Grid (V2G)* technology in collaboration with other companies. V2G supplies
power from electric vehicles (EV) to the power grid, allowing utilization of EVs in adjusting supply and demand.
As part of this proof-of-concept initiative, we have received funding from the Agency for Natural Resources and Energy as part of their
"Demonstration experiment of virtual power plant construction leveraging energy resources on the demand side."
V2G Technology Field Testing
*V2G: Discharging energy stored in EVs to the power grid.
Competitive, Reliable Power Sources
Kyuden Group Annual Report 2018 39
Our Strategy
Energy
Service
Businessinthe
Kyushu
Region
40 九州電力 アニュアルレポート 2018
By leveraging the accumulated strengths of the Kyuden Group, we will expand our energy business outside the Kyushu region, in overseas
markets, and in the field of renewable energy.
Basic Strategy
Individual Strategies
We will utilize technologies and expertise accumulated in Japan and
abroad to develop our Independent Power Producer (IPP) business,
centering on the high-growth Asian market. We are also engaging in
activities in the US and Europe to expand our overseas electric power
business.
Overseas: 7.0
Other:12.0Renewable
energy: 2.0
Information Communications: 9.030.02018.3 2022.3 2031.3
(target)
1,550
2,400
5,000 MW
FY2021
FY2012-16 average
■しかく IPP and other investment business
■しかく Overseas consulting business
(major near-term projects)
Output: total output
Growth Businesses
Reinforce Overseas Electric Power Business
Overseas: 2.0
Renewable
energy: 1.0
Other: 9.5
Information
Communications: 7.520.0Principal Initiatives
Reinforce overseas electric power business
Extend domestic electric power business
outside the Kyushu region
Expand renewable energy business123■しかく Ordinary income target, excluding electric power business
in the Kyushu region (Billions of yen)
Equity Ownership in Output
Overseas Energy Business Initiatives (as of June 30, 2018)
Ukraine:
Investigation and verification
of the energy sector
Cape Verde:
Investigation and verification
of renewable energy
implementation and system
stabilization
India:
Preparatory study of thermal power
station construction
China:
Energy conservation-related
business for textile industry
Marshall Islands:
Ebeye Island Solar power generation
system Improvement project preparation
Tuxpan II & V IPP Project (Gas)
Output: 495 MW x 2
Vera Cruz, Mexico
Kenya:
Survey relating to enhancement
of O&M abilities using IoT at
Olkaria Geothermal Power Station
Sarulla IPP Project (Geothermal)
Output: approx. 330 MW
North Sumatra, Indonesia
Senoco Energy Project
Output: 3,300 MW
Singapore
Phu My III IPP Project (Gas)
Output: 744 MW
Ba Ria-Vung Tau Province, Vietnam
Rwanda:
Research of geothermal/electric
power development plans
Inner Mongolia IPP Project
(Wind Power)
Output: 50 MW
Chifeng, China
Ilijan IPP Project (Gas)
Output: 1,200 MW
Batangas City, Philippines
Shin Tao IPP Project (Gas)
Output: 600 MW
Hsinchu County, Taiwan
Cuba:
Preparatory survey of
power supply
improvement plan
on Isla de la Juventud
Kleen (Gas)
Output: 620 MW
Connecticut, USA
Birdsboro (Gas)
Output: 488 MW
Pennsylvania, USA
(under construction)
Kyuden Group Annual Report 20184041
九州電力 アニュアルレポート 2018成長分野における事業
Our Strategy
Unit 3, the final unit of Indonesia’s Sarulla Geothermal IPP Project, commenced
operation in May 2018. With this milestone, the project’s total geothermal power output
(three units) is the largest in the world.
The electricity generated at the Sarulla Geothermal Power Station is slated to supply
a national electric power company over a 30-year period and is expected to be a stable
source of income.
All Sarulla Geothermal Power Units Commence Operation
Unit 1: Operation commenced March 2017
Unit 2: Operation commenced October 2017
Unit 3: Operation commenced May 2018
In December 2017, Kyushu Electric Power acquired 11.1% of the equity of the Birdsboro
gas-fired thermal power plant under construction in Pennsylvania, USA. This was our
first equity participation in an American power generation business. Ahead of the start
of operation in 2019, we continue to appropriately monitor construction progress and
other aspects on the project.
Once the operation commences, it is expected to supply power to the northeastern
US through PJM, one of the country’s wholesale power markets.
Participation in Birdsboro Gas-fired Thermal Power Plant
In May 2018, Kyushu Electric Power acquired a 20.25% equity share in the Kleen
Energy Gas-fired Thermal Power Plant involved in the power generation business,
located in Middletown, Connecticut.
The combined-cycle plant in Middletown generates power using a highly efficient
gas turbine, and is an important source of stable power for the northeastern US through
ISO-NE.
Participation in Kleen Energy Gas-fired Thermal Power Plant
approx. 330 MW (3-unit system) 25%
488 MW Equity share 11.1%
Total output
Total output
Total output 620 MW Equity share 20.25%
Equity share
Kyuden Group Annual Report 2018 41
Our Strategy
Growth
Businesses
The Kyuden Group is working as one to expand its renewable energy
business in Japan and abroad, emphasizing stable energy procurement
and environmental benefits.
We are utilizing our accumulated technology and pushing forward
with new technology development with a focus on geothermal and
hydropower, as well as offshore wind power, which offers hidden
potential.
Expanding Our Renewable Energy Business
Since April 2016, the Kyuden Group’s wholly-owned subsidiary Kyuden Mirai Energy Company, Inc. has been engaged in retail electric power sales in the
Kanto region. Starting in January 2017, the company extended its sales efforts to customers in the high-voltage bracket and above.
Extending Retail Electric Power Sales Outside
the Kyushu Region
Accounts acquired
approx. 6,700
(as of March 31, 2018)
Chiba-Sodegaura Energy Co., Ltd, which we established in partnership
with Idemitsu Kosan Co., Ltd. and Tokyo Gas Co., Ltd., is continuing
the process of investigating, and evaluating the environmental impact
of, opening a coal-fired thermal power plant.
With full liberalization of the retail market for electric power, the
partners are leveraging their respective value chain strengths to deliver
safer, more reliable, and more affordable electric power.
We will do our utmost to address environmental impact and will also
contribute to the local economy.
Development of Own Power Sources Outside
the Kyushu Region Through Partner Alliances
2018.3 2022.3
Development research
in progress
2031.3
(target)02,000 2,000 MW
Output Development
Output development
2018.3 2022.3 2031.3
(target)
1,960
3,300
4,000 MW
Unit 1: Operating commencement FY2025 (planned)
Unit 2: Operation commencement FY2026 (planned)
Chiba Prefecture
Tokyo Metropolis
Kanagawa Prefecture
Plant location
(Sodegaura, Chiba)
Through partner alliances and other measures, we are working to
develop energy sources for other regions.
In the interval before these sources come online, we are using other
approaches, such as market procurement, to engage in electric power
sales.
Electric Power Business Outside
the Kyushu Region
Total output 2,000 MW
Kyuden Group Annual Report 201842Kyuden Mirai Energy Company, Inc., Nishinippon Plant Engineering and Construction Co., Ltd.,
and Kyuden Sangyo Co., Inc. established Shimonoseki Biomass Energy LLC in December 2017.
The new entity, based in Shimonoseki, Yamaguchi, will carry out research, construction,
operation, and management of what is set to become one of Japan’s largest biomass power
generation facility using wood combustion.
Biomass Power Generation 74.98 MW
Total output
2.00 MW
Total output
A four-company consortium that includes Kyuden Mirai Energy Company, Inc. and Nippon Steel
& Sumikin Engineering Co., Ltd. is working on Japan’s first large-scale proof-of-concept facility
for tidal power generation in the ocean off Goto City, Nagasaki Prefecture. Test operation is
planned to begin in FY2019, after further research into tidal currents at the site, design and
construction of power generating units, and other preparations are complete.
Toward Practical Use of Tidal Power
Total output 43.50 MW
An LLC corporation established by five partners, including Kyuden Mirai Energy Company, Inc.,
Kyudenko Corporation, and ORIX Corporation, created Renatosu Soma Solar Park to make
effective use of agricultural and other land in Soma, Fukushima that suffered tsunami-related
salt damage after the Great East Japan Earthquake. The facility commenced operation in June
2017.
Megasolar Power Generation Outside the Kyushu Region
Total output 4.99 MW
In February 2018, Kyuden Mirai Energy Company, Inc. began managing Yamagawa Binary Cycle
Power Station, located at our Yamagawa geothermal power station.
The new binary cycle facility makes effective use of geothermal water not used for power
generation in the main facility using a geothermal binary method, which generates power by
utilizing a medium with a lower boiling point than water.
Yamagawa Binary Cycle Power Station Commences Operation
Kyuden Group Annual Report 2018 43
Our Strategy
Growth
Businesses
Governance P56
Environment P60
Social P62
Amidst an environment in which we are seeing great change, in addition to financial initiatives, ESG efforts will be
paramount in our endeavor to continuously improve corporate value.
This section outlines a number of key ESG initiatives of the Kyuden Group.
ESG Initiatives
Kyuden Group Annual Report 201844ESG Section
Kyuden Group Annual Report 2018 45
ESG Section
Michiaki Uriu
Member of the Board of Directors,
Chairperson
Kazuhiro Ikebe
Member of the Board of Directors,
President & Chief Executive Officer
Kazuhiro Izaki
Member of the Board of Directors,
Vice-Presidential Executive Officer
1 4 7 10
2 5 8 11
3 6 9 12
Members of the Board of Directors
Yuuzou Sasaki
Member of the Board of Directors,
Vice-Presidential Executive Officer
Hideomi Yakushinji
Member of the Board of Directors,
Vice-Presidential Executive Officer
Yoshiro Watanabe
Member of the Board of Directors,
Vice-Presidential Executive Officer
Akira Nakamura
Member of the Board of Directors,
Senior Managing Executive Officer
Ichirou Fujii
Member of the Board of Directors,
Senior Managing Executive Officer
Takashi Yamasaki
Member of the Board of Directors,
Senior Managing Executive Officer
Naoyuki Toyoshima
Member of the Board of Directors,
Senior Managing Executive Officer
Masahiko Inuzuka
Member of the Board of Directors,
Senior Managing Executive Officer
Makoto Toyoma
Member of the Board of Directors,
Senior Managing Executive Officer
Kyuden Group Annual Report 20184616 1913171418156414217 19138 1839 175
10 16
11 1512ESG Section
Akiyoshi Watanabe
Member of the Board of Directors
(External)
Ritsuko Kikukawa
Member of the Board of Directors
(External)
Nobuya Osa
Member of the Board of Directors,
Audit & Supervisory Committee
Member
Eiji Kamei
Member of the Board of Directors,
Audit & Supervisory Committee
Member
Kazutaka Koga
Member of the Board of Directors,
Audit & Supervisory Committee
Member (External)
Fumiko Furusho
Member of the Board of Directors,
Audit & Supervisory Committee
Member (External)
Yusuke Inoue
Member of the Board of Directors,
Audit & Supervisory Committee
Member (External)
Kyuden Group Annual Report 2018 47
ESG Section
Membersofthe
BoardofDirectors
1977 Joined Kyushu Electric Power
2015 Member of the Board of Directors,
Senior Managing Executive Officer (current position)71979 Joined Kyushu Electric Power
2018 Member of the Board of Directors,
Senior Managing Executive Officer (current position)101981 Joined Kyushu Electric Power
2018 Member of the Board of Directors,
President & Chief Executive Officer (current position)21976 Joined Kyushu Electric Power
2016 Member of the Board of Directors,
Senior Managing Executive Officer (current position)81982 Joined Kyushu Electric Power
2018 
Member of the Board of Directors,
Senior Managing Executive Officer (current position)111981 Joined Kyushu Electric Power
2018 Member of the Board of Directors,
Senior Managing Executive Officer (current position)121978 Joined Kyushu Electric Power
2017 Member of the Board of Directors,
Senior Managing Executive Officer (current position)91978 Joined Kyushu Electric Power
2015 Member of the Board of Directors,
Vice-Presidential Executive Officer (current position)31978 Joined Kyushu Electric Power
2016 Member of the Board of Directors,
Vice-Presidential Executive Officer (current position)41976 Joined Kyushu Electric Power
2018 Member of the Board of Directors,
Vice-Presidential Executive Officer (current position)51977 Joined Kyushu Electric Power
2018 Member of the Board of Directors,
Vice-Presidential Executive Officer (current position)61975 Joined Kyushu Electric Power
2018 Member of the Board of Directors, Chairperson (current position)1Members of the Board of Directors
Career Highlights
Michiaki Uriu
Member of the Board of Directors,
Chairperson
Important Concurrent Positions: 1
Hideomi Yakushinji
Member of the Board of Directors,
Vice-Presidential Executive Officer,
Executive Director of Business Solution Headquarters,
Matters relating to CSR, Crisis Management
Kazuhiro Ikebe
Member of the Board of Directors,
President & Chief Executive Officer
Kazuhiro Izaki
Member of the Board of Directors,
Vice-Presidential Executive Officer,
Executive Director of Energy Service
Headquarters
Important Concurrent Positions: 1
Yuuzou Sasaki
Member of the Board of Directors,
Vice-Presidential Executive Officer,
Executive Director of Technical Solution Headquarters
Important Concurrent Positions: 1
Yoshiro Watanabe
Member of the Board of Directors,
Vice-Presidential Executive Officer,
Deputy Executive Director & Director of Marketing
Division of Energy Service Headquarters
Akira Nakamura
Member of the Board of Directors,
Senior Managing Executive Officer,
Special Assignment Officer for Nuclear Power
Promotion
Takashi Yamasaki
Member of the Board of Directors,
Senior Managing Executive Officer,
President of Power Transmission and
Distribution Company
Important Concurrent Positions: 1
Masahiko Inuzuka
Member of the Board of Directors,
Senior Managing Executive Officer,
Director of Operation Division,
Business Solution Headquarters
Ichirou Fujii
Member of the Board of Directors,
Senior Managing Executive Officer,
Director of Human Resource Vitalization Division,
Business Solution Headquarters,
Matters relating to the Secretary Office
Naoyuki Toyoshima
Member of the Board of Directors,
Senior Managing Executive Officer,
Director of Nuclear Power Division
Makoto Toyoma
Member of the Board of Directors,
Senior Managing Executive Officer,
Executive Director of Corporate Strategy Division
Kyuden Group Annual Report 2018481966 Joined Toyota Motor Co., Ltd. (now Toyota Motor Corporation)
1996 Director
1998 Director (part-time), Toyota Motor Kyushu, Inc.
2001 Managing Officer, Toyota Motor Corporation
2002 Retired as a Managing Officer from Toyota Motor Corporation
2002 President, Toyota Motor Kyushu, Inc.
2007 
Vice-Chairman, Kyushu Economic Federation (a general incorporated
association)
2008 Chairman, Toyota Motor Kyushu, Inc.
2009 
Member of the Board of Directors, Kyushu Electric Power (current
position)
2011 Advisor, Toyota Motor Kyushu, Inc.
2011 Director, Kyudenko Corporation (current position)
2015 Retired as Vice-Chairman of Kyushu Economic Federation
2015 Retired as an Advisor from Toyota Motor Kyushu, Inc.131982 Joined Furusho Tochi, Ltd.
1982 Director
1998 Board Member, Special Olympics Nippon
2000 Bureau Chief
2004 Retired as a Board Member from Special Olympics Nippon
2006 Member, Kumamoto Prefectural Board of Education
2008 Retired from Special Olympics Japan
(now Special Olympics Japan Foundation)
2009 
Committee Chairman, Kumamoto Prefectural Board of Education
2011 Representative Director, Furusho Tochi, Ltd. (current position)
2012 Retired as Committee Chairman,
Kumamoto Prefectural Board of Education
2013 Audit & Supervisory Board Member, Kyushu Electric Power
2014 
Retired as a Member from Kumamoto Prefectural Board of
Education
2018 Member of the Board of Directors, Audit & Supervisory
Committee Member, Kyushu Electric Power (current position)171973 Joined Bank of Japan
1985 Retired from Bank of Japan
1985 
Joined Fukuoka Sogo Bank, Ltd.
(now Nishi-Nippon City Bank, Ltd.)
1986 Director
1989 Director, Fukuoka City Bank, Ltd.
(Name changed from Fukuoka Sogo Bank, Ltd.)
1990 Managing Director
1993 Senior Managing Director
1997 Deputy President
2003 Retired as Deputy President, Fukuoka City Bank, Ltd.
2003 Chairman, The Kyushu Card Co., Ltd.
2005 Retired as Chairman, The Kyushu Card Co., Ltd.
2005 Chairman, Kyushu Servicer Co., Ltd. (current position)
2016 Audit & Supervisory Board Member, Kyushu Electric Power
2018 
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu Electric Power (current position)181986 Registered as attorney (current position)
1989 Established Koga Kazutaka Law Office
(now Koga Hanashima Law Office)
2007 
Auditor (part-time), MAXVALU KYUSHU CO., Ltd. (current position)
2012 Vice President, Kyushu Federation of Bar Associations
2012 Chairman, Fukuoka Bar Association
2013 Retired as Vice President, Kyushu Federation of Bar Associations
2013 Retired as Chairman, Fukuoka Bar Association
2014 Vice President, Japan Federation of Bar Associations
2015 Retired as Vice President, Japan Federation of Bar Associations
2016 Audit & Supervisory Board Member, Kyushu Electric Power
2018 
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu Electric Power (current position)19*Important concurrent positions to not include those within the Kyuden Group.
Akiyoshi Watanabe
Member of the Board of Directors
(External)
1974 Joined Fukuoka Prefectural Government
2005 Director, Fukuoka Prefectural General Social Education Center
2007 Director, Fukuoka Prefectural Library
2008 Retired from Fukuoka Prefectural Government
2008 Vice-President, National Institution for Youth Education
2011 Retired from the National Institution for Youth Education
2012 Executive Vice President, Kyushu University
2014 Retired from Kyushu University
2014 
Director of Fukuoka Study Center, Specially-appointed
Professor, Open University of Japan (current position)
2015 
Member of the Board of Directors, Kyushu Electric Power
(current position)14Ritsuko Kikukawa
Member of the Board of Directors
(External)
Important Concurrent Positions: 1
1977 Joined Kyushu Electric Power
2018 Member of the Board of Directors,
Audit & Supervisory Committee Member (current position)15Nobuya Osa
Member of the Board of Directors,
Audit & Supervisory Committee Member
1979 Joined Kyushu Electric Power
2018 Member of the Board of Directors,
Audit & Supervisory Committee Member (current position)16Eiji Kamei
Member of the Board of Directors,
Audit & Supervisory Committee Member
Fumiko Furusho
Member of the Board of Directors,
Audit & Supervisory Committee Member (External)
Important Concurrent Positions: 1
Yusuke Inoue
Member of the Board of Directors,
Audit & Supervisory Committee Member (External)
Important Concurrent Positions: 1
Kazutaka Koga
Member of the Board of Directors,
Audit & Supervisory Committee Member (External)
Important Concurrent Positions: 2
Kyuden Group Annual Report 2018 49
ESG Section
Membersofthe
BoardofDirectors
In June 2018, Kyushu Electric Power transitioned to an Audit and Supervisory Committee.
Chairperson Uriu discussed the advantages of the new approach as well as the ongoing roles of external directors
Ritsuko Kikukawa and Akiyoshi Watanabe.
Feature 3 Transition to an Audit and Supervisory Committ
Michiaki Uriu
Member of the Board of Directors,
Chairperson
Ritsuko Kikukawa
Member of the Board of Directors
(External)
Akiyoshi Watanabe
Member of the Board of Directors
(External)
Kyuden Group Annual Report 201850tee
Feature3Transitiontoan
AuditandSupervisory
Committee
Kyuden Group Annual Report 2018 51
ESG SectionQ1Kyushu Electric Power has transitioned to an Audit and Supervisory Committee. What advantages do you
anticipate from this move?
A1 We expect two main advantages: strengthened
corporate governance and accelerated decision making.
Under the new structure, the Audit and Supervisory
Committee will assume the duties formerly executed
by the Board of Corporate Auditors. Since Audit and
Supervisory Committee members also sit on the Board
of Directors, they will have the authority to make
recommendations and give input in such areas as
assignments and compensation for directors, as well
as the right to vote at Board of Directors meetings.UriuAs such, compared to the former Board of Corporate
Auditors approach, their oversight function with respect
to the Board of Directors will be strengthened.
In addition, with the exception of issues covered by
laws and regulations and the articles of incorporation,
the Board of Directors can now delegate important
operational decisions to board members. This will
accelerate decision making and be extremely beneficial
in a rapidly changing operating environment, especially
in promoting growth businesses and other initiatives.
Kyuden Group Annual Report 201852Q2
As a corporation with an Audit and Supervisory Committee, how will the role of external directors who are not
members of that committee change?A2Uriu
Kikukawa
Watanabe
Feature3Transitiontoan
AuditandSupervisory
Committee
Both Mr. Watanabe and Ms. Kikukawa are external directors
who do not sit on the Audit and Supervisory Committee,
and we look forward to their continued participation in
management from an independent, outside standpoint.
With the establishment of the Audit and Supervisory
Committee, issues delegated for decision to directors
are to be discussed by the Corporate Management
Committee, and this makes the management committee
even more important than before. From the perspective
of maintaining and strengthening oversight of the Board
of Directors, I believe it will be increasingly important
for both of them to continue providing input, not only
to the board but also to the Corporate Management
Committee, concerning all manner of management
issues.
As external directors, our role is to offer frank, objective
input from an outside perspective and to oversee the
conduct of management. Delegating decision-making
authority to board members has the merit of enabling
more nimble management. However, it brings with it
the risk of management errors that could negatively
impact corporate value. We attend meetings of the
Board of Directors as well as Corporate Management
Committee meetings and strive to offer input based on
our respective experience. I look forward to helping to
speed up the pace of management decision making on
the part of the board members while occasionally acting
as a brake from a risk control perspective, in order to
provide appropriate management oversight.
I agree with Ms. Kikukawa. From a management oversight
perspective, our participation as external directors in
Corporate Management Committee meetings is even
more important than before. The Corporate Governance
Code stipulates that the company shall have at least
two external directors. I understand that in some cases,
companies have fulfilled this requirement by placing
their external auditors on the Audit and Supervisory
Committee. I am fully aware of my role as an external
director who does not sit on the Audit and Supervisory
Committee, and I look forward to representing the
opinions of shareholders to the Board of Directors
appropriately and contributing to enhancing corporate
value over the medium to long term.
Kyuden Group Annual Report 2018 53
ESG Section
Q3 What do you anticipate from this new structure under President Ikebe?A3Uriu
Watanabe
During my six years as president, I believe I was
able to lay out a path to such medium to long term
goals as restarting our nuclear power generation
units, responding to competition brought by industry
deregulation, and fostering innovation, and I decided
it was time to place the charting of our management
course in new hands as we move toward a major growth
stage.
In addition to knowledge, ability, and experience,
President Ikebe has outstanding comprehensive
capacity, including broad vision, a talent for resolute
action, and extensive management expertise. To date
we have spent much time discussing a broad range
of management challenges, and I am confident he
is capable of making rapid, appropriate decisions in
response to our rapidly changing business environment,
as well as further enhancing our corporate value. I will
continue to support the president so that he can fully
leverage his capabilities and demonstrate leadership,
and as chairman of the Board of Directors, I will work to
further strengthen its oversight functions.
To date, President Ikebe has been involved in
formulating the Medium-term Management Policy,
financial objectives, and innovation efforts, and has
helped plot Kyushu Electric Power’s strategic direction.
As chairperson of the Personnel Committee, I believe he
was the right choice to assume position as president.
Moreover, a performance-based stock remuneration
system for directors was adopted this fiscal year
under the new structure. I participated in designing
Kyuden Group Annual Report 201854Feature3Transitiontoan
AuditandSupervisory
Committee
Kikukawa
this system as chairperson of the Compensation
Committee; the system links stock remuneration to
the degree of achievement of the 110円 billion financial
objective in consolidated ordinary income. I believe
this system will promote sharing of our corporate value
with shareholders, and will further incentivize the
management team to enhance corporate value and
boost the stock price.
As the incentive to generate profits increases, I
will execute my oversight role as an external director
meticulously, to ensure that the conduct of management
does not stray outside legal or other appropriate limits.
The future of the electric power industry is facing
uncertainty from numerous directions, including new
market entry. The difficult challenges that lie ahead
cannot be met by relying on past experiences of
success. To overcome them will require the company
to understand stakeholder opinion and the needs of a
new era, and to move forward with fresh vision. Kyushu
Electric Power has a mechanism for communicating
investor opinions gathered though IR activities to
the Board of Directors on a regular basis, and this
information is shared with all board members.
As we strive under the new structure to become
a corporate group that provides Japan’s best energy
services while taking into account investor input, I will
do my best to provide the kind of useful advice that my
external perspective makes possible.
Kyuden Group Annual Report 2018 55
ESG Section
Governance Initiatives
We aim to generate sustainable value for all shareholders in keeping with Kyuden Group’s Mission by engaging in operations that are socially
meaningful from a long-term perspective. It is a top management priority to strengthen corporate governance to ensure that we do business
properly.
Basic Stance
Corporate Governance
Appoint or dismiss
Appoint or dismiss
Appoint or dismiss
Report
Determine that
accounts audits
are appropriate
Audit Audit & Supervisory Committee Office
Audit & Supervisory Committee
Business Execution Structure
Compliance
Committee
Accounting
Auditor
Board of Directors
Members of the Board of Directors
(Audit & Supervisory Committee members)
Members of the Board of Directors
(excluding Audit & Supervisory Committee members)
Audit
Audit accounts
Liaise
Appoint, dismiss,
delegate business execution
Implementation
monitoring
Supervise
Delegate
Report
Internal
auditing
President & Chief Executive Officer
Company, Headquarters, Divisions,
Branch Offices, Group companies, etc.
Corporate Management Committee
Report
Instruct
Submit and report on important matters
Coordinate
and instruct
• Management Auditing Office
• Nuclear Auditing Office
• Auditing Office, Power Transmission and
Distribution Company
Internal Auditing Body
General Meeting of Shareholders
■しかく Corporate Governance Structure
■しかく Overview of Internal Organizations
Organization Role
Members
(As of March 31, 2018)
Meeting Frequency, etc.
Board of Directors
• Decides on important corporate management matters
• Supervises performance of duties
• 
15 members of the Board of Directors in total
(including 2 external members of the Board of
Directors)
Once a month in principle
(18 times during FY2017)
Corporate Management
Committee
• 
Considers matters that were decided by the Board of
Directors in advance
• Makes important decisions on business execution
• 
President, vice president, senior managing
executive officers, managing executive officers,
and others 16–27 members (11 members
attended in response to agenda)*In addition to the above, two external directors
attended
Once a week in principle
(41 times during FY2017)
Audit & Supervisory
Committee
• 
Performs audits relating to general status of members of the
Board of Directors’ performance of duties
→ 
Attends Corporate Management Committee and other
important meetings
→ 
Receives oral reports from executive divisions, consolidated
subsidiaries, and others
→ Performs business site inspections
→ 
Deliberates and decides on important matters related to
audits stipulated by laws and regulations and the articles of
incorporation
• 
6 Audit & Supervisory Committee members in
total (including 3 external Audit & Supervisory
Committee members)*The Audit & Supervisory Committee Member
Office, which has 12 members, was established
to assist the Audit & Supervisory Committee
members as a specialist organizational body
*Information from 
Board of Corporate Auditors
Once a month in principle
(15 times during FY2017)*Board of Corporate Auditors actual
result
Internal auditing body
• 
Audits observance of laws, regulations, and so forth
in divisions and business sites and status of business
execution
• 
Audits quality assurance systems in place to monitor safety
initiatives and the status of operations based on these
• Management Auditing Office (19)
• Nuclear Auditing Office (8)
• 
Auditing Office, Power Transmission and
Distribution Company (8)
*Held constantly as part of duties
Kyuden Group Annual Report 201856We believe that strengthening governance and accelerating decision-making is critical to respond to our changing operating environment
more flexibly and dynamically. Consequently, in June 2018, we transitioned from an Audit and Supervisory Board model to an Audit and
Supervisory Committee model.
The Company conducted questionnaires and interviews with members of the Board of Directors, and the results were submitted for
discussion to the Board of Directors.
It was determined that Board of Directors decision-making with respect to important matters, and oversight of operational execution, are
being performed appropriately, and that meetings are being conducted with the goal of active, high-quality deliberations.
Transition to a Company with an Audit and Supervisory Committee
Analysis and Evaluation of Overall Effectiveness of Board of Directors
Objectives
●くろまる Strengthen auditing supervision of the Board of Directors by giving audit personnel board voting rights
●くろまる Accelerate decision-making by delegating decisions from the Board of Directors to directors
(1) Regarding the function and composition
of the Board of Directors
●くろまる Appropriateness of the decision-making process
●くろまる Formulation and external disclosure of management strategies
and policies
●くろまる Appropriateness of supervision of business execution
●くろまる Appropriateness of composition (diversity, scale)
(2) Operation of the Board of Directors
●くろまる Appropriateness of determination of matters for resolution
and reporting and matters for deliberation
●くろまる Clarity of materials and explanations
●くろまる Appropriateness of frequency and time allocation for
deliberation
General Meeting of Shareholders
Members of the Board
of Directors
Voting rights: Voting rights:
Audit
and supervise
Internal: 12 persons
External: 2 personsyesMembers of the Board of Directors
(Audit & Supervisory Committee
members)
5 persons
Internal: 2 persons
External: 3 persons
Appoint Dismiss Appoint Dismiss
Board of Directors
Governance
Initiativesyes14 persons
Kyuden Group Annual Report 2018 57
ESG Section
Candidates for Board membership are selected based on consideration of their character, judgment, and background, and after Board of
Director deliberations with the participation of external directors. Candidates who are members of the Audit and Supervisory Committee
must gain approval from that board before becoming Board of Directors candidates.
In addition, the election of director candidates by the Board is preceded by a meeting of the Personnel Committee, which is chaired by an
external director, to obtain appropriate involvement and advice from external directors and ensure transparency and objectivity in candidate
selection.
Nomination Policies and Procedures
Director remuneration is set at levels appropriate to the individual’s capabilities and responsibilities, taking into account such factors as our
operating environment, compensation at other enterprises, principally listed companies, and Kyushu Electric Power employee compensation
as a whole.
Specifically, remuneration breaks down into monthly remuneration, bonuses, and stock compensation, which was adopted this fiscal
year. To ensure objectivity and transparency, the Compensation Committee, which is chaired by an external director, reviews all aspects of
director compensation for review and decision by the Board of Directors and the Audit and Supervisory Committee.
Bonuses for directors (excluding external directors and Audit and Supervisory Committee members) are linked to the company’s business
performance, with an upper limit, to clarify directors’ responsibility for business results and as an incentive to better business performance.
Remuneration Policies and Procedures
A performance-based stock compensation system was adopted for directors (excluding external directors and Audit and
Supervisory Committee members) beginning this fiscal year. The system awards company stock to directors, proportionate
to their degree of fulfillment of business performance targets. The goal of the system is for directors to share corporate
value with stockholders, and further incentivize directors to contribute to enhancing corporate value and raising the
company’s stock price through achievement of management objectives.
Adoption of Performance-based Stock Compensation
Committee
Total
members
(persons)
Statutory
members
(persons)
Internal
directors
(persons)
External
directors
(persons)
External
experts
(persons)
Other
(persons)
Chairperson
Nominating
discretionary
committee
Personnel Committee 4 0 2 2 0 0
External
director
■しかく Discretionary committee status, member composition, chairperson affiliation
Committee
Total
members
(persons)
Statutory
members
(persons)
Internal
directors
(persons)
External
directors
(persons)
External
experts
(persons)
Other
(persons)
Chairperson
Compensation
discretionary
committee
Compensation
Committee
6 0 4 2 0 0
External
director
■しかく Discretionary committee status, member composition, chairperson affiliation
Kyuden Group Annual Report 201858To manage risk, we regularly identify, categorize and assess risks based on our risk management rules, clarifying Company-wide and
division-specific threats that could affect management.
Each division and business office produces contingency plans to appropriately manage clear general and specific risks.
With regard to risks that relate to multiple departments and risks for which concerns of materializing are high, we share information
among related departments, clarify response structures and address these risks appropriately.
For nuclear power in particular, we take external knowledge and opinions into consideration as we work to identify a broad range of risks,
share this information with members of the Board of Directors and executive officers and address the risks thoroughly and on an ongoing
basis.
When these risks arise, and events occur including emergency disasters involving loss of public trust or major adverse operational or social
effects, rapid and appropriate response is critical. To this end, we have codified our risk response structures and procedures, and carry out
regular drills.
Risk Management
Principal Risks
●くろまる Changes in systems affecting the electric power
business, etc.
●くろまる Status of the environment surrounding nuclear power
generation
●くろまる Fluctuations of electric power sales volume, etc.
●くろまる Fluctuations of fuel price
●くろまる Costs related to nuclear power backend costs, etc.
●くろまる Costs related to climate change
For details, see Business and Other Risks (page 68)
■しかく Risk Management System
President
Report & consult
Risk Management Administrator Risk Management Department
External experts (think tank)
xx Branch
supervisory area
Risk Management
Supervisor
Risk Management
Supervisor
Risk Management
Supervisor
xx Branch
supervisory area
xx Branch
supervisory area
Risk Management Officer
(Vice President)
Branch
supervisory
areas
Supervising departments
Liaise
Risk management
meetings
xx Headquarters
Risk Management
Supervisor
xx Headquarters
Risk Management
Supervisor
xx Headquarters Risk Management
Supervisor
Governance
Initiatives
Kyuden Group Annual Report 2018 59
ESG Section
Energy Conservation Law
Enhancing efficiency of
thermal power generation
(USC standard, etc.)
Rationalization of energy use by energy consumers (business sites, etc.)
Regulation of power producers
Rationalization of fossil fuel energy use when
establishing and operating power generation facilities
Climate Change
The Kyuden Group is engaged in major efforts to meet CO2 reduction targets across its entire electric power business through the use of
nuclear as well as renewable forms of power generation, and by raising the efficiency of its thermal power stations.
In particular, with respect to enhanced thermal efficiency and adoption of zero-CO2 emission power sources, we are working to reach
the 2030 targets set forth in the Energy Conservation Law and the Energy Supply Structural Enhancement Law, which were issued by the
government to ensure effectiveness and transparency, and will take appropriate steps to that end.
In addition to completing work that began in 2009 to upgrade the six turbines at Shin-Oita Power Station Unit 1 to high-efficiency gas units,
we kept our other high-efficiency thermal power stations operating at high levels. Thanks to these efforts, total thermal efficiency for
thermal power stations in FY2017 was maintained at a high 41.8% (power transmission end).
Enhancing Thermal Power Efficiency
2030 CO2 emission coefficient:
0.37 kg CO2/kWh equivalent*1
Choice of retail energy provider
Energy Supply Structural Enhancement Law
Non-fossil fuel power
generation: 44%
Regulation of retail electricity businesses
Expanded procurement from non-fossil power sources
Power output from renewable energy, such as solar and wind energy,
varies significantly depending on weather conditions and time of day.
By combining power from these sources in an optimal way with our
thermal power and hydropower generation, we are working to maximize
utilization.
In FY2017, renewable energy amounted to approximately 20% of all
energy generated and purchased by Kyushu Electric Power.
Maximizing Adoption Renewable Energy May 3 (Thurs), 2018 Demand/Supply Management
12 a.m. 6 a.m. 12 p.m. 6 p.m. 12 a.m.
Demand
Pumped-storage
generation
Base load power source
Thermal, etc.
Electricity from
pumped-storage
Electricity from
pumped-storage
Solar power output: 6,210 MW
(81% of demand)
Pumped-storage
generation
12,000
10,000
8,000
6,000
4,000
2,0000(MW)
*1: Target value of Action Plan for Achieving a Low-carbon Society*2 through electricity business
*2: Medium- to Long-term plan for independent action by the electric power industry to mitigate climate change, formulated in 2015 by
12 Federation of Electric Power Companies and proposed new entrants
Environmental Initiatives
Kyuden Group Annual Report 201860Environment
ESG Section
Resource Use
Kyushu Electric Power is working to make efficient use of resources,
and we recycled nearly all of the 870,000 tons of industrial waste we
produced in FY2017.
After segregating industrial waste by category and prepositioning it
at selected operating locations, nearly the entire amount was recycled
jointly.
We added concrete rubble to the list of recyclable waste in FY2018,
and are working to further reduce the burden on the environment in
terms of logistics.
Near-100% Recycling of Industrial Waste
Water usage
Industrial water used in power generation is drawn from rivers and other sources consistent with usage limitations. We are working to
reduce the amount of water we use through such measures as water recirculation when power generation facilities are shut down or in
normal operation.
Management of Water Used in Power Generation
Biodiversity
To ensure stable supplies of water for hydropower generation, Kyushu Electric Power manages 4,447 hectares of company-owned forest
land. Through headwater conservation, CO2 uptake, and other means, we are working to maintain and enhance the public functions of our
forest holdings.
To enhance the biodiversity of our forest land, group company Kyushu Rinsan Co. has begun a local biodiversity survey.
Biodiversity Survey in Company Forest
Company forest (Yufu City, Oita Prefecture) Near-threatened and threatened species confirmed in company forest
Osprey
Osprey
Eurema laeta
Eurema laeta
Power generation,
transformation facilities
Power generation,
transformation facilities
Branch
Branch
Recycling company
Recycling company
Entire amount recycled to roadbeds,
steel sheets, etc.
Entire amount recycled to roadbeds,
steel sheets, etc.
Sales offices,
distribution facilities
Sales offices,
distribution facilities
Kyuden Group Annual Report 2018 61
ESG Section
Environmental
Initiatives
Labor Standards
Kyushu Electric Power is promoting a workstyle reform aimed at creation of environments where employees can actively engage in their
jobs; enhancement of labor efficiency through thoroughgoing increases in operational efficiency; and a corporate culture that encourages
employees to take on new challenges.
To further these efforts, in May 2018, we held Kyuden Workstyle Reform Festa 2018, which featured panel discussions with senior
management and sharing of instructive cases from various business sites.
Promoting a Workstyle Reform
Kyuden Workstyle Reform Festa 2018
1. Enhancing operational efficiency and revamping
our organizational culture
• Management workshops
• Establishing uniform companywide workflow rules
2. Designing systems that encourage flexible
workstyles
• Application/expansion of flextime system
• Promotion of telework
Principal Activities
In 2016, Kyushu Electric Power formulated its Action Plan to Promote an Active Role for Women. The plan included measures to further
promote enhanced participation of women in the company, including a system for rehiring female employees who had quit to marry or care
for children, and career development training.
The plan also aims to double the number of women newly promoted to management positions during FY2014-2018, compared to the
preceding five-year period (FY2009-2013). This goal was reached in FY2017.
Promoting Active Roles for Women
Percent of Target Achieved for Promoting Women to Management Positions
Employees aged 60 and above are valuable human resources with extensive experience and advanced knowledge and skills. Our career
employee program was adopted in FY2015 to more fully utilize motivated senior employees. Going forward, we will work to further enhance
our reemployment program.
Enhancing the Employment Environment for Seniors
111% (as of March 31, 2018)
Social Initiatives
Kyuden Group Annual Report 201862Social
ESG Section
Health and Safety
In FY2017, we established the Companywide Safety Promotion Committee, chaired by the President, and the Group Safety Promotion
Committee, with participation from directors responsible for safety and other individuals from 42 group companies.
These two bodies will share information and liaise with each other, formulate the Kyuden Group Safe Conduct Charter, and work to
disseminate and inculcate its provisions, undertaking to foster a uniform, groupwide culture of safety.
Groupwide Activities to Promote Safety
To minimize worker exposure at our nuclear power stations, we provide radiation shielding and promote measures such as remote and
automated operation.
Average actual exposure by nuclear power station workers in FY2017 amounted to 0.1 millisieverts, far below the legally mandated
limit.*
Radiation Emissions Management for Employees Engaged in Radiation Work
* No more than 100 millisieverts in a five-year period or 50 millisieverts in a single year
Information sharing, liaison
Co-Existing with Communities and Society
Kyuden Mirai Foundation was established to engage in activities to
support the environment and the cultivation of future generations.
To promote healthy child development, the foundation provides
support to NPOs and other organizations engaged in next-generation
educational support activities.
In FY2017, the foundation assisted 20 organizations with a
total of approximately 14円 million in support.
Efforts to Promote Next-generation
Educational Support Activities
Crafts Festival
Children learn about the fun of manufacturing by experiencing traditional craftsmanship
Group Management Committee
Group Safety Promotion Committee
• Disseminate and inculcate Safe Conduct Charter
• Foster a culture of safety
• Share and propagate laterally information
concerning disasters and safety efforts
Companywide Safety Promotion Committee
(chaired by President)
• Establish, disseminate and inculcate Safe Conduct
Charter system
• Promote facilities safety
• Promote labor safety
• Foster a culture of safety
• Disseminate information
Kyuden Group Annual Report 2018 63
ESG Section
Social
Initiatives
Consolidated Eleven-year Financial Summary
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31
Summary of the Year Ended March 31, 2018
Millions of Yen
2008 2009 2010 2011 2012 2013
For the Year:
Operating revenues: 1,482,351円 1,524,193円 1,444,941円 1,486,083円 1,508,084円 1,545,919円
Electric 1,363,423 1,398,577 1,310,085 1,354,204 1,367,610 1,406,218
Other 118,927 125,616 134,856 131,878 140,474 139,700
Operating expenses: 1,376,811 1,439,470 1,345,214 1,387,174 1,692,939 1,845,347
Electric 1,260,615 1,317,216 1,220,536 1,261,425 1,562,055 1,715,262
Other 116,195 122,254 124,677 125,748 130,883 130,085
Interest charges 36,937 35,770 35,292 34,025 34,025 37,407
Income (loss) before income taxes and
minority interests 72,463 55,859 67,610 48,318 (214,750) (334,298)
Income taxes 29,853 21,481 25,404 19,245 (48,760) (2,195)
Net income (loss) attributable to
owners of the parent 41,726 33,991 41,812 28,729 (166,390) (332,470)YenPer Share of Common Stock:
Basic net income (loss) \(351.80) \(702.98)
Diluted net income (loss) — — — — — —
Cash dividends applicable to the year
(common stock) 50.00
88円.19 71円.84 88円.38 60円.73
60.00 60.00 60.00 60.00
Cash dividends applicable to the year
(Class A preferred shares) — — — — — ——Millions of Yen
At Year-End:
Total assets 4,526,513円
Net property 2,941,114
Long-term debt, less current portion 2,526,729
Total equity 557,799
4,059,775円 4,110,877円 4,054,192円 4,185,460円 4,428,093円
3,109,292 3,080,446 3,037,054 3,033,125 2,997,232
1,712,949 1,811,744 1,724,972 1,714,429 2,188,601
1,084,212 1,072,374 1,089,066 1,079,679 888,131
(U.S. dollar amounts have been translated from yen, for convenience, at the rate of 106円.27 = U.S.1,ドル the approximate rate of exchange at March 31, 2018.)
Note: Figures less than a million yen are rounded down. (Applies hereafter)
In the year ended March 31, 2018, Kyushu Electric Power recorded a 21.8% decrease in ordinary income year on year. While fuel costs
fell thanks to an increase in the volume of electric power produced at our Sendai Nuclear Power Station, sales of electric power were also
down due to increased competition, and expenses rose as a result of such factors as reforms of Japan’s electricity systems. At the same
time, net income attributable to owners of the parent rose 9.3%, due to a drop in corporate income tax resulting from an increase in
deferred tax assets. This increase reflects our judgment of the likelihood of recovery of deferred tax assets, based on such considerations
as the status of the restart of Genkai Nuclear Power Station Unit 3.
Consolidated Eleven-year Financial Summary
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31
Kyuden Group Annual Report 201864Millions of Yen
Thousands of
U.S. Dollars
2014 2015 2016 2017 2018 2018
For the Year:
Operating revenues: 1,960,359円 18,446,972ドル
Electric 1,804,418 16,979,569
Other 155,940 1,467,402
Operating expenses: 1,857,235 17,476,577
Electric 1,713,322 16,122,353
Other 143,913 1,354,224
Interest charges 33,416 314,447
Income (loss) before income taxes and
minority interests 73,558 692,185
Income taxes (14,470) (136,165)
Net income (loss) attributable to
owners of the parent 86,657
1,791,152円 1,873,467円 1,835,692円 1,827,524円
1,633,023 1,719,570 1,688,328 1,681,066
158,129 153,897 147,364 146,458
1,886,974 1,916,782 1,715,435 1,704,883
1,746,890 1,779,711 1,584,556 1,574,890
140,083 137,070 130,879 129,993
39,429 40,148 39,317 36,008
(73,732) (72,901) 92,499 82,840
20,786 40,324 17,359 2,230
(96,096) (114,695) 73,499 79,270 815,448
Yen U.S. Dollars
Per Share of Common Stock:
Basic net income (loss) 175円.56
\(203.19) \(242.38) 155円.17 159円.97 1ドル.65
Diluted net income (loss) — — — 159.78 144.03 1.35
Cash dividends applicable to the year
(common stock)* — — — 15.00 20.00 0.18
Cash dividends applicable to the year
(Class A preferred shares)* — — — 3,500,000.00 3,500,000.00 32,934.97
*The amounts of cash dividends per share are based on the recorded earnings for each fiscal year.
Millions of Yen
Thousands of
U.S. Dollars
At Year-End:
Total assets 4,710,158円 44,322,560ドル
Net property 3,229,489 30,389,475
Long-term debt, less current portion 2,709,117 25,492,779
Total equity 653,963
4,549,852円 4,784,735円 4,748,237円 4,587,541円
2,941,142 2,985,935 3,073,861 3,134,911
2,804,896 2,844,538 2,745,848 2,789,038
494,232 450,990 499,903 574,577 6,153,789
Operating Revenues (Billions of yen) Operating Income (Loss)/Net Income (Loss) attributable to owners of the parent
(Billions of yen)0(332.470)
(299.428)
Operating Income (Loss) Net Income (Loss) attributable to owners of the parent
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
86.657
1,482.351
1,524.193
1,444.941
1,486.083
1,508.084
1,545.919
1,791.152
1,873.467
1,835.692
1,827.524
1,960.359
79.270
73.499
122.640
103.123
120.256
(114.695)
(43.314)
(95.821)
(96.096)
(166.390)
(184.854)
28.729
98.908
99.727
84.723
105.540
41.812
33.991
41.726
Kyuden Group Annual Report 2018 65
Financial Section
Consolidated
Eleven-year
Financial
Summary
Operating Results
Consolidated operating revenues rose
by 7.3% year on year during the term, to
1,960円.3 billion. In the electricity business,
despite a decrease in the volume of
electric power sold, lighting and power
revenue was up due to such factors as an
adjustment in fuel costs, which caused
unit charges to increase, and an increase
in renewable energy-related subsidies.
At the same time, with regard
to expenditures, the Kyuden Group
continued its coordinated cost-cutting
efforts. In our electricity business, the
cost of purchased power from renewable
sources increased, while fuel costs
increased due to higher fuel prices and
other factors. Other expenses also rose,
and as a result of these factors, the
operating expenses rose 8.9% year on
year, to 1,857円.2 billion.
As a result, operating income for the
term under review fell 15.9% year on year,
to 103円.1 billion.
Other revenues fell 12.5% year on
year, to 15円.8 billion. An increase in
dividend income was more than offset by
other factors, including reduced interest
income.
Other expenses decreased 2.7%
year on year, to 45円.2 billion, driven in
part by lower interest expense.
Ordinary income was 1,976,2円 billion,
an increase of 7.1% over the previous
fiscal year, while ordinary expenses
reached 1,902円.5 billion, up 8.6%. As a
result, ordinary income was down 21.8%
year on year, to 73円.6 billion.
Corporate income tax was negative
14円.4 billion, compared to positive 2円.2
billion for the previous term, due to such
factors as a revision in the recoverability
outlook for deferred tax assets, based on
such considerations as the status of the
restart of Genkai Nuclear Power Station
Unit 3, which resulted in higher deferred
tax assets.
As a result of the foregoing factors,
net income attributable to owners of the
parent rose 9.3% over the previous fiscal
year, to 86円.6 billion. Basic net income
per share of common stock totaled
175円.56, an increase of 15円.60.
Segment Information (Before Elimination
of Internal Transactions)
(1) Electric Power
The volume of electric power sales fell
to 76.8 billion kWh, down 2.3% year on
year, due to such factors as a drop in the
volume of contracted power sales.
Kyushu Electric Power maintained
stable supplies of electric power through
coordinated operation of its thermal
power generation and pumped-storage
facilities, including an increase in new
energy sources and stable operation of
its Sendai Nuclear Power Station Units 1
and 2.
Electric power segment sales were
up 7.3% year on year, to 1,808円.3 billion.
While the volume of electric power sales
fell, lighting and power revenue were
nevertheless higher, in part due to higher
unit charges resulting from adjusted
fuel costs. Renewable energy-related
subsidies also rose during the term.
Operating expenses increased 8.8%,
to 1,726円.8 billion. While the Kyuden
Group continued its comprehensive
efforts to reduce operating expenses, the
impact of such factors as an increase in
cost of purchased power from renewable
sources, and an increase in fuel costs
due in part to higher fuel prices, as well
as increases in other expenses, resulted
in higher operating expenses.
As a result, operating income fell
17.2%, to 81円.4 billion.
(2) Energy-related Business
Sales increased 3.4% year on year, to
191円.4 billion. The negative influence of
such factors as lower smart meter sales
was more than offset by such factors as
higher gas and LNG sales, as well as the
start of production at one of our overseas
LNG projects.
Operating income rose 16.3%, to
11円.7 billion. Subcontracting fees for
Lighting Power Liberalized Segment
(Millions of kWh)
Electricity Sales Volume
88,082
6,120
52,412
29,550
85,883
5,718
50,911
29,254
83,392
5,545
48,675
29,172
87,474
5,748
50,575
31,151
85,352
5,475
49,887
29,990
83,787
5,204
49,074
29,509
84,450
5,291
49,367
29,792
81,279
4,867
47,894
28,518
79,210
4,744
46,366
28,100
78,619
50,084
28,535
Note 1: Specified-Scale Demand is 6,000 V or higher at standard voltage and 50 kW or higher of contracted power
Note 2: Display categories changed from fiscal 2017
2008.3 2009.3 2010.3 2011.3 2012.3 2013.3 2014.3 2015.3 2016.3 2017.3 2018.3
76,775
48,173
28,603
Management Discussion and Analysis
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Kyuden Group Annual Report 201866system structuring rose, resulting from
our entry into the retail gas business, but
these were more than offset by the impact
of such factors as the start of production
at one of our overseas LNG projects, and
income from overseas electric power
generation.
(3) IT and Telecommunications
Sales rose 5.2% over the previous fiscal
year, to 106円.6 billion, thanks in part to
an increase in commissioned information
system development projects and sales
of electronic communications equipment.
Operating income fell 13.9%, to 7円.3
billion, in part because of an increase in
smartphone service selling expenses.
(4) Other Business
Sales in the category increased 2.7%
over the previous fiscal year, to 25円.5
billion, partially thanks to higher revenues
from temporary staffing services and
residential facilities for senior citizens.
Operating income expanded 6.5%, to
4円.8 billion, due to such factors as a
reduction in depreciation expense for
rental buildings.
Financial Position
(1) Assets, Liabilities and Equity
The total of current assets, including cash
and deposits, declined. However, fixed
assets increased due to multiple factors,
including an increase in the temporary
fixed asset account, attributable in part
to construction to enhance the safety of
our nuclear power stations; an increase
in nuclear fuel costs; and an increase in
deferred tax assets due to a revision in
the recoverability outlook. As a result, total
assets at the end of the term amounted
to 4,710円.1 billion, an increase of 122円.6
billion over the previous fiscal year.
Despite a lower total of outstanding
interest-bearing debt, taxes payable,
notes payable, accounts payable, and
other current liabilities all recorded higher
totals. As a result, liabilities increased by
43円.2 billion over the previous fiscal year,
to 4,056円.1 billion.
The total of interest-bearing debt fell
by 70円.1 billion year on year, to 3円.243.8
billion.
Total equity rose 79円.3 billion, to
reach 653円.9 billion at the close of the
term, while the equity ratio was 13.4%.
The reduction in total equity due to
dividend payouts was more than offset by
net income attributable to owners of the
parent.
(2) Cash Flows
Cash flows provided by operating
activities rose by 167円.9 billion over the
previous fiscal year to 355円.9 billion.
This result was due to such factors as a
drop in payments for consumption tax
and corporate income tax, as well as in
payments of accrued contributions for
reprocessing of irradiated nuclear fuel in
accordance with the enforcement of the
Act for Partial Amendment to the Act for
Deposit and Management of the Reserve
Funds for Reprocessing of Spent Fuel
from Nuclear Power Generation.
Net cash used in investment activities
ended 46円.7 billion higher than at the
close of the previous fiscal year, at 321円.7
billion. The total of proceeds from sales of
investment securities and collections of
advances exceeded that of the previous
term, but was more than offset by an
increase in capital investments.
Net cash used in financing activities
amounted to 90円.3 billion, a drop of
168円.7 billion from previous fiscal year.
While interest-bearing debt increased
during the previous term, due in part
to issuance of convertible bonds with
subscription rights to shares, the total of
such debt fell during the term just ended,
partly because the net redemption value
of corporate bonds exceeded their issue
value.
As a result, the balance of cash and
cash equivalents at the end of the term
was 365円.8 billion, 53円.9 billion down
from the close of the previous fiscal year.26.326.3 25.725.726.426.425.425.419.719.711.911.910.510.59.09.010.110.12,040.0
2,110.6
2,004.7
2,089.4
4,059.7
4,110.8
4,054.1
4,185.4
2,483.2
2,910.7
3,116.7
3,337.9
3,224.8
4,428.0
4,526.5
4,549.8
4,784.7
4,748.2
1,062.4
1,067.0
1,054.7
1,071.7
870.3
539.6
475.5
431.5
479.9
3,313.9
3,243.8
4,587.5
4,710.1
550.9
629.1
Total Assets (Billions of yen) Interest-bearing Debt (Billions of yen) Shareholders’ Equity (Billions of yen)
Consolidated Interest-bearing Debt and Equity Ratio
2008.3 2009.3 2010.3 2011.3 2012.3 2013.3 2014.3 2015.3 2016.3 2017.3 2018.312.012.013.413.4
Equity Ratio (%)
Kyuden Group Annual Report 2018 67
Financial Section
Management
DiscussionandAnalysis
Business Risks Factors
The following is a list of some significant risk factors that may have an effect on the operating results,
financial position, and other aspects of the Kyuden Group (consolidated).
Forward-looking statements in this report reflect judgment as of the end of the current consolidated fiscal year.
Changes in Systems
Affecting the
Electricity Business
Status of the
Environment
Surrounding
Nuclear Power
Fluctuations in
Electricity Sales
Volume
Fuel Price
Fluctuations
With regard to energy policy, revisions to the government’s Strategic Energy Plan are ongoing.
With regard to the matter of electricity system reforms, legal unbundling of the transmission/distribution sector
will start in April 2020.
Moreover, we are also considering specific priorities from the standpoint of addressing issues affecting the
public interest amid further intensification of competition and liberalization in the electricity market. We are
considering the creation of a base load and capacity market, as well as the expansion of the already established
non-fossil value trading market.
Changes such as these to the systems affecting the electricity business could have an impact on the Group’s
performance.
We believe that nuclear power generation is important in terms of energy security and global warming concerns.
We will comply with the New Nuclear Regulatory Requirements enforced by the government based on the lessons
learned from the accident at the Fukushima Daiichi Nuclear Power Station and continue our voluntary efforts to
improve safety and reliability. In conjunction with this, we are also vigorously implementing activities to allay the
concerns of local residents. However, the Group’s performance could be affected by any long-term suspension
of our nuclear power stations or increase in capital investments, depending on the new regulatory requirements
and the results of lawsuits regarding their operations.
Electricity sales volume in the electricity business fluctuates according to factors such as economic trends,
temperature changes, the spread of residential solar power systems, the development of energy conservation,
and competition in the electricity market. As a result, changes in these factors could have an impact on the
Group’s performance. Supply and demand operations could be affected by an increase in solar power systems.
Fuel expenses in the electricity business fluctuate as a result of trends in CIF prices and in the foreign exchange
markets because we procure sources of fuel for thermal power generation including liquefied natural gas (LNG)
and coal from overseas.
However, fluctuations in fuel prices are reflected in electric rates through the fuel cost adjustment system,
which helps to ease the impact of fuel price volatility on the Group’s performance.1234
Costs for the
Back-end of
Nuclear Operations
The decommissioning of nuclear facilities and the back-end of nuclear operations such as the storage,
reprocessing, and disposal of spent nuclear fuel require long-term projects that involve uncertainties. However,
risks to operators have been reduced to a certain extent due to the government’s institutional measures and other
factors. Since the costs for the back-end of nuclear operations and so forth vary in accordance with factors such
as future reviews of systems, changes to estimated future expenses, and the storage conditions of spent nuclear
fuel, they may affect the business performance of the Kyuden Group.5Cost of Measures
to Combat Global
Warming
In response to global warming, the Group aims for more efficient power generation that uses less carbon, and to
this end, the Group conducts a variety of measures, such as safe and stable nuclear power station operations,
active development and introduction of renewable energy, and maintenance and improvement of total thermal
efficiency for thermal power stations. Future changes in policies related to global warming could have an impact
on the Group’s performance.6Kyuden Group Annual Report 201868Deferred Tax
Assets
Interest Rate
Fluctuations
Leakage of
Information
Natural
Disasters
Compliance
The recoverability of deferred tax assets reported in the consolidated balance sheet is determined based on
estimated future taxable income. Therefore, if estimated future taxable income falls due to factors such as
changes in the business environment, we will have to break into deferred tax assets, and this may affect the
business performance of the Kyuden Group.
The Group’s balance of interest-bearing debt as of the end of March 2018 was 3,243円.8 billion, which accounts
for 69% of the Group’s total assets. Future changes in interest rates have the potential to affect the Group’s
financial condition.
However, 96% of outstanding interest-bearing debt comprises corporate bonds and long-term debt, and most
of this bears interest at fixed rates. The impact of fluctuating interest rates on the Group’s performance is
therefore viewed as limited.
Businesses
Other than
Electricity
The Group is enhancing its revenue basis by utilizing its management resources and steadily developing new
business areas beyond the electricity business. In business operations, we put emphasis on profitability and work
to improve efficiency while pursuing growth. If the planned profits cannot be achieved due to worsening business
conditions, the Group’s performance may be affected.789101112
The Group has established strict internal frameworks to manage in-house information and personal information
which Group companies hold, to ensure information security. Additionally, we have implemented thorough
information management by establishing internal policies and guidelines on handling information as well as
familiarizing employees with the handling procedures. However, in case of leaks of in-house information or
personal information caused by computer viruses or cyber attacks, the Group’s performance may be affected.
To ensure a stable supply of electricity to our customers, the Group implements inspections and maintenance of
facilities systematically to prevent any trouble from occurring. However, large-scale natural disasters, such as
typhoons, torrential rains, earthquakes and tsunami, as well as unexpected accidents and illicit acts have the
potential to affect the Group’s performance.
We are also developing a risk management system and are preparing for numerous risks that may have a
material impact on business operations. Failing to respond appropriately to a risk may adversely affect the
Group’s performance.
To be worthy of the trust of all its stakeholders, the Group conducts its business activities from the perspective
of its customers and the local people in the regions in which it operates by working together to fully instill an
awareness of compliance and complying with laws and regulations. However, if problems such as compliance
violations were to cause the Group’s social credibility to decline, this could have an impact on the Group’s
performance.
The Group will continue to work to build trust-based relationships with all its stakeholders.
Kyuden Group Annual Report 2018 69
Financial Section
Business
Risks
Factors
Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2018 2017 2018
ASSETS
PROPERTY (Note 3):
Plant and equipment 10,187,825円 10,072,426円 95,867,372ドル
Construction in progress 561,296 467,401 5,281,793
Total 10,749,121 10,539,827 101,149,165
Less-
Contributions in aid of construction 209,621 204,943 1,972,532
Accumulated depreciation 7,310,011 7,199,973 68,787,157
Total 7,519,632 7,404,916 70,759,689
Net property 3,229,489 3,134,911 30,389,475
NUCLEAR FUEL 271,742 252,138 2,557,092
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 15) 75,152 74,499 707,186
Investments in and advances to nonconsolidated subsidiaries and affiliated companies (Note 15) 117,251 112,671 1,103,337
Assets for retirement benefits (Note 7) 15,760 11,041 148,310
Deferred tax assets (Note 11) 151,970 129,562 1,430,039
Special account related to nuclear power decommissioning (Note 2.g) 19,226 20,048 180,924
Special account related to reprocessing of spent nuclear fuel (Note 2.n) 15,297 143,945
Other 86,717 83,037 816,010
Total investments and other assets 481,377 430,860 4,529,754
CURRENT ASSETS:
Cash and cash equivalents (Note 15) 365,875 419,831 3,442,885
Receivables (Note 15) 226,334 226,601 2,129,806
Allowance for doubtful accounts (853) (959) (8,034)
Inventories, principally fuel 70,039 64,344 659,073
Deferred tax assets (Note 11) 43,828 39,437 412,428
Prepaid expenses and other 22,325 20,375 210,078
Total current assets 727,549 769,630 6,846,238
TOTAL 4,710,158円 4,587,541円 44,322,560ドル
See notes to consolidated financial statements.
Consolidated Balance Sheet
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
March 31, 2018
Kyuden Group Annual Report 201870Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2018 2017 2018
LIABILITIES AND EQUITY
LONG-TERM LIABILITIES:
Long-term debt, less current portion (Notes 6 and 15) 2,709,117円 2,798,999円 25,492,779ドル
Liability for retirement benefits (Note 7) 95,605 99,526 899,645
Asset retirement obligations (Note 9) 221,372 217,278 2,083,115
Other 52,126 49,951 490,510
Total long-term liabilities 3,078,222 3,165,756 28,966,051
CURRENT LIABILITIES:
Current portion of long-term debt (Notes 6 and 15) 430,738 409,726 4,053,245
Short-term borrowings (Notes 10 and 15) 117,371 118,572 1,104,467
Notes and accounts payable (Notes 14 and 15) 156,831 122,903 1,475,786
Accrued income taxes (Note 15) 11,789 2,634 110,941
Other 252,550 184,799 2,376,501
Total current liabilities 969,282 838,636 9,120,942
RESERVE FOR FLUCTUATIONS IN WATER LEVEL 8,690 8,570 81,777
COMMITMENTS AND CONTINGENCIES (Note 17)
EQUITY (Note 12):
Common stock,
authorized, 1,000,000,000 shares; issued,
474,183,951 shares
Preferred stock,
authorized, 1,000 shares; issued,
1,000 shares
237,304 237,304 2,233,037
Capital surplus 120,825 120,844 1,136,968
Retained earnings 282,504 212,945 2,658,365
Treasury stock-at cost,
520,059 shares in 2018 and 522,731 shares in 2017 (668) (685) (6,292)
Accumulated other comprehensive income:
Unrealized gain on available-for-sale securities 4,369 3,597 41,120
Deferred loss on derivatives under hedge accounting (1,412) (1,389) (13,295)
Foreign currency translation adjustments (1,905) (3,590) (17,932)
Defined retirement benefit plans (11,876) (18,062) (111,761)
Total 629,140 550,965 5,920,210
Noncontrolling interests 24,822 23,611 233,579
Total equity 653,963 574,577 6,153,789
TOTAL 4,710,158円 4,587,541円 44,322,560ドル
See notes to consolidated financial statements.
Kyuden Group Annual Report 2018 71
Financial Section
Consolidated
Balance
Sheet
Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2018 2017 2018
OPERATING REVENUES:
Electric \1,804,418 \1,681,066 $16,979,569
Other 155,940 146,458 1,467,402
Total operating revenues 1,960,359 1,827,524 18,446,972
OPERATING EXPENSES (Note 13):
Electric 1,713,322 1,574,890 16,122,353
Other 143,913 129,993 1,354,224
Total operating expenses 1,857,235 1,704,883 17,476,577
OPERATING INCOME 103,123 122,640 970,394
OTHER EXPENSES (INCOME)
Interest charges 33,416 36,008 314,447
Loss on disaster (Note 8) 10,450
Other-net (3,970) (7,602) (37,366)
Total other expenses-net 29,445 38,856 277,081
INCOME BEFORE INCOME TAXES AND PROVISION FOR RESERVE FOR FLUCTUATIONS
IN WATER LEVEL 73,678 83,784 693,312
PROVISION FOR RESERVE FOR FLUCTUATIONS IN WATER LEVEL 119 943 1,127
INCOME BEFORE INCOME TAXES 73,558 82,840 692,185
INCOME TAXES (Note 11):
Current 15,170 5,745 142,752
Deferred (29,640) (3,515) (278,917)
Total income taxes (14,470) 2,230 (136,165)
NET INCOME 88,028 80,610 828,350
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1,371 1,339 12,901
NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT \ 86,657 \ 79,270 $815,448
Yen U.S. Dollars
PER SHARE OF COMMON STOCK (Note 2.s):
Basic net income 175円.56 159円.97 1ドル.65
Diluted net income 144.03 159.78 1.35
Cash dividends applicable to the year
Common share 20.00 15.00 0.18
Class A preferred share 3,500,000.00 3,500,000.00 32,934.97
See notes to consolidated financial statements.
Consolidated Statement of Income
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2018
Kyuden Group Annual Report 201872Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2018 2017 2018
NET INCOME 88,028円 80,610円 828,350ドル
OTHER COMPREHENSIVE INCOME (Note 18):
Unrealized gain on available-for-sale securities 462 585 4,355
Deferred loss on derivatives under hedge accounting (178) (158) (1,681)
Foreign currency translation adjustments 1,448 (731) 13,630
Defined retirement benefit plans 6,598 1,807 62,092
Share of other comprehensive income in
nonconsolidated subsidiaries and affiliated companies 231 (75) 2,181
Total other comprehensive income 8,562 1,427 80,577
COMPREHENSIVE INCOME 96,591円 82,037円 908,927ドル
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent 95,276円 80,560円 896,553ドル
Noncontrolling interests 1,314 1,477 12,374
See notes to consolidated financial statements.
Consolidated Statement of Comprehensive Income
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2018
Kyuden Group Annual Report 2018 73
Financial Section
Consolidated
StatementofComprehensive
Income
Consolidated
StatementofIncome
Thousands of Shares/Millions of Yen
Common Stock Preferred Stock Treasury Stock Accumulated Other Comprehensive Income
Shares Amount Shares Amount
Capital
Surplus
Retained
Earnings Shares Amount
Unrealized
Gain on
Available-for-
Sale Securities
Deferred Loss
on Derivatives
under Hedge
Accounting
Foreign
Currency
Translation
Adjustments
Defined
Retirement
Benefit Plans Total
Noncontrolling
interests
Total
Equity
BALANCE AT APRIL 1, 2016 474,183 237,304円 1 130,368円 133,675円 523 \(684) 2,839円 \(1,255) \(2,280) \(20,037) 479,929円 19,973円 499,903円
Net income attributable to owners
of the parent 79,270 79,270 79,270
Cash dividends,
5円 per common share (2,369) (2,369) (2,369)
Cash dividends, 7,153,763円
per class A preferred share (7,153) (7,153) (7,153)
Change in the parent’s ownership
interest due to transactions
with noncontrolling interests
0 0 0
Purchase of treasury stock 15 (3) (3) (3)
Disposal of treasury stock (0) (15) 2 2 2
Net change in the year 757 (133) (1,309) 1,974 1,289 3,638 4,927
BALANCE AT MARCH 31, 2017 474,183 237,304円 1 120,844円 212,945円 522 \(685) 3,597円 \(1,389) \(3,590) \(18,062) 550,965円 23,611円 574,577円
Net income attributable to owners
of the parent 86,657 86,657 86,657
Cash dividends,
25円 per common share (11,849) (11,849) (11,849)
Cash dividends, 5,250,000円 per
class A preferred share (5,250) (5,250) (5,250)
Change in the parent’s ownership
interest due to transactions
with noncontrolling interests
0 0 0
Purchase of treasury stock 18 (19) (19) (19)
Disposal of treasury stock (21) (20) 36 15 15
Changes by share exchange 2 0 2 2
Net change in the year 772 (23) 1,684 6,185 8,619 1,210 9,829
BALANCE AT MARCH 31, 2018 474,183 237,304円 1 120,825円 282,504円 520 \(668) 4,369円 \(1,412) \(1,905) \(11,876) 629,140円 24,822円 653,963円
Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Common
Stock
Preferred
Stock
Capital
Surplus
Retained
Earnings
Treasury
Stock
Unrealized
Gain on
Available-for-Sale
Securities
Deferred Loss
on Derivatives
under Hedge
Accounting
Foreign
Currency
Translation
Adjustments
Defined
Retirement
Benefit Plans Total
Noncontrolling
interests
Total
Equity
BALANCE AT MARCH 31, 2017 2,233,037ドル 1,137,148ドル 2,003,819ドル $(6,449) 33,852ドル $(13,075) $(33,783) $(169,968) 5,184,580ドル 222,186ドル 5,406,766ドル
Net income attributable
to owners of the parent 815,448 815,448 815,448
Cash dividends,
0ドル.23 per common share (111,499) (111,499) (111,499)
Cash dividends, 49,402ドル.46 per
class A preferred share (49,402) (49,402) (49,402)
Change in the parent’s ownership
interest due to transactions
with noncontrolling interests
0 0 0
Purchase of treasury stock (185) (185) (185)
Disposal of treasury stock (200) 341 141 141
Changes by share exchange 21 0 21 21
Net change in the year 7,267 (219) 15,850 58,206 81,105 11,392 92,498
BALANCE AT MARCH 31, 2018 2,233,037ドル 1,136,968ドル 2,658,365ドル $(6,292) 41,120ドル $(13,295) $(17,932) $(111,761) 5,920,210ドル 233,579ドル 6,153,789ドル
See notes to consolidated financial statements.
Consolidated Statement of Changes in Equity
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2018
Kyuden Group Annual Report 201874Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2018 2017 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes \ 73,558 \ 82,840 $692,185
Adjustments for:
Income taxes paid (5,932) (9,679) (55,828)
Depreciation and amortization 210,455 215,342 1,980,387
Decommissioning costs of nuclear power units 4,603 4,589 43,314
Amortization of special account related to nuclear power decommissioning 821 821 7,733
Reversal of reserve for reprocessing of irradiated nuclear fuel (5,271)
Loss on disposal of plant and equipment 7,999 7,261 75,279
Provision for reserve for fluctuation in water level 119 943 1,127
Payments of accrued contributions for reprocessing of irradiated nuclear fuel (36,123)
Changes in assets and liabilities:
Decrease in reserve funds for reprocessing of irradiated nuclear fuel 15,409
Increase in trade receivables (25,108) (20,521) (236,272)
Increase in inventories, principally fuel (5,693) (4,366) (53,578)
Increase (decrease) in trade payables 22,983 (27,701) 216,270
Increase in liability for retirement benefits 3,559 2,943 33,492
Other-net 68,629 (38,470) 645,804
Total adjustments 282,436 105,176 2,657,730
Net cash provided by operating activities 355,995 188,016 3,349,915
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures including nuclear fuel (352,763) (304,688) (3,319,506)
Proceeds from contribution in aid of construction 24,905 27,006 234,357
Payments for investments and advances (6,518) (5,542) (61,336)
Proceeds from sales of investment securities and collections of advances 12,340 5,645 116,123
Other-net 284 2,531 2,679
Net cash used in investing activities (321,751) (275,047) (3,027,682)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of bonds 189,396 299,365 1,782,215
Repayments of bonds (190,000) (130,000) (1,787,898)
Proceeds from long-term loans 150,414 161,130 1,415,398
Repayments of long-term loans (217,915) (241,235) (2,050,582)
Net (decrease) increase in short-term borrowings (1,200) 210 (11,300)
Cash dividends paid (17,065) (9,583) (160,590)
Other-net (3,962) (1,507) (37,285)
Net cash (used in) provided by financing activities (90,334) 78,380 (850,043)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS 2,134 (1,276) 20,086
NET DECREASE IN CASH AND CASH EQUIVALENTS (53,955) (9,926) (507,724)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 419,831 429,757 3,950,609
CASH AND CASH EQUIVALENTS AT END OF YEAR \365,875 \419,831 $3,442,885
See notes to consolidated financial statements.
Consolidated Statement of Cash Flows
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2018
Kyuden Group Annual Report 2018 75
Financial Section
Consolidated
StatementofCash
Flows
Consolidated
StatementofChangesinEquity
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
Kyushu Electric Power Company, Incorporated (the "Company")
has prepared the accompanying consolidated financial
statements in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act, the
Electricity Business Act and their related accounting regulations
and in accordance with accounting principles generally
accepted in Japan, which are different in certain respects as
to application and disclosure requirements of International
Financial Reporting Standards. Especially accounting
related to the nuclear power generation is regulated by the
above accounting regulations, which are dependent on a
governmental long-term nuclear energy policy.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the
consolidated financial statements issued domestically in order
to present them in a form which is more familiar to readers
outside Japan. In addition, certain reclassifications have been
made to the consolidated financial statements for the year
ended March 31, 2017, to conform to the classifications used
in the consolidated financial statements for the year ended
March 31, 2018.
The U.S. dollar amounts included herein are provided solely
for the convenience of readers outside Japan and are stated at
the rate of 106円.27 = U.S. 1,ドル the approximate exchange rate
prevailing on March 31, 2018. The translations should not be
construed as representations that the Japanese yen amounts
could be converted into U.S. dollars at that or any other rate.
Japanese yen figures less than a million yen are rounded
down to the nearest million yen, except for per share data. As
a result, the totals shown in the accompanying consolidated
financial statements (both in yen and U.S. dollars) do not
necessarily agree with the sum of the individual amounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidation and Application of the Equity Method—
The consolidated financial statements as of March 31,
2018, include the accounts of the Company and its 43
(41 for 2017) subsidiaries (together, the "Companies"). All
significant intercompany transactions and balances have been
eliminated in consolidation. Investments in 13 nonconsolidated
subsidiaries and 14 affiliated companies are accounted for by
the equity method.
The Company adopts the control and influence concepts.
Under these concepts, those companies in which the Company,
directly or indirectly, is able to exercise control over operations
are treated as subsidiaries and those companies over which
the Companies have the ability to exercise significant influence
are treated as affiliated companies.
Consolidation of the remaining subsidiaries and the
application of the equity method to the remaining affiliated
companies would not have a material effect on the
accompanying consolidated financial statements.
The fiscal year-end of 6 (5 for 2017) consolidated
subsidiaries and several nonconsolidated subsidiaries
and affiliated companies is December 31. The Company
consolidates such consolidated subsidiaries’ financial
statements and accounts for investments in such
nonconsolidated subsidiaries and affiliated companies by the
equity method using their financial results for the year ended
December 31. The effects of any significant transactions
during the period between the subsidiaries’ and affiliated
companies’ fiscal year-end and the Company’s fiscal year-end
are reflected in the consolidated financial statements.
b. Business Combination— Business combinations are
accounted for using the purchase method. Acquisition-
related costs, such as advisory fees or professional fees,
are accounted for as expenses in the periods in which the
costs are incurred. If the initial accounting for a business
combination is incomplete by the end of the reporting period
in which the business combination occurs, an acquirer shall
report in its financial statements provisional amounts for
the items for which the accounting is incomplete. During
the measurement period, which shall not exceed one year
from the acquisition, the acquirer shall retrospectively
adjust the provisional amounts recognized at the acquisition
date to reflect new information obtained about facts and
circumstances that existed as of the acquisition date and
that would have affected the measurement of the amounts
recognized as of that date. Such adjustments shall be
recognized as if the accounting for the business combination
had been completed at the acquisition date. A parent’s
ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The
carrying amount of noncontrolling interest is adjusted to reflect
the change in the parent’s ownership interest in its subsidiary
while the parent retains its controlling interest in its subsidiary.
Any difference between the fair value of the consideration
received or paid and the amount by which the noncontrolling
interest is adjusted is accounted for as capital surplus as long
as the parent retains control over its subsidiary.
c. Property and Depreciation— Property is stated at cost.
Contributions in aid of construction including those made by
customers are deducted from the cost of the related assets.
Depreciation is principally computed using the declining-
balance method based on the estimated useful lives of the
assets. Depreciation of easements related to transmission
lines is computed using the straight-line method based on the
estimated useful lives of the transmission lines.
Notes to Consolidated Financial Statements
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2018
Kyuden Group Annual Report 201876 Under the accounting regulations applicable to electric utility
providers, properties, which are required for decommissioning
of nuclear power units or which need maintenance and
management even after nuclear power units have been in the
process of decommissioning, are to be included in "Plant and
equipment."
d. Impairment of Fixed Assets—The Companies review their
fixed assets for impairment whenever events or changes in
circumstance indicate the carrying amount of an asset or
asset group may not be recoverable. An impairment loss
would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash
flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss
would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which
is the higher of the discounted cash flows from the continued
use and eventual disposition of the asset or the net selling
price at disposition.
e. Amortization of Nuclear Fuel— Amortization of nuclear fuel
is computed based on the proportion of current heat produced
to the estimated total potential heat production over the
estimated useful life of the nuclear fuel.
f. Investment Securities— Investment securities are classified
and accounted for, depending on management’s intent, as
follows:
(a) Held-to-maturity debt securities are stated at cost with
discounts or premiums amortized throughout the holding
periods; (b) Available-for-sale securities, which are not
classified as the aforementioned securities and investment
securities in nonconsolidated subsidiaries and affiliated
companies, are stated at market value; and nonmarketable
securities are stated at cost.
The Companies record unrealized gains or losses on
available-for-sale securities, net of deferred taxes, in equity
presented as "Unrealized gain on available-for-sale securities."
For other-than-temporary declines in fair value, investment
securities are written down to net realizable value by a charge
to income.
g. Special Account Related to Nuclear Power
Decommissioning— On March 13, 2015, the Japanese
government, i.e. , the Ministry of Economy, Trade and Industry
("METI"), revised the accounting regulation applicable to
electric utility providers. Under the revised accounting
regulation effective on March 13, 2015, in case the Company
decides to decommission nuclear power units due to factors
such as a change of the government’s energy policy, the
Company is permitted to transfer the carrying amounts related
to nuclear power units and costs related to nuclear power
decommissioning to "special account related to nuclear
power decommissioning" when the Company decides to
decommission nuclear power units and applies to the Minister
of METI for adopting the above special account, because they
are expected to be collected through regulated electricity fees.
The special account is amortized in proportion to the amounts
of future regulated electricity fees collected, after approval of
the Minister of METI.
h. Cash Equivalents— Cash equivalents are short-term
investments that are readily convertible into cash and that
are exposed to insignificant risk of changes in value. Cash
equivalents include time deposits and mutual fund investments
in bonds that represent short-term investments, all of which
mature or become due within three months of the date of
acquisition.
i. Inventories— Inventories are stated at the lower of cost,
principally determined by the average method, or net selling
value.
j. Foreign Currency Transactions— Receivables and payables
denominated in foreign currencies are translated into Japanese
yen at the rates in effect as of each balance sheet date.
k. Foreign Currency Financial Statements—The balance
sheet accounts of the consolidated foreign subsidiaries, and
nonconsolidated foreign subsidiaries and foreign affiliated
companies which are accounted for by the equity method, are
translated into Japanese yen at the current exchange rate as
of the balance sheet date except for equity, which is translated
at the historical rate. Differences arising from such translation
are shown as "Foreign currency translation adjustments"
under accumulated other comprehensive income in a separate
component of equity.
Revenue and expense accounts of consolidated foreign
subsidiaries are translated into yen at the average exchange
rate.
l. Derivatives and Hedging Activities— Derivative financial
instruments are classified and accounted for as follows: (a)
all derivatives are recognized as either assets or liabilities
and measured at fair value, and gains or losses on derivative
transactions are recognized in the consolidated statement of
income and (b) for such derivatives used for hedging purposes,
if derivatives qualify for hedge accounting because of high
correlation and effectiveness between the hedging instruments
and the hedged items, gains or losses on derivatives are
deferred until maturity of the hedged transactions.
Kyuden Group Annual Report 2018 77
Financial Section
NotestoConsolidated
Financial
Statements
 Liabilities denominated in foreign currencies for which
foreign exchange forward contracts are used to hedge the
foreign currency fluctuations are translated at the contracted
rate if the forward contracts qualify for hedge accounting.
Forward contracts applied for committed transactions are
measured at fair value and the unrealized gains/losses are
deferred until the underlying transactions are completed.
The interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not remeasured at
market value, but the differential paid or received under the
swap agreements are recognized and included in interest
charges.
m. Severance Payments and Pension Plans— The
Companies have unfunded retirement plans for most of their
employees and the Company and most of the consolidated
subsidiaries also have contributory funded defined benefit
pension plans covering substantially all of their employees.
Under ASBJ Statement No. 26, "Accounting Standard for
Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on
Accounting Standard for Retirement Benefits", the Companies
accounted for the liability for retirement benefits based on the
projected benefit obligations and plan assets at the balance
sheet date.
The projected benefit obligations are attributed to periods
on a benefit formula basis. Actuarial gains and losses and past
service costs that are yet to be recognized in profit or loss are
recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects and are recognized in
profit or loss over 5 years no longer than the expected average
remaining service period of the employees.
n. Accounting for Contributions Concerning Reprocessing of
Spent Nuclear Fuel and Concerning Processing of Nuclear
Fuel Material Separated in Reprocessing— Prior to October
1, 2016, reserve for reprocessing of irradiated nuclear fuel
was provided for reprocessing costs of irradiated nuclear
fuel. The annual provision was calculated in accordance with
the accounting regulations set by the Japanese Government
applicable to electric utility providers in Japan.
As of April 1, 2005, unrecognized prior costs of 130,495円
million, which had not been recognized in the past as a
liability, were incurred because new accounting regulations
to estimate the reprocessing costs for irradiated nuclear
fuel were applicable on or after April 1, 2005. These costs
were being amortized on a straight-line basis over 15 years.
However the Company recalculated the estimate in accordance
with a specific law. As a result, the unrecognized prior costs
as of April 1, 2008 were changed from 104,397円 million to
90,977円 million, and these costs are amortized over 12 years,
beginning on April 1, 2008. The balance of unrecognized
past costs as of March 31, 2016, was 30,325円 million. The
Company was permitted to recover these reprocessing costs
by including them in the admitted cost elements for electric
rates.
The Company was obliged to reserve funds which were
owned by the Company and managed by an independent
fund managing body set up based on the Spent Nuclear Fuel
Reprocessing Implementation Act. The reserve funds belonged
to the nuclear operator and were presented as "Reserve funds
for reprocessing of irradiated nuclear fuel" in the consolidated
balance sheet.
The Act for Partial Revision of the Spent Nuclear Fuel
Reprocessing Implementation Act (the "Act") was enforced
on October 1, 2016. The Act aims to secure the funds stably
for reprocessing costs without being influenced by the
financial position of nuclear operators under the competitive
environment on April 1, 2016, when full liberalization of
participation in retail electricity sales began.
The Nuclear Reprocessing Organization of Japan (the
"NuRO") was established on October 3, 2016 under the Act.
Nuclear operators are obliged to contribute the funds for
reprocessing nuclear fuel to the NuRO every year. Nuclear
operators fulfill the obligation to bear the reprocessing costs
when they pay contributions to the NuRO, and the funds
belong to the NuRO. The Reserve funds for reprocessing of
irradiated nuclear fuel which were funded by nuclear operators
until September 30, 2016 were transferred to the NuRO.
Contributions to NuRo consists of two parts. One is
concerning reprocessing of spent nuclear fuel (part "A"),
the other is concerning processing of nuclear fuel material
separated in reprocessing (part "B").
To reflect such revision of the funding system for
reprocessing costs of nuclear fuel, accounting regulations
applicable to electric providers were revised, and the
revised regulations became effective on October 1, 2016.
In accordance with the revised regulations, the Company
records the part A of contributions to the NuRO, the amount of
which is calculated based on quantities of irradiated nuclear
fuel resulting from operation of nuclear power stations, as
operating expenses. On the other hand, the Company records
part B of the contributions to the NuRO as assets and presents
them as "Special account related to reprocessing of spent
nuclear fuel" in the consolidated balance sheet.
The Company is required to contribute equally divided
amounts (\ 7,581 million ($ 71,341thousand)) of unrecognized
past costs due to the revision of accounting regulations
effective on April 1, 2005, until 2020 and record them as
operating expenses.
o. Asset Retirement Obligations— Under ASBJ Statement No.
18, "Accounting Standard for Asset Retirement Obligations,"
Notes to Consolidated Financial Statements
Kyuden Group Annual Report 201878an asset retirement obligation is defined as a legal obligation
imposed either by law or contract that results from the
acquisition, construction, development and the normal
operation of a tangible fixed asset and is associated with the
retirement of such tangible fixed asset. The asset retirement
obligation is recognized as the sum of the discounted cash
flows required for the future asset retirement. The Company
recognizes the asset retirement obligation as the sum of the
future decommissioning costs of nuclear power unit imposed
by the "Law on the Regulation of Nuclear Source Material,
Nuclear Fuel Material and Reactors," discounted at 2.3%.
The asset retirement costs are allocated to expense
through depreciation based on the straight-line method over
a period totaling the remaining useful life and expected safe
storage period in accordance with the accounting regulations
applicable to electric utility providers.
p. Income Taxes— The provision for income taxes is
computed based on the pretax income included in the
consolidated statement of income. The Company and its wholly
owned domestic subsidiaries adopted consolidated taxation
system.
The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferred
taxes are measured by applying currently enacted tax laws to
the temporary differences.
q. Reserve for Fluctuations in Water Level— This reserve is
provided to stabilize the Company’s income level based on the
Electricity Business Act and related accounting regulations.
This reserve is recorded when the volume of water for
generating hydroelectric power is abundant and available for
future power generation, and reversed in years when there
is an insufficient volume of water. Also, this reserve must be
shown as a liability under the act and regulations.
r. Treasury Stock— The accounting standard for treasury
stock requires that where an affiliated company holds a
parent company’s stock, a portion which is equivalent to the
parent company’s interest in such stock should be presented
as treasury stock as a separate component of equity and the
carrying value of the investment in the affiliated company
should be reduced by the same amount.
s. Net Income and Cash Dividends per Share— Basic
earnings per share ("EPS") are computed by dividing net
income available to common shareholders by the weighted-
average number of common shares outstanding during the
year, and diluted EPS reflects the potential dilution that could
occur if securities were exercised or converted into common
stock.
Diluted EPS at year ended reflects the potential dilution
that could occur if securities were exercised or converted into
common stock. Diluted EPS of common stock assumes full
conversion of the outstanding convertible bonds at the time
of issuance with an applicable adjustment for related interest
expense, net of tax, and full exercise of outstanding warrants.
Cash dividends per share represent actual amounts
applicable to earnings of the respective years.
t. Research and Development Costs— Research and
development costs are charged to income as incurred.
u. New Accounting Pronouncements— On March 30,
2018, the ASBJ issued ASBJ Statement No. 29, "Accounting
Standard for Revenue Recognition," and ASBJ Guidance No.
30,"Implementation Guidance on Accounting Standard for
Revenue Recognition. " The core principle of the standard and
guidance is that an entity should recognize revenue to depict
the transfer of promised goods or services to customers in
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
An entity should recognize revenue in accordance with that
core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: 
Allocate the transaction price to the performance
obligations in the contract
Step 5: 
Recognize revenue when (or as) the entity satisfies
a performance obligation
The accounting standard and guidance are effective for
annual periods beginning on or after April 1, 2021. Earlier
application is permitted for annual periods beginning on or
after April 1, 2018.
The companies have not decided the date of application and
the impact of adoption has not been evaluated at this time.
Kyuden Group Annual Report 2018 79
Financial Section
NotestoConsolidated
Financial
Statements
3. PROPERTY
The breakdown of property at March 31, 2018 and 2017, was as follows:
Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2018 2017 2018
Costs:
Electric power production facilities:
Hydroelectric power \ 819,664 \ 811,253 $ 7,713,040
Thermal power 1,534,601 1,545,885 14,440,585
Nuclear power 1,729,872 1,718,756 16,278,087
Internal-combustion engine power 130,382 130,128 1,226,900
Renewable power 115,622 113,147 1,088,006
Total 4,330,143 4,319,171 40,746,621
Transmission facilities 1,860,214 1,850,932 17,504,603
Transformation facilities 1,039,480 1,035,283 9,781,505
Distribution facilities 1,450,114 1,427,445 13,645,563
General facilities 400,008 400,019 3,764,075
Other electricity-related facilities 6,646 6,646 62,539
Other plant and equipment 1,101,218 1,032,927 10,362,463
Construction in progress 561,296 467,401 5,281,793
Total 10,749,121 10,539,827 101,149,165
Less-
Contributions in aid of construction 209,621 204,943 1,972,532
Accumulated depreciation 7,310,011 7,199,973 68,787,157
Carrying amount \3,229,489 \3,134,911 $ 30,389,475
4. INVESTMENT SECURITIES
The costs and aggregate fair values of investment securities at March 31, 2018 and 2017, were as follows:
Millions of Yen
March 31, 2018 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities \3,265 \4,237 \11 \7,491
Debt securities 260 30 230
Other securities 369 85 4 451
Held-to-maturity 251 0 12 238
Millions of Yen
March 31, 2017 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities \3,242 \3,557 \75 \6,723
Debt securities 280 20 260
Other securities 368 56 0 424
Held-to-maturity 355 1 12 345
Notes to Consolidated Financial Statements
Kyuden Group Annual Report 201880Thousands of U.S. Dollars
March 31, 2018 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities $30,731 $39,873 $111 $70,493
Debt securities 2,451 285 2,165
Other securities 3,480 808 40 4,248
Held-to-maturity 2,361 3 118 2,247
6. LONG-TERM DEBT
Long-term debt at March 31, 2018 and 2017, consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Yen bonds, 0.14% to 2.85%, due serially to 2038 \ 1,144,296 \ 1,144,293 $ 10,767,825
Yen-denominated zero coupon convertible bonds due 2020 and 2022 150,000 150,000 1,411,499
Loans from the Development Bank of Japan Inc.,0.37% to 3.15%,
due serially to 2038 298,471 311,023 2,808,613
Loans, principally from banks and insurance companies, 0.126% to 5.016%,
due serially to 2038
Collateralized 55,972 56,127 526,701
Unsecured 1,477,701 1,533,934 13,905,165
Obligations under finance leases 13,413 13,348 126,218
Total 3,139,856 3,208,726 29,546,024
Less current portion 430,738 409,726 4,053,245
Long-term debt, less current portion \ 2,709,117 \ 2,798,999 $ 25,492,779
The annual maturities of long-term debt outstanding at March 31, 2018, were as follows:
Year ending March 31 Millions of Yen
Thousands of
U.S. Dollars
2019 \ 430,738 $ 4,053,245
2020 442,364 4,162,646
2021 406,492 3,825,087
2022 352,042 3,312,721
2023 301,049 2,832,874
Thereafter 1,207,168 11,359,449
Total \ 3,139,856 $29,546,024
The offer price of Yen-denominated zero coupon convertible bonds is 102円.0, and Issue price 100円.0 has been paid to the Company.
5. PLEDGED ASSETS
All of the Company’s assets amounting to 4,230,935円 million (39,813,070ドル
thousand) are subject to certain statutory preferential rights established to
secure bonds and loans borrowed from the Development Bank of Japan Inc.
Certain assets of the consolidated subsidiaries, amounting to 53,415円 million
(502,642ドル thousand), are pledged as collateral for a portion of their long-term
debt at March 31, 2018.
Investments in affiliated companies held by consolidated subsidiaries,
amounting to 8,995円 million (84,644ドル thousand), are pledged as collateral
for bank loans and derivatives, mainly interest rate swaps of the affiliated
companies and the subsidiary of the affiliated companies at March 31, 2018.
Kyuden Group Annual Report 2018 81
Financial Section
NotestoConsolidated
Financial
Statements
The contents regarding Yen-denominated zero coupon convertible bonds at March 31, 2018, were as follows:
Stock name
Yen-denominated zero coupon convertible bonds
due 2020
Yen-denominated zero coupon convertible bonds
due 2022
Stock will be converted Common stock Common stock
Issue price of stock acquisition rights (yen) Gratis free Gratis free
Issue price of stock 1,428円.2 (13ドル.43) 1,465円.1 (13ドル.78)
Amount of zero coupon convertible bonds 75,000円 million (705,749ドル thousand) 75,000円 million (705,749ドル thousand)
Amount of stock price issued
by exercising stock acquisition rights − −
Application rate of stock acquisition rights (%) 100 100
Period of exercise stock acquisition rights From April 13, 2017 to March 17, 2020 From April 13, 2017 to March 17, 2022
In the case of exercising stock acquisition rights, Yen-denominated zero coupon convertible bonds shall be deemed to be acquired by the Company as a capital
contribution in kind by such bond holder at the price equal to the principal amount of the bond.
The Company resolved at the general shareholder’s meeting held on June 27, 2018, to pay a 10円 cash dividend per share, and the accumulated cash dividend
for the year ended March 31, 2018 is 20円 per share. As a result, under the constriction rules of convertible bonds, the issue price of stock of Yen-denominated zero
coupon convertible bonds due 2020 has been changed from 1,428円.2 to 1,416円.2, and the issue price of stock of Yen-denominated zero coupon convertible bonds
due 2022 has been changed from 1,465円.1 to 1,452円.8, with an effective date on April 1, 2018.
Defined retirement benefit plans (excluding plans applying the simplified method)
(1) The changes in defined benefit obligation for the years ended March 31, 2018 and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Balance at beginning of year \421,572 \422,888 $3,966,992
Current service cost 13,657 13,344 128,518
Interest cost 3,401 3,467 32,005
Actuarial (gains) losses (164) 5,038 (1,546)
Benefits paid (22,693) (23,166) (213,547)
Prior service cost (77) (727)
Other (0) 0 (1)
Balance at end of year \415,695 \421,572 $3,911,693
7. SEVERANCE PAYMENTS AND PENSION PLANS
Employees terminating their employment with the Companies, either
voluntarily or upon reaching mandatory retirement age, are entitled, under
most circumstances, to severance payments based on credits earned in
each year of service, length of service and certain other factors. As for the
Company, if the termination is made voluntarily at one of a number of specified
ages, the employee is entitled to certain additional payments.
Additionally, the Company and most of the consolidated subsidiaries
have contributory funded defined benefit pension plans covering substantially
all of their employees. In general, eligible employees retiring at the mandatory
retirement age receive pension payments for the fixed term selected by
them. As for the Company, eligible employees retiring after at least 20 years
of service but before the mandatory retirement age, receive a lump-sum
payment upon retirement and an annuity. The Company has established
retirement benefit trusts for the Company’s defined retirement benefit plan.
Certain consolidated subsidiaries calculate liability for retirement
benefits and periodic benefit costs related to defined retirement benefit plans
by the simplified method. Under the simplified method, projected benefit
obligations are principally stated at the necessary payment amounts for
voluntary retirement as of the end of the fiscal year. The simplified method
for accounting for defined retirement benefit plans is allowed for a specified
small-sized entity under accounting principles generally accepted in Japan.
Notes to Consolidated Financial Statements
Kyuden Group Annual Report 201882(2) The changes in plan assets for the years ended March 31, 2018 and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Balance at beginning of year \336,106 \333,361 $3,162,763
Expected return on plan assets 7,034 8,255 66,194
Actuarial gains 6,149 5,424 57,862
Contributions from the employer 6,825 6,935 64,229
Benefits paid (17,365) (17,870) (163,410)
Balance at end of year \338,750 \336,106 $3,187,639
(3) Reconciliation between the liability and asset recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets as of
March 31, 2018 and 2017, was as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Funded defined benefit obligation \409,190 \415,260 $3,850,475
Plan assets (338,750) (336,106) (3,187,639)
70,439 79,153 662,835
Unfunded defined benefit obligation 6,505 6,311 61,218
Net liability for defined benefit obligation \76,945 \85,465 $724,053
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Liability for retirement benefits \92,010 \95,940 $865,816
Assets for retirement benefits (15,065) (10,475) (141,762)
Net liability for defined benefit obligation \76,945 \85,465 $724,053
(4) The components of net periodic benefit costs for the years ended March 31, 2018 and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Current service cost \13,657 \13,344 $128,518
Interest cost 3,401 3,467 32,005
Expected return on plan assets (7,034) (8,255) (66,194)
Recognized actuarial losses 4,804 4,557 45,210
Amortization of prior service cost (1,980) (2,409) (18,636)
Others 160 95 1,514
Net periodic benefit costs \13,009 \10,800 $122,416
(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years ended March 31, 2018
and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Prior service cost \(1,903) \(2,409) $(17,909)
Actuarial gains 11,118 4,944 104,628
Total \9,215 \2,535 $86,719
Kyuden Group Annual Report 2018 83
Financial Section
NotestoConsolidated
Financial
Statements
(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March 31, 2018
and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Unrecognized prior service cost \(1,108) \794 $(10,428)
Unrecognized actuarial losses (13,208) (24,327) (124,294)
Total \(14,317) \(23,532) $(134,722) (7) Plan assets as of March 31, 2018 and 2017
a. Components of plan assets
Plan assets consisted of the following:
2018 2017
Debt investments 42% 44%
Equity investments 27 26
General account of life insurance companies 18 18
Others 13 12
Total 100% 100%
b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering distribution of plan assets currently and in the future and the long-term rates of return which
are expected currently and in the future from the various components of the plan assets.
(8) Assumptions used for the years ended March 31, 2018 and 2017, were set forth as follows:
2018 2017
Discount rate Mainly 1.0% Mainly 1.0%
Expected rate of return on plan assets Mainly 2.0% Mainly 2.5%
Defined retirement benefit plans applying the simplified method
(1) The changes in the net carrying amount of liabilities and assets for the years ended March 31, 2018 and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Balance at beginning of year \3,019 \3,029 $28,416
Periodic benefit costs 443 500 4,176
Benefits paid (246) (186) (2,318)
Contributions from the employer (318) (323) (2,992)
Balance at end of year \2,899 \3,019 $27,281
Notes to Consolidated Financial Statements
Kyuden Group Annual Report 201884(2) Reconciliation between the liability and asset recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets as of
March 31, 2018 and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Funded defined benefit obligation \5,894 \5,882 $55,464
Plan assets (5,446) (5,261) (51,252)
447 621 4,211
Unfunded defined benefit obligation 2,451 2,398 23,070
Net carrying amount of liabilities and assets 2,889 3,019 27,281
Liabilities for retirement benefits 3,595 3,585 33,829
Assets for retirement benefits (695) (565) (6,547)
Net carrying amount of liabilities and assets \2,899 \3,019 $27,281
(3) Periodic benefit costs
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Periodic benefit costs calculated under the simplified method \443 \500 $4,176
Defined contribution plans
The required contribution to defined contribution plans by the Company and its certain consolidated subsidiaries for the years ended March 31, 2018 and 2017 was
2,200円 million (20,709ドル thousand) and 2,187円 million, respectively.
8. LOSS ON DISASTER
Loss on disaster represents the amount of assets impaired and post-disaster recovery expenses attributable to the 2016 Kumamoto Earthquake. It consists of loss
on assets impaired of 297円 million, repair expenses of facilities of 7,165円 million and other expenses related to the earthquake of 2,987円 million.
9. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2018 and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Balance at beginning of year \217,278 \213,006 $2,044,591
Net change in the year 4,093 4,272 38,523
Balance at end of year \221,372 \217,278 $2,083,115
10. SHORT-TERM BORROWINGS
Short-term borrowings were generally represented by bank loans, bearing interest at rates ranging from 0.15% to 0.46% and from 0.13% to 1.88% for the years
ended March 31, 2018 and 2017, respectively.
Kyuden Group Annual Report 2018 85
Financial Section
NotestoConsolidated
Financial
Statements
Notes to Consolidated Financial Statements
11. INCOME TAXES
The Companies are subject to national and local income taxes. The aggregate normal statutory tax rates for the Company approximated 28.1% for the
years ended March 31, 2018 and 2017.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31,
2018 and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Deferred Tax Assets:
Tax loss carryforwards 174,745円 185,668円 1,644,357ドル
Depreciation 41,867 38,048 393,976
Liability for retirement benefits 36,251 37,407 341,123
Asset retirement obligations 19,696 19,508 185,346
Other 79,098 74,618 744,320
Less valuation allowance (132,038) (165,317) (1,242,477)
Deferred tax assets 219,622 189,934 2,066,647
Deferred Tax Liabilities:
Gain on contributions of securities to retirement benefit trust 5,375 5,375 50,580
Assets for retirement benefits 4,418 3,109 41,578
Accrued income of foreign subsidiary 3,246 1,697 30,553
Amortization in foreign subsidiary 2,493 2,270 23,465
Unrealized gain on available-for-sale securities 1,628 1,323 15,320
Capitalized assets retirement costs 1,485 1,457 13,982
Other 6,857 6,054 64,530
Deferred tax liabilities 25,506 21,288 240,011
Net deferred tax assets 194,116円 168,645円 1,826,636ドル
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements
of income for the years ended March 31, 2018 and 2017, was as follows:
2018 2017
Normal effective statutory tax rate 28.1% 28.1%
Valuation allowance (45.4) (21.8)
Equity in earnings of nonconsolidated subsidiaries and affiliated companies (2.8) (2.4)
Other - net 0.4 (1.2)
Actual effective tax rate (19.7)% 2.7%
At March 31, 2018, the Company and certain subsidiaries have tax loss carryforwards aggregating 624,889円 million (5,880,205ドル thousand), most of
which are available to be offset against taxable income of the Company and these subsidiaries and will expire in 9 years. At March 31, 2018, the tax
loss carryforwards for the Company amounting to 87,830円 million (826,481ドル thousand), 114,354円 million (1,076,074ドル thousand), 310,653円 million
(2,923,243ドル thousand), and 82,933円 million (780,401ドル thousand) will expire in the years ending March 31, 2024, 2023, 2022, and 2021, respectively.
Kyuden Group Annual Report 20188612. EQUITY
Japanese companies are subject to the Companies Act of Japan (the
"Companies Act"). The significant provisions in the Companies Act that
affect financial and accounting matters are summarized below:
(a) Dividends
Under the Companies Act, companies can pay dividends at any
time during the fiscal year in addition to the year-end dividend
upon resolution at the shareholders’ meeting. For companies that
meet certain criteria, the Board of Directors may declare dividends
(except for dividends-in-kind) at any time during the fiscal year
if the Company has prescribed so in its articles of incorporation.
However, the Company cannot do so because it does not meet all
the criteria.
The Companies Act permits companies to distribute dividends-in-
kind (noncash assets) to shareholders subject to a certain limitation
and additional requirements.
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation
of the Company so stipulate. The Companies Act provides certain
limitations on the amounts available for dividends or the purchase
of treasury stock. The limitation is defined as the amount available
for distribution to the shareholders, but the amount of net assets
after dividends must be maintained at no less than 3円 million.
(b) 
Increases/decreases and transfer of common stock, reserve and
surplus
The Companies Act requires that an amount equal to 10% of
dividends must be appropriated as a legal reserve (a component of
retained earnings) or as additional paid-in capital (a component of
capital surplus) depending on the equity account that was charged
upon the payment of such dividends until the total of aggregate
amount of legal reserve and additional paid-in capital equals 25%
of the common stock. Under the Companies Act, the total amount
of additional paid-in capital and legal reserve may be reversed
without limitation. The Companies Act also provides that common
stock, legal reserve, additional paid-in capital, other capital surplus
and retained earnings can be transferred among the accounts
under certain conditions upon resolution of the shareholders.
(c) 
Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Board
of Directors. The amount of treasury stock purchased cannot
exceed the amount available for distribution to the shareholders,
which is determined by specific formula. Under the Companies Act,
stock acquisition rights are presented as a separate component
of equity. The Companies Act also provides that companies can
purchase both treasury stock acquisition rights and treasury stock.
Such treasury stock acquisition rights are presented as a separate
component of equity or deducted directly from stock acquisition
rights.
Issuance of Preferred Stock
The Company has issued 1,000 shares of Class A Preferred Stock for
100,000円 million by way of third-party allotment to the Development
Bank of Japan Inc.
(1) Way of offering
Third-party allotment to the Development Bank of Japan Inc.
(2) Class and number of new shares to be issued
1,000 shares of Class A Preferred Stock
(3) Issue price
100円 million per share
(4) Total amount of the issue price
100,000円 million
(5) 
Amount of preferred stock and additional paid-in capital to be
increased
Amount of preferred stock to be increased: 50,000円 million
(50円 million per share)
Amount of additional paid-in capital to be increased: 50,000円 million
(50円 million per share)
(6) Issue date
August 1, 2014
(7) Uses of proceeds
The proceeds from issuance of the Preferred Stock are planned
to be used entirely for construction to enhance the safety of the
Company’s nuclear power plants to meet new regulations for safety
of nuclear power plants.
(8) Characteristics of the Preferred Stock
The Preferred Stock provides no provision for acquisition or right
to request acquisition using common stock as consideration that
will not dilute common stock. These stocks also do not provide any
voting rights at the general shareholders meeting.
The Preferred Stock has a provision for acquisition allowing the
Company to acquire this Preferred Stock in exchange for cash the
day after the payment date or thereafter. Furthermore, the Preferred
Stock will provide the Preferred Shareholders with the right to
request acquisition of this Preferred Stock in exchange for cash of
the Company the day after the payment date or thereafter if the
Preferred Shareholders follow the prescribed procedures, but the
exercise of this right by the Preferred Shareholders is limited by the
agreement to underwriting of the Preferred Stock.
Annual preferred dividend for the Preferred Stock is 3,500円
thousand per share.
Kyuden Group Annual Report 2018 87
Financial Section
NotestoConsolidated
Financial
Statements
Notes to Consolidated Financial Statements
13. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were 5,651円 million (53,183ドル thousand) and 5,817円 million for the years ended March 31, 2018
and 2017, respectively.
14. RELATED PARTY DISCLOSURES
Significant transactions of the Company with an affiliated company for the years ended March 31, 2018 and 2017 were as follows: Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
KYUDENKO CORPORATION
Transactions:
Purchase of construction works on distribution facilities and other 38,751円 36,526円 364,647ドル
Balances at year end:
Payables for construction works 5,016 4,531 47,204
15. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Items Pertaining to Financial Instruments
(a) 
The Companies’ policy for financial instruments
The Companies use mainly long-term debt, including bonds
and loans, to raise funds required for investments in electric
utility plant and equipment and repayments of bonds and loans.
Cash surpluses, if any, are invested in low-risk financial assets.
Derivatives are used not for speculative purposes, but to avoid
financial risks as described in (b) below.
(b) 
Nature and extent of risks arising from financial instruments and
risk control system
Investment securities, mainly held-to-maturity debt securities and
equity securities issued by companies related through business,
and investments in and advances to nonconsolidated subsidiaries
and affiliated companies which have a quoted market price in an
active market are exposed to the risk of market price fluctuations.
Such market risk is managed by monitoring market values and
financial position of issuers on a regular basis. Investment securities
and investments in and advances to nonconsolidated subsidiaries
and affiliated companies which do not have a quoted market price
in an active market are managed by monitoring financial position
of issuers on a regular basis. In addition, the Company requires
its nonconsolidated subsidiaries and affiliated companies to
submit business plans and performance reports, and to consult in
advance on any items that could have a significant impact on the
Companies’ business activities.
Receivables are exposed to customer credit risk. Payment terms
are set forth in specific retail electricity power supply provisions and
so on. The Companies manage their credit risk from receivables
by monitoring payment terms and balances of each customer and
identifying and reducing the default risk of customers at an early
stage.
Bonds and loans are mainly used to raise funds for investments
in plant and equipment. Foreign currency denominated debt is
exposed to the market risk of fluctuations in foreign exchange, Such
risk is mitigated by using currency swaps. Financial liabilities with
variable interest rate is exposed to interest rate fluctuation risk,
Such risk is mitigated by using interest rate swaps as necessary.
Payment terms of notes and accounts payable are less than one
year. Accounts payable to purchase fuel in foreign currencies is
exposed to the market risk of fluctuations in foreign exchange and
fuel price, Such risks are mitigated by using currency swaps and
energy swaps as necessary.
Liquidity risk comprises the risk that the Companies cannot
meet their contractual obligations in full on maturity dates. The
Companies manage their liquidity risk by holding adequate volumes
of liquid assets based on monthly financial planning and diversifying
sources of their financing.
Kyuden Group Annual Report 201888Fair values of financial instruments
The carrying amounts and aggregate fair values of financial instruments at March 31, 2018 and 2017 were as follows:
Millions of Yen
March 31, 2018 Carrying Amount Fair Value
Unrecognized
Gain (Loss)
Investment securities:
Held-to-maturity debt securities \251 \ 238 \ (12)
Available-for-sale securities 8,173 8,173
Investments in and advances to nonconsolidated subsidiaries and affiliated companies 28,400 84,205 55,804
Cash and cash equivalents 365,875 365,875
Receivables 226,334 226,334
Total \629,034 \684,826 \55,792
Long-term debt:
Bonds \1,294,296 \1,323,792 \29,495
Loans 1,832,145 1,884,864 52,718
Short-term borrowings 117,371 117,371
Notes and accounts payable 156,831 156,831
Accrued income taxes 11,789 11,789
Total \3,412,436 \3,494,650 \82,213
Derivatives \ (2,105) \ (2,105)
Millions of Yen
March 31, 2017 Carrying Amount Fair Value
Unrecognized
Gain (Loss)
Investment securities:
Held-to-maturity debt securities \ 355 \ 345 \ (10)
Available-for-sale securities 7,408 7,408
Investments in and advances to nonconsolidated subsidiaries and affiliated companies 24,288 48,864 24,576
Cash and cash equivalents 419,831 419,831
Receivables 226,601 226,601
Total \678,485 \703,051 \24,566
Long-term debt:
Bonds \1,294,293 \1,330,404 \36,111
Loans 1,901,085 1,961,217 60,132
Short-term borrowings 118,572 118,572
Notes and accounts payable 122,903 122,903
Accrued income taxes 2,634 2,634
Total \3,439,488 \3,535,732 \96,243
Derivatives \ (2,023) \ (2,023)
Kyuden Group Annual Report 2018 89
Financial Section
NotestoConsolidated
Financial
Statements
Thousands of U.S. Dollars
March 31, 2018 Carrying Amount Fair Value
Unrecognized
Gain (Loss)
Investment securities:
Held-to-maturity debt securities $ 2,361 $ 2,247 $(114)
Available-for-sale securities 76,908 76,908
Investments in and advances to nonconsolidated subsidiaries and affiliated companies 267,249 792,373 525,123
Cash and cash equivalents 3,442,885 3,442,885
Receivables 2,129,806 2,129,806
Total $ 5,919,207 $ 6,444,216 $525,008
Long-term debt:
Bonds $12,179,324 $12,456,875 $277,550
Loans 17,240,480 17,736,562 496,081
Short-term borrowings 1,104,467 1,104,467
Notes and accounts payable 1,475,786 1,475,786
Accrued income taxes 110,941 110,941
Total $32,111,001 $32,884,633 $773,631
Derivatives $ (19,809) $ (19,809)
The securities whose fair value cannot be reliably determined are
excluded from investment securities and investments in and advances
to nonconsolidated subsidiaries and affiliated companies (see (b) below).
Advances are excluded from investments in and advances to
nonconsolidated subsidiaries and affiliated companies because they are
immaterial.
Long-term debt contains its current portion, and obligations under
finance leases are excluded because they are immaterial.
Derivatives are stated at the net amount.
(a) 
Methods used to calculate fair values of financial instruments
Investment securities and investments in and advances to
nonconsolidated subsidiaries and affiliated companies
The fair values of investment securities and investments in and
advances to nonconsolidated subsidiaries and affiliated companies
are measured at the quoted market price of the exchanges for
the equity securities some of the debt securities are measured,
principally at the quoted price obtained from financial institutions for
other securities. Fair value information for investment securities by
classification is included in Note 4.
Cash and cash equivalent, and receivables
The carrying amounts of cash and cash equivalents, and receivables
approximate fair values because of their short maturities.
Bonds
The fair values of bonds are based on market price.
Long-term loans
The fair values of long-term loans at fixed interest rates are
determined by discounting the cash flows related to the loans
at the Company’s assumed corporate borrowing rate. Because
loans at variable interest rates reflect short-term movements in
market interest rates and there has been no substantial change in
the Company’s credit position since the loans were implemented,
the carrying amounts approximate fair values. A part of loans is
subjected to interest rate swaps, which qualify for hedge accounting
and meet specific matching criteria (see Note 16), and the fair
values are determined by discounting the cash flows related to
the loans with the interest rate swaps at the Company’s assumed
corporate borrowing rate.
Short-term borrowings, notes and accounts payable, and
accrued income taxes
The carrying amounts of short-term borrowings, notes and accounts
payable and accrued income taxes approximate fair values because
of their short maturities.
Derivatives
Fair value information for derivatives is included in Note 16.
Notes to Consolidated Financial Statements
Kyuden Group Annual Report 201890(b) Financial instruments whose fair value cannot be reliably determined
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Investment securities:
Available-for-sale:
Equity securities \63,885 \63,906 $601,159
Other securities 2,843 2,827 26,756
Investments in and advances to nonconsolidated subsidiaries and affiliated companies:
Equity securities 74,006 73,361 696,397
Other securities 10,780 11,590 101,446
Total \151,515 \151,686 $1,425,760
Maturity analysis for financial assets and securities with contractual maturities
Millions of Yen
March 31, 2018
Due in one
year or less
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
Investment securities:
Held-to-maturity debt securities \ 100 \5 10円 136円
Available-for-sale securities with contractual maturities 22 20 230
Cash and cash equivalents 365,875
Receivables 226,334
Total \592,331 \25 10円 366円
Thousands of U.S. Dollars
March 31, 2018
Due in one
year or less
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
Investment securities:
Held-to-maturity debt securities $ 940 $47 $94 $1,279
Available-for-sale securities with contractual maturities 210 194 2,165
Cash and cash equivalents 3,442,885
Receivables 2,129,806
Total $5,573,839 $241 $94 $3,445
Please see Note 6 for annual maturities of long-term debt.
Kyuden Group Annual Report 2018 91
Financial Section
NotestoConsolidated
Financial
Statements
16. DERIVATIVES
The Company enters into foreign exchange forward contracts currency swaps, interest rate swaps and energy swap agreements to manage its
exposures to fluctuations in foreign exchanges, interest rates and fuel price, respectively.
A consolidated subsidiary of the Company enters into interest rate swaps to manage exposure to fluctuations in interest rates.
The Companies do not enter into derivatives for trading or speculative purposes.
Foreign exchange forward contracts, currency swaps, interest rate swaps and energy swap agreements are not subject to any market risk except for
abandoning potential income by market fluctuations in hedged items.
The Companies do not anticipate any losses arising from credit risk, which is the possibility that a loss may result from counterparties’ failure to
perform according to the terms and conditions of the contract, because the counterparties to those derivatives have high credit ratings.
The derivative transactions are executed by the specific sections, and the administrative section monitors them based on internal policies.
Derivative transactions to which hedge accounting is applied
Millions of Yen
March 31, 2018 Hedged Item
Contract
Amount
Contract Amount
due after One Year Fair Value
Interest rate swaps:
Principle treatment (Note a)
Pay fixed /Receive floating Long-term loans 31,804円 28,241円 \(2,105)
Special treatment (Note b)
Pay fixed / Receive floating Long-term loans 2,540 2,323
Total \(2,105)
Millions of Yen
March 31, 2017 Hedged Item
Contract
Amount
Contract Amount
due after One Year Fair Value
Interest rate swaps:
Principle treatment (Note a)
Pay fixed / Receive floating Long-term loans 25,483円 25,483円 \(2,023)
Special treatment (Note b)
Pay fixed / Receive floating Long-term loans 2,680 2,540
Total \(2,023)
Thousands of U.S. Dollars
March 31, 2018 Hedged Item
Contract
Amount
Contract Amount
due after One Year Fair Value
Interest rate swaps:
Principle treatment (Note a)
Pay fixed /Receive floating Long-term loans 299,276ドル 265,754ドル $(19,809)
Special treatment (Note b)
Pay fixed / Receive floating Long-term loans 23,901 21,860
Total $(19,809)
Notes:
a) The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.b) The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap agreements is recognized and
included in interest charges. As a result, the fair values of interest rate swaps are included in those of hedged items (i.e., long-term loans) in Note 15.
c) The contract or notional amounts of derivatives, which are shown in the above table, do not represent the amounts exchanged by the parties and do not measure the Companies’ exposure to market risk.
Notes to Consolidated Financial Statements
Kyuden Group Annual Report 20189217. COMMITMENTS AND CONTINGENCIES
At March 31, 2018, the Companies had a number of fuel purchase commitments, most of which specify quantities and dates for fuel deliveries. However, most of
purchase prices are contingent upon fluctuations in market prices.
Contingent liabilities at March 31, 2018 were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Co-guarantees of loans, mainly in connection with procurement of fuel 91,965円 865,390ドル
Guarantees of employees’ loans 58,944 554,664
Other 10,896 102,533
18. COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2018 and 2017, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2018 2017 2018
Other comprehensive income:
Unrealized gain on available-for-sale securities:
Gains arising during the year \676 \810 $6,362
Reclassification adjustments to profit or loss 7 304 67
Amount before income tax effect 683 1,115 6,429
Income tax effect (220) (529) (2,074)
Total \462 \585 $4,355
Deferred loss on derivatives under hedge accounting:
Losses arising during the year \(617) \(687) $(5,812)
Reclassification adjustments to profit or loss 535 507 5,038
Amount before income tax effect (82) (180) (773)
Income tax effect (96) 21 (907)
Total \(178) \(158) $(1,681)
Foreign currency translation adjustments:
Gains (losses) arising during the year \2,570 \(832) $24,190
Amount before income tax effect 2,570 (832) 24,190
Income tax effect (1,122) 101 (10,559)
Total \1,448 \(731) $13,630
Defined retirement benefit plans:
Gains arising during the year \6,385 \386 $60,083
Reclassification adjustments to profit or loss 2,830 2,148 26,636
Amount before income tax effect 9,215 2,535 86,719
Income tax effect (2,617) (727) (24,627)
Total \6,598 \1,807 $62,092
Share of other comprehensive income in nonconsolidated subsidiaries and
affiliated companies:
Gains (losses) arising during the year \265 \(301) $2,494
Reclassification adjustments to profit or loss (33) 225 (313)
Total \231 \(75) $2,181
Total other comprehensive income \8,562 \1,427 $80,577
Kyuden Group Annual Report 2018 93
Financial Section
NotestoConsolidated
Financial
Statements
Notes to Consolidated Financial Statements
19. SEGMENT INFORMATION
(1) Description of reportable segments
The Companies’ reportable segments are those for which financial information is available separately and regular evaluation by the Company’s
management is being performed in order to decide how resources are allocated among the Companies. Therefore, the Companies’ segments consist of
electric power, energy related business, information technology (IT) and telecommunications and other. ・ Electric Power segment: this segment is engaged in the business of power supply mainly with the Kyushu region as the basis of its operational
development. ・ Energy-related Business segment: this segment is engaged in the wholesale supply of electricity, obtaining, storing, gasifying, supplying and
selling gas and LNG, a renewable energy business and other businesses related to energy. ・ IT and Telecommunications segment: this segment is engaged in the provision of telecommunications services. ・ Other segment: this segment is engaged in the provision of environment and recycling services, lifestyle-oriented services and others.
(2) Methods of measurement for the amounts of sales, profit, assets and other items for each reportable segment
The accounting policies of each reportable segment are consistent to those disclosed in Note 2, "Summary of Significant Accounting Policies."
(3) Information about sales, profit, assets and other items at March 31, 2018 and 2017, was as follows:
Millions of Yen2018Reportable segment
Electric Power
Energy-related
Business
IT and Telecommu-
nications Other Total Reconciliations Consolidated
Sales:
Sales to
external customers \1,804,418 \ 73,134 \ 70,512 \ 12,293 \1,960,359 \1,960,359
Intersegment sales
or transfers 3,892 118,335 36,175 13,288 171,691 \ (171,691)
Total \1,808,311 \ 191,470 \ 106,687 \ 25,581 \2,132,051 \ (171,691) \1,960,359
Segment profit \ 81,422 \ 11,732 \ 7,321 \ 4,824 \ 105,301 \ (2,177) \ 103,123
Segment assets 4,038,218 487,956 185,515 149,497 4,861,188 (151,029) 4,710,158
Other:
Depreciation 180,179 8,044 21,408 3,795 213,428 (2,972) 210,455
Increase in property
and nuclear fuel 318,488 20,094 22,837 2,417 363,838 (4,885) 358,953
Millions of Yen2017Reportable segment
Electric Power
Energy-related
Business
IT and Telecommu-
nications Other Total Reconciliations Consolidated
Sales:
Sales to
external customers \1,681,066 \64,559 \70,181 \11,716 \1,827,524 \1,827,524
Intersegment sales
or transfers 4,016 120,660 31,259 13,200 169,136 \ (169,136)
Total \1,685,082 \185,220 \101,440 \24,917 \1,996,661 \ (169,136) \1,827,524
Segment profit \ 98,365 \10,088 \8,499 \4,528 \ 121,481 \ 1,159 \ 122,640
Segment assets 3,972,388 453,092 183,795 142,460 4,751,737 (164,196) 4,587,541
Other:
Depreciation 184,993 8,405 20,848 4,112 218,359 (3,017) 215,342
Increase in property
and nuclear fuel 271,967 18,039 23,312 1,147 314,466 (4,369) 310,096
Kyuden Group Annual Report 201894Thousands of U.S. Dollars2018Electric Power
Energy-related
Business
IT and Telecommu-
nications Other Total Reconciliations Consolidated
Sales:
Sales to
external customers $16,979,569 $ 688,198 $ 663,522 $ 115,681 $18,446,972 $18,446,972
Intersegment sales 36,626 1,113,539 340,406 125,042
or transfers 1,615,615 $(1,615,615)
Total $17,016,196 $1,801,737 $1,003,929 $ 240,723 $20,062,587 $(1,615,615) $18,446,972
Segment profit $ 766,185 $ 110,403 $ 68,897 $ 45,399 $ 990,885 $ (20,491) $ 970,394
Segment assets 37,999,610 4,591,671 1,745,697 1,406,768 45,743,748 (1,421,187) 44,322,560
Other:
Depreciation 1,695,484 75,703 201,454 35,719 2,008,361 (27,974) 1,980,387
Increase in property
and nuclear fuel 2,996,975 189,089 214,901 22,748 3,423,715 (45,968) 3,377,746
Notes:
(a) Reconciliations of segment profit and segment assets are intersegment transaction eliminations.
(b) Segment profit is adjusted to reflect operating income in the consolidated statement of income.
Geographic segment information is not disclosed because the Companies’ overseas operations are immaterial.
Information for overseas sales is not disclosed due to overseas sales being immaterial compared with consolidated net sales.
20. SUBSEQUENT EVENT
At the general shareholders meeting held on June 27, 2018, the Company’s shareholders approved the following appropriation of retained earnings as
of March 31, 2018:
Millions of Yen
Thousands of
U.S. Dollars
Year-end cash dividends, 10円.00 (0ドル.09) per common share 4,739円 44,599ドル
Year-end cash dividends, 1,750,000円.00 (16,467ドル.48) per Class A preferred share 1,750円 16,467ドル
21. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share ("EPS") for the year ended March 31, 2018 and 2017, was as follows:
Millions of Yen
Thousands of
Shares Yen U.S. Dollars
Year Ended March 31, 2018
Net Income
Attributable
to Owners
of the Parent
Weighted-Average
Shares EPS
Net income attributable to owners of the parent 86,657円
Amount not attributable to common shareholder:
Preferred dividend (3,500)
Basic EPS-Net income available to common shareholders 83,157円 473,662 175円.56 1ドル.65
Effect of dilutive securities:
Convertible bonds 103,705
Diluted EPS-Net income for computation 83,157円 577,367 144円.03 1ドル.35
Millions of Yen
Thousands of
Shares Yen U.S. Dollars
Year Ended March 31, 2017
Net Income
Attributable
to Owners
of the Parent
Weighted-Average
Shares EPS
Net income attributable to owners of the parent 79,270円
Amount not attributable to common shareholder:
Preferred dividend (3,500)
Basic EPS-Net income available to common shareholders 75,770円 473,662 159円.97
Effect of dilutive securities:
Convertible bonds 566
Diluted EPS-Net income for computation 75,770円 474,228 159円.78
Kyuden Group Annual Report 2018 95
Financial Section
NotestoConsolidated
Financial
Statements
22. ADDITIONAL INFORMATION
The revision of the accounting regulations applicable to electric utility providers
The METI revises the accounting regulations which became effective on April 1, 2018. They change the period over which asset retirement costs of nuclear power
units are to be allocated to expense.
Prior to April 1, 2018, the asset retirement costs were allocated to expense through depreciation based on the straight-line method over a period totaling the
remaining useful life and expected safe storage period of nuclear power units. Effective April 1, 2018, these costs are allocated to expense through depreciation
based on the straight-line method over the remaining useful life of nuclear power units.
However, in case the Company decides to decommission nuclear power units due to factors such as a change of the government’s energy policy, the asset
retirement costs are allocated to expense over 10 years from the month that includes the date of decommissioning of the nuclear power unit that is defined by the "Law
on the Regulation of Nuclear Source Material, Nuclear Fuel Material and Reactors".
Kyuden Group Annual Report 201896Kyuden Group Annual Report 2018 97
Financial Section
Independent
Auditor’s
Report
Nuclear Power (2 facilities/maximum output 4,699,000 kW)
Station name Maximum output (kW)
Operation
commencement date
System Location
Genkai 2,919,000 (×ばつ1 ×ばつ2) Oct. 1975 Pressurized water reactor Genkai-cho, Higashi Matsuura-gun, Saga Prefecture
Sendai 1,780,000 (×ばつ2) Jul. 1984 Pressurized water reactor Satsumasendai-shi, Kagoshima Prefecture
Thermal Power (8 facilities/maximum output 9,939,400 kW)
Station name Maximum output (kW)
Operation
commencement date
System Location
Shin Kokura 1,800,000 (×ばつ3) Sep. 1978 LNG Kokura Kita-ku, Kitakyushu-shi, Fukuoka Prefecture
Karita 360,000 (×ばつ1) Jul. 2001 Coal Kanda-machi, Miyako-gun, Fukuoka Prefecture
Buzen 1,000,000 (×ばつ2) Dec. 1977 Heavy oil/crude oi Buzen-shi, Fukuoka Prefecture
Matsuura 700,000 (×ばつ1) Jun. 1989 Coal Matsuura-shi, Nagasaki Prefecture
Ainoura 875,000 (×ばつ1 ×ばつ1) Apr. 1973 Heavy oil/crude oil Sasebo-shi, Nagasaki Prefecture
Shin Oita
2,804,400 (×ばつ6 ×ばつ3 ×ばつ1)
Jun. 1991 LNG Oita-shi, Oita Prefecture
Reihoku 1,400,000 (×ばつ2) Dec. 1995 Coal Reihoku-machi, Amakusa-gun, Kumamoto Prefecture
Sendai 1,000,000 (×ばつ2) Jul. 1974 Heavy oil/crude oil Satsumasendai-shi, Kagoshima Prefecture
Hydroelectric Power (143 facilities/maximum output 3,579,851 kW)
Station name Maximum output (kW)
Operation
commencement date
System Location
Tenzan 600,000 Dec. 1986 Dam and conduit system (pure pumped-storage) Karatsu-shi, Saga Prefecture
Matsubara 50,600 Aug. 1971 Dam system Hita-shi, Oita Prefecture
Yanagimata 63,800 Jun. 1973 Dam and conduit system Hita-shi, Oita Prefecture
Ohira 500,000 Dec. 1975 Dam and conduit system (pure pumped-storage) Yatsushiro-shi, Kumamoto Prefecture
Kamishiiba 93,200 May. 1955 Dam and conduit system Shiiba-son, Higashi Usuki-gun, Miyazaki Prefecture
Iwayado 52,000 Jan. 1942 Dam and conduit system Shiiba-son, Higashi Usuki-gun, Miyazaki Prefecture
Tsukabaru 63,050 Oct. 1938 Dam and conduit system Morotsuka-son, Higashi Usuki-gun, Miyazaki Prefecture
Morotsuka 50,000 Feb. 1961 Dam and conduit system Morotsuka-son, Higashi Usuki-gun, Miyazaki Prefecture
Omarugawa 1,200,000 Jul. 2007 Dam and conduit system (pure pumped-storage) Kijo-cho, Koyu-gun, Miyazaki Prefecture
Hitotsuse 180,000 Jun. 1963 Dam and conduit system Saito-shi, Miyazaki Prefecture
Oyodogawa Daiichi 55,500 Jan. 1926 Dam system Miyakonojo-shi, Miyazaki Prefecture
Oyodogawa Daini 71,300 Mar. 1932 Dam and conduit system Miyazaki-shi, Miyazaki Prefecture
* With outputs of 50,000 kW or higher
Geothermal Power (6 facilities/maximum output 207,800 kW)
Station name Maximum output (kW)
Operation
commencement date
Location
Takigami 27,500 Nov. 1996 Kokonoe-machi, Kusu-gun, Oita Prefecture
Otake 12,500 Aug. 1967 Kokonoe-machi, Kusu-gun, Oita Prefecture
Hatchoubaru 110,000 (×ばつ2) Jun. 1977 Kokonoe-machi, Kusu-gun, Oita Prefecture
Hatchoubaru Binary 2,000 Apr. 2006 Kokonoe-machi, Kusu-gun, Oita Prefecture
Ogiri 25,800 Mar. 1996 Kirishima-shi, Kagoshima Prefecture
Yamagawa 30,000 Mar. 1995 Ibusuki-shi, Kagoshima Prefecture
Internal Combustion Power (34 facilities/maximum output 395,610 kW)
Station name Maximum output (kW)
Operation
commencement date
Location
Shinarikawa 60,000 (×ばつ6) Jun. 1982 Shinkamigotou-cho, Minami matsuura-gun, Nagasaki Prefecture
Tatsugo 60,000 (×ばつ6) Jun. 1980 Tatsugo-cho, Oshima-gun, Kagoshima Prefecture
* With outputs of 50,000 kW or higher
Wind Power (2 facilities/maximum output total 3,250 kW)
Station name Maximum output (kW)
Operation
commencement date
Location
Koshikijima wind power 250 Mar. 2003 Satsumasendai-shi, Kagoshima Prefecture
Noma-misaki wind park 3,000 Mar. 2003 Minamisatsuma-shi, Kagoshima Prefecture
Photovoltaic Power (1 facility/maximum output total 3,000 kW)
Station name Maximum output (kW)
Operation
commencement date
Location
Mega Solar Omuta 3,000 Nov. 2010 Omuta-shi, Fukuoka Prefecture
*including gas turbines on isolated islands and internal-
combustion engines at the Buzen Power Station
Overview of Power Generation Facilities
(As of March 31, 2018)
Overview of Power Generation Facilities
(As of March 31, 2017)
Kyuden Group Annual Report 201898Subsidiaries and Affiliated Companies
(As of March 31, 2018)
Company Name Capital (Millions of yen)
Equity Ownership(%)Business
Energy Business in Kyushu
Oita Liquefied Natural Gas Co., Inc. 7,500 98.0 Receipt, storage, vaporization and delivery and sales of LNG
Kitakyushu Liquefied Natural Gas Co., Inc. 4,000 75.0 Receipt, storage, vaporization and delivery and sales of LNG
Pacific Hope Shipping Limited 4,071 60.0 Purchasing, operating, chartering and renting of LNG carriers
Kushima Wind Hill Co., Ltd. 2,821 51.0 Sales of electricity generated by wind power
Nishinippon Environmental Energy Co., Inc. 1,016 100.0 Distributed power system business and consultation about energy efficiency
Kyuden Mirai Energy Company, Incorporated 2,069 100.0 Renewable energy business
Kyushu Rinsan Co., Inc. 490 100.0 Greening construction at power stations and other facilities
Nagashima Wind Hill Co., Ltd. 490 86.0 Sales of electricity generated by wind power
Fukuoka Energy Service Co., Inc. 490 80.0 Heat supply business
Kyuden Technosystems Corporation 327 85.2 Manufacture and sales of electric machinery; installation, maintenance and
management of electrical measurement equipment
Kyuden High Tech Corporation 200 100.0 Maintenance and repair of electricity facilities
Nishi Nippon Airlines Co., Ltd. 360 54.7 Air cargo transportation
Nishinippon Plant Engineering and Construction Co., Ltd. 150 85.0 Construction, maintenance and repair of power generation facilities
Kyushu Kouatsu Concrete Industries Co., Ltd. 240 51.3 Manufacture and sales of concrete poles
Kyuden Sangyo Co., Inc. 117 100.0 Environmental preservation work at power stations
Miyazaki Biomass Recycle Co., Inc. 100 42.0 Power-generation activities using poultry dung fuel
West Japan Engineering Consultants, Inc. 40 100.0 Consultation and planning of civil engineering and construction
Koyo Denki Kogyo Co., Ltd. 20 97.3 Manufacture and sales of HV and LV insulators and other items
Nishigi Kogyo, Co., Inc. 20 74.0 Conduit maintenance for hydroelectric power stations
Shimonoseki Biomass Energy Co., Ltd 1 100.0 Sales of electricity generated by biomass
Energy Business Overseas
Kyuden International Corporation 23,150 100.0 Acquisition and holding of securities of overseas companies operating electricity
Kyuden International Netherlands B.V. 6,545 100.0 Acquisition and holding of securities of overseas electric companies
Kyuden Hsin Tao Power Holdings 2,400
(Millions of Taiwan dollars)
100.0 Investment in Hsin Tao IPP business company
Kyushu Electric Australia Pty Ltd. 210
(Millions of U.S. dollars)
Kyuden Birdsboro Inc. 1 100.0 Acquisition and holding of securities of overseas electric companies
(U.S. dollars)
100.0 Share ownership and management (funding, tax, accounting, etc.) of Kyushu Electric
Wheatstone Pty Ltd
Kyushu Electric Wheatstone Pty Ltd. 198
(Millions of U.S. dollars)
100.0 Ownership of mining interests and assets, trading and sales of output in Wheatstone
LNG project
KYUDEN SARULLA PTE. LTD. 159
(Millions of Singapore dollars)
100.0 Geothermal power generation
IT and Telecommunications
QTNet Co., Ltd. 22,020 100.0 Fiber-optic cable and broadband services
Kyuden Infocom Company, Inc. 480 100.0 IT-related planning and consultation, and data center business
Nishimu Electronics Industries, Co., Ltd. 300 100.0 Manufacture, sales, installation and maintenance of telecommunication devices
Kyuden Business Solutions Co., Inc. 100 100.0 Development, operation and maintenance of information systems
RKK Computer Service Co., Inc. 100 61.3 Development and sales of computer software
Lifestyle-oriented Services
DENKI BLDG. CO., Ltd. 3,395 91.9 Leasing and management of real estate
Kyuden Good Life Company, Inc. 300 100.0 Paid elderly nursing home management and nursing services
Capital Kyuden Corporation 285 100.0 Acquiring and owning of securities, loans to group companies
Kyuden Good Life Kumamoto Company, Inc. 200 100.0 Paid elderly nursing home management and nursing services
Kyuden Business Front Inc. 100 100.0 Temporary staffing and job-placement services
Kyuden Good Life Fukuoka Josui Company, Inc. 100 100.0 Paid elderly nursing home management and nursing services
Kyuden Good Life Kagoshima Company, Inc. 100 90.0 Paid elderly nursing home management and nursing services
Kyuden Good Life Higashifukuoka Company, Inc. 100 70.0 Paid elderly nursing home management and nursing services
Kyuden Fudousan Co., Ltd. 32 98.1 Leasing of real estate and site management
Kyuden Office Partner Co., Inc. 30 100.0 Clerical work acceptance on trust and consulting business
Kyushu Maintenance Co., Ltd. 10 82.0 Cleaning and maintenance of real estate
Consolidated Subsidiaries (43)
Subsidiaries and Affiliated Companies
(As of March 31, 2017)
Kyuden Group Annual Report 2018 99
Financial Section
SubsidiariesandAffiliated
Companies
OverviewofPower
Generation
Facilities
Non-consolidated Subsidiaries and Affiliated Companies Accounted for under Equity Method (27)
Company Name Capital (Millions of yen)
Equity Ownership(%)Business
Energy Business in Kyushu
Tobata Co-operative Thermal Power Co., Inc. 9,000 50.0 Thermal power generation business
Kyudenko Corporation 12,555 22.7 Electric work
Fukuoka Clean Energy Co., Ltd. 5,000 49.0 Waste incineration and power generation business
Oita Co-operative Thermal Power Co., Inc. 4,000 50.0 Thermal power generation business
KYUSYU CRYOGENICS CO., LTD. 450 50.0 Manufacture and sales of liquid oxygen, liquid nitrogen and liquid argon
Kyuhen Co., Ltd. 225 35.9 Manufacture and sales of electrical equipment
Seishin Corporation 200 27.3 Sale of electrical equipment
Plazwire Co., Ltd. 50 100.0 Flame spray coating (painting) business
Nishikyushu Kyodo Kowan Co., Ltd. 50 50.0 Operation and maintenance of coal handling equipment
Kyuken Corporation 100 15.2 Construction and repair of transmission lines
Nishi Nihon Denki Tekkou Co., Ltd. 30 33.5 Design, production and sales of steel towers and steel conduits
Washiodake Wind Power Co., Ltd. 10 100.0 Sales of electric power from wind generation
NISHIGI SURVEYING AND DESIGN CO., LTD. 10 100.0 Investigation, measurement, design, drafting and care of civil engineering/construction projects
Munakataasty Solar Power Co., Ltd. 10 100.0 Sales of electricity generated by solar power
Amami Oshima Wind Power Co., Ltd. 10 75.0 Sales of electric power from wind generation
Energy Business Overseas
KYUDEN ILIJAN HOLDING CORPORATION 3
(Millions of U.S. dollars)
100.0 Investment in Ilijan IPP business company
Kyushu Tohoku Enrichment Investing SAS 62
(Millions of Euro)
50.0 Investment in uranium enrichment business
Electricidad Aguila de Tuxpan, S. de R.L. de C.V. 641
(Millions of Mexico Pesos)
50.0 Power-generation activities using natural gas fuel
Electricidad Sol de Tuxpan, S. de R.L. de C.V. 493
(Millions of Mexico Pesos)
50.0 Power-generation activities using natural gas fuel
IT and Telecommunications
RKKCS Software 10 100.0 Developments and sales of computer software
Environment and Recycling Business
J-Re-Lights Co., Ltd. 100 100.0 Recycling of used fluorescent bulbs
Records & Intelligence Management Co., Ltd 80 98.1 Recycling of confidential documents
Lifestyle-oriented Services
Kyushu Highlands Development Co., Ltd. 300 100.0 Management of golf courses
Kyushu Housing Guarantee Corporation 272 33.3 Housing and building assessments, security services affairs
Kyuden Shared Business Co., Ltd. 80 100.0 Accounting and personnel services
Kyushu Captioning Co-Production Center Inc. 60 78.3 Subtitle production for broadcasting
Oak Partners Co., Ltd. 3 100.0 Real estate management
Kyuden Group Annual Report 2018100Financial Institutions
43.4%
Securities Firms1.5%Other Domestic
Companies4.7%Less than 100
25.7%
100 to 499
32.9%
500 to 999
13.0%
1,000 to 4,999
25.0%
5,000 or more3.8%Foreign Investors
18.7%
Individuals
and Other
30.8%
Governmental
Organization0.9%Composition of Shareholders
(By Type of Shareholder)
• Common stock
Composition of Shareholders
(By Number of Shares Held)
Trends of
Stock Price
and Trading
Volume
Major
ShareholdersNameNumber of Shares Held
(Thousands of Shares)
Shareholding Ratio (%)
Meiji Yasuda Life Insurance
2,508 5.29
The Master Trust Bank of Japan, Ltd. (trust unit)
2,288 4.83
Nippon Life Insurance Company
1,707 3.60
Kochi Shinkin Bank
1,329 2.80
Japan Trustee Services Bank, Ltd. (trust unit)
1,221 2.58
Japan Trustee Services Bank, Ltd. (trust unit9)
1,103 2.33
Kyushu Electric Power Co., Inc. Employees’ Shareholding Association 1,067 2.25
Mizuho Bank, Ltd. 967 2.04
The Bank of Fukuoka, Ltd. 867 1.83
Sumitomo Mitsui Banking Corporation 847 1.79
• Class A preferred sharesNameNumber of Shares Held
(Thousands of Shares)
Shareholding Ratio (%)
The Development Bank of Japan 1 100.0
Corporate Data
(As of March 31, 2018)
Total Number of
Shares Authorized 1,000,000,000
Common stock: 1,000,000,000
Class A preferred shares: 1,000
Number of Shares
Issued and Outstanding Common stock: 474,183,951
Class A preferred shares: 1,000
Number of Shareholders Common stock: 144,222
Class A preferred shares: 1
Stock
Information
Shareholders’ Meeting June
Fiscal Year From April 1 to March 31
Stock Listings Tokyo Stock Exchange, Fukuoka
Stock Exchange (Code: 9508)
Transfer Agent and Sumitomo Mitsui Trust Bank,
Registrar Limited 4-1, Marunouchi 1-chome,
Chiyoda-ku, Tokyo, Japan
Accounting Auditor Deloitte Touche Tohmatsu LLC
Trade Name Kyushu Electric Power Company, Incorporated
Head Office 1-82, Watanabe-dori 2-chome, Chuo-ku,
Fukuoka 810-8720, Japan
Phone +81-92-761-3031
Tokyo Branch Office 7-1, Yurakucho 1-chome, Chiyoda-ku,
Tokyo 100-0006, Japan
Phone +81-3-3281-4931
Company
Overview
Date of Establishment May 1, 1951
Paid-in Capital 237,300円 million
Number of Employees 13,022
Trading Volume (left axis)
Stock Price (right axis)
140,000
120,000
100,000
80,000
60,000
40,000
20,00002,000
1,800
1,600
1,400
1,200
1,0008006004002000(Thousands of Shares) (Yen)201832016201520142013
2012 2017
Corporate Data
Kyuden Group Annual Report 2018 101
Financial Section
CorporateData