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