JR Kyushu Group Integrated Report2022

What we aim to be corporate group that invigorates Kyushu, Japan, and Greater Asia
Awith safety and service as its foundation
The JR Kyushu Group’s first and central business is our railway network throughout Kyushu. Over theyears, our business has expanded into areas such as station buildings, hotels, condominiums, construction,
shipping, retail and restaurants. These areas complement our railway business, allowing us to achievea synergy between our various areas of business. We are dedicated to contributing to the sustainable
development of Kyushu through city-building and community development initiatives that leverage thedistinctive characteristics of local communities, centering on safe and reliable mobility services.

Kyushu Railway Company

Integrated Report 2022

2

Contents
1 Message from the President

3 Value Creation Story

5 Environment

7 Governance����������������� 4

Value Creation Story���������� 13

For Building a Sustainable Society���� 35

Value Creation Process��������� 14

Realization of a De-carbonized Society��� 36

The Process of Formulation of JR Kyushu Group
Medium-Term Business Plan 2022-2024 �� 15

Other Initiatives����������� 38

Sound Corporate Management── Corporate governance��������
Round-table discussions for outside directors�── Risk management and compliance����
── Enhancing communication with stakeholders�

2 History of the JR Kyushu Group
History of the JR Kyushu Group ����� 9
At a Glance ������������� 11

Feature JR Kyushu Group Medium-Term Business
Plan 2022-2024 �������� 18
Message from the CFO��������� 22
Feature Local Community Invigoration
─ Sustainable city-building ─ ��� 26

4 Implementing corporate ESG
The JR Kyushu Group’s Corporate ESG��� 32

6 Social
Safety and Service, the Foundation for All of Our
Businesses── Safety������������� 40
── Service������������� 44
Development of Human Resources, the Source ofValue Creation── Advancing personnel strategy ����� 48
Development of Employees Skilled in Digital Technologies� 53
Human Rights Efforts��������� 55

57
60
71
74

8 Data Section
Data Section
── Financial highlights���������
── Non-financial highlights��������
── Financial information���������

76
77
78

Investor Information�����������

84

Consolidated Subsidiary Information�����

84

Editorial Policy

Forward-looking Statements

This report was developed for the purpose of imparting a deeper understanding of the JR Kyushu Group’s
operations (Kyushu Railway Company (JR Kyushu) and related companies) to our stakeholders. The report
was prepared with reference to the International Integrated Reporting Framework of the International
Integrated Reporting Council (IIRC)* and the Guidance for Integrated Corporate Disclosure and CompanyInvestor Dialogues for Collaborative Value Creation from the Ministry of Economy, Trade and Industry. The
editors’ aim is to communicate financial and non–financial information, such as management policies,
business strategies, and ESG information, to readers in a concise manner. More detailed information isavailable on the corporate website for those who are interested.
* A private-sector organization established in 2010 by entities such as private-sector companies, investors,
accountants’ organizations, and government institutions with the aim of developing an international
corporate reporting framework. In June 2021, IIRC and SASB merged to form the Value Reporting
Foundation.

This report contains forward-looking statements, including future outlooks and objectives of the
JR Kyushu Group.
These statements are judgments made by the Company based on information, projections,and assumptions available at the time of the report’s creation.
Accordingly, please be advised that actual operating results could greatly differ from thecontents of this report due to the influence of COVID-19; changes in people’s values andlifestyles; the economic situation inside and outside Japan and the economic situation in
Kyushu; real estate market conditions; the progress of respective projects; changes in laws andregulations; and a wide range of other risk factors.
In addition, the purpose of this report is only to provide information. Its purpose is not to solicit
transactions.

Message from the President

Doing everything we can to get backon our path of growth and bring cheer
and energy to Kyushu
As the new President"Cheer, earnestness and kindness": my motto for growthPresident and CEO

Yoji Furumiya
Kyushu Railway Company

As I take on the mantle as President of JR Kyushu, I think
about how I joined the company during its last days as
Japanese National Railways, before it was privatized as JR. I
started on the front lines in various roles, including as a rollingstock maintenance worker and driver. My time in those jobs
gave me an understanding of how people in those roles think
and feel, and I learned a lot from the people around me. Thatexperience was an asset for me. During the transition fromJapanese National Railways to JR, I thought about how JR
Kyushu should be and what it should do from the perspectiveof someone on the ground, and those thoughts are thefoundation of my creed today.
That creed, the principle I hold dear at all times, is something
extremely simple: "Cheer, earnestness and kindness." I think
this applies to companies just as much as it applies to people.
If there's no cheer and energy at a company, you won't enjoy
working there, you won't have good ideas, and things won't
go in a good direction. Cheer and energy gives a company agood atmosphere, and I think that will ultimately lead to our
growth. But a company needs more than cheer. In order totake on challenges of all kinds, it is important to learn and workin earnest. And I also want to be kind as a person—to ourcustomers, to our colleagues and to our communities.

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Message from the President

I want to return to a growth track in the next three years
From the time it was first established, the JR Kyushu Group
has navigated the difficult business conditions of the railway
business by actively expanding into businesses peripheral
to stations that achieve a synergistic effect, such as stationbuildings and condominiums. Through these endeavors, wehave achieved growth as a company. But when COVID-19
struck in 2020, those endeavors ground to a halt and we
found ourselves facing the biggest crisis the Group has everexperienced. The first thing we focused on was ensuring thesafety of our customers and employees. With less than half ourusual passenger numbers on our commuter trains, we knew
the company was in trouble if we didn't do something. I still
remember how anxious I was about what to do next.
If you don't act, a crisis will never be more than a crisis. But
you can turn a crisis into an opportunity. During that period,
we sought to reduce the fixed costs of our railway business by
14 billion yen, around 10% of operating expenses, as a BPR
measure. We also put measures in place in our city-building
initiatives, such as the development of the New Nagasaki Stationbuilding. We revised our plans, using efficient development
methods to get the building open faster and carrying out
initiatives to de-carbonize the building and prevent the spread of
COVID-19. There is so much we've accomplished because of
COVID-19. Now is the time for the JR Kyushu Group to evolveto adapt to this new world. Now is the time to push ourselves
harder and take on all kinds of new challenges.
It is in these circumstances that we started our new MediumTerm Business Plan in April 2022. The Group has been damaged
by COVID-19, and we have positioned the period of this plan as
an important stage for working to rapidly return the Group to a
growth track. We are working on three key strategies: completingbusiness structural reforms creating a model for building cities
that promote well-being, and developing businesses in new areasin which we can contribute. We will do everything we can to get
our business back to its pre-COVID state as soon as possible,
create a working environment that provides peace of mind andKyushu Railway Company

cheer for our employees, and achieve sustainable growth that willtake us in the direction set out in our 2030 Long-Term Vision.

Policies for the realization of the2030 Long-Term Vision
Our policies for achieving our 2030 Long-Term Vision need to
be defined according to the changes we can expect to see inour external environment and the ways in which society's values
have been changed by COVID-19. We have considered multiple
future scenarios and set two policies defining how the JR Kyushu
Group will contribute to sustainable development of Kyushu.

Policies for the realization of the 2030 Long-Term Vision
1. Implementing city-building initiatives for therealization of well-being, with consideration forchanges in values
For the purposes of our city-building initiatives, we basicallydivide Kyushu into two areas. One is areas around terminal
stations and areas around our railway lines and the other iscity-building initiatives in local regions.
I'll start by talking about areas around terminal stations
and areas around our railway lines. People say that Kyushu
is a region where the decline in birthrate and the aging anddecline of the population are taking place at a faster rate than
the national average, but for example, when facilities such as
condominiums are built around terminal stations in areas like
Fukuoka, Kumamoto and Oita, they fill up immediately. Many ofthe people buying those homes are older people who want tomove to an urban area where life is more convenient than thesuburban areas that are a little further out of the way. There arehigh hopes for compact cities around stations. The Hakata areain Fukuoka is a particular focus, but the medium cities around
Kyushu also have extremely good prospects.
Based on this, I want to strengthen our development ofareas around terminal stations throughout Kyushu and thenlater expand our city-building initiatives to areas around ourrailway lines that are 20-30 minutes from terminal stations.
Creating compact cities in areas around our railway lines is abusiness model with hidden potential for growth. The sizes of
the cities vary, but no matter what the size, we want to carry out
development that suits people's diversifying lifestyles, including
environments that are easy to live in and commercial facilities
that are closely linked to lifestyles, to invigorate areas around ourrailway lines and create cities that people can live in long-term.
I'll now talk about our city-building initiatives in local regions.
These areas are unlikely to see an increase in permanent
populations in future, so we are focusing on attempts to expand
non-resident populations. For example, in Saga Prefecture, weare carrying out an initiative to restore a traditional Japanesehouse as a Japanese-style inn and building a hot spring inn. I
believe that we can invigorate local communities by pairing local
appeal with the foundations of our business to expand the nonresident populations of these communities. It is important tomake sure our city-building initiatives are well-balanced, witha combination of the places where people live and the places
people visit, and a connection between cities and nature.
In summer 2023, we will introduce a BRT (bus rapid transit)
system along the Hitahikosan Line, which was damaged byheavy rain. BRT stations will be set up to allow boarding andalighting at points other than railway stations. In addition to
improving convenience for customers, the new electric buses
will be good for the environment. We plan to use this as amodel case for future community revitalization work that seeks
to bring convenient transportation to communities and provide
an option for elderly people who cannot drive anymore.
The matter of how to maintain sustainable mobility services
in Kyushu will be critical in the long term, and we expect
MaaS to play a major role. We aim to develop transportation
infrastructure around Kyushu that connects multiple modes oftransport, including railways, buses and taxis. We will continue
to focus on strengthening our cooperation with organizations
such as local transport providers, tourism associations, andgovernments and further promoting MaaS.

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Message from the President

2. Expanding areas we work in that contribute to thesustainable development of Kyushu
The decrease in demand for railways in regional areas is also
leading to a decrease in the stationmasters who have been theface of each region, and we feel that there has been a loss ofopportunities for communication with local governments andcommunities around our railway lines as a result. Through theRegional Strategy Department we established in April 2022, wewant to work together with our branches and Transportation
Departments to rebuild that communication with communities.
In doing so, we will learn information that only our communities
possess, and we will draw on that information and thestrengths of the JR Kyushu Group to expand areas we workin that contribute to the sustainable development of Kyushu,
which is one of our fields of business. For example, roadbridges and tunnels need to be inspected regularly but there
are not enough engineers in the regions. Railways also havebridges and tunnels, so we have the know-how that is needed
for those inspections. I would like to use the strengths we havedeveloped through our business activities to solve regions'issues and turn that into new areas of business for us.

Strengthening our management baseto achieve our long-term vision
Maximizing the individual capabilities of employees
is the key to growth
Employees are an extremely important area in our workto achieve our 2030 Long-Term Vision. Our management
strategies and business model are changing, along with thelabor market, which has prompted discussions of the humanresources strategies we have used so far. It is undeniable that
improvements in a company's value come from the company's
employees. We need to strengthen the positive spiral where
we maximize the strengths of the individuals behind ourstrategies and, in doing so, achieve growth in the JR Kyushu

Kyushu Railway Company

Group and improve employee engagement. Our railway work
was the central focus of our existing human resources system.
We believe that this system was somewhat lacking in flexibility,
so we have begun reforms. I am conscious that we need tomake our human resources system one where an individual's
growth leads to growth of the Group, and if I am to motivate
our employees then I myself must fly that flag enthusiastically.
To give one example, a driver at one of our depots who isskilled at IT plotted the latitude and longitude of every stationon our lines and built a system for driving support and onboard
announcements as part of the depot's research on driving
work. I am sure that we have many hidden stars like this
employee who have useful characteristics and a high levelof knowledge. To draw out those individual capabilities, weare recruiting existing employees who are good at IT, or areinterested in it, and putting excellent employees in the ideal
roles. We also have construction employees working on thedesigns for our Hitahikosan Line BRT, and they are very goodat this work. Working with communities to build cities will makemembers of those communities happy and is a way for us to
get to know those communities and learn about them. That
could lead to business opportunities.
We have also introduced an internal recruitment systemcalled HIRAMEKI. Employees submit ideas (hirameki) for new
businesses. When an idea passes the screening, the employee
who submitted it is put in charge of that work. Some of theideas have already been put into practice. I want to use flexible
staff placement initiatives like these to create new businesses
together with our employees.
It is also important to actively make use of our employees'
diverse skills to grow the company. I believe that having adiverse range of employees—women, people with disabilities,
older people, and mid-career hires who bring a high levelof knowledge and skills—leads to many opportunities for
growth, both for each employee and for the organization. In
particular, in order to promote the advancement of womenin our workplaces, it is important to create an environment
where they can keep working and to create frameworks thatenable them to thrive. We have actively appointed womenin positions such as site managers and officers of our groupcompanies to give them management experience. The ratioof female managers and the ratio of female employees among
new employees are two of the non-financial KPIs in our current
Medium-Term Business Plan, and we are continuously working
toward these targets with a long-term view. Another way
to promote diversity in the Group is to strategically second
employees to other sites and allow them to gain a wide rangeof experience. We can expect these seconded employees
to play a central role in carrying out our business strategies.
By interacting and gaining new insights and motivation, ouremployees will learn to think more flexibly, which will leadto new ideas and services. I am conscious that making the
maximum use of individuals' strength will lead to sustainablegrowth of the company.

Flexible ideas using digital technology
There are still areas of track and rolling stock maintenancethat we assume can only be done by workers and need to
be done manually. For example, electrical and structuralinspections conducted from a moving train could be done byinstalling cameras and sensors in rolling stock. With flexible
thinking and effective adoption of digital technology, we
can make employees' jobs safer and achieve more efficient
operations for the company. I think it would also be beneficialfrom a diversity standpoint, as it would enable more people
to work here. Flexible thinking by no means applies only todigitalization; I am always telling our employees that theyshould think not in terms of the Company's norms but in termsof society's norms.

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﻿
Message from the President

About the JR Kyushu Group’s
Corporate ESG
Creating sustainable corporate and social value thatbrings us closer to what we aim to be
The JR Kyushu Group aims to be a corporate group thatwill invigorate Kyushu and transmit Kyushu vitality to the restof Japan and Asia. This means that creating sustainablecorporate and social value that brings us closer to what we
aim to be is the corporate ESG we strive for, and I want tocontribute to the accomplishment of the SDGs through our
corporate ESG.
The JR Kyushu Group has carried out corporate ESG
initiatives through much trial and error since we first announced
in 2019 that we would promote and strengthen corporate
ESG. However, some investors have expressed concern that
we may be tackling too many material issues at once and that
we do not have enough KPIs, so we discussed points such asthese as we established our current Medium-Term Business
Plan. We then revised our material issues and set non-financial
KPIs for our new material issues. I feel like through this process
we have clearly defined how our ESG is connected to what
we aim to be, our conduct, and our management strategies
and business strategies, and established the meaning andsignificance that corporate ESG has for us in a way that is easy
to understand.
Climate change is a particularly critical environmental issue.
The JR Kyushu Group announced its agreement with the
TCFD Recommendations in February 2021, and is aiming toachieve net-zero CO₂ emissions by 2050. We have analyzed
the 1.5°C scenario and quantitatively disclosed some of thefinancial impacts that are expected, but even if a shift to a decarbonized society is achieved, physical risks such as more
severe natural disasters are unavoidable, and the transition
will come with significant costs. In addition to playing defense,
where we work to reduce CO₂ emissions, we also need to play

Kyushu Railway Company

offense and consider the opportunities to grow our businessthat will come with the transition to a de-carbonized society.
It will also be essential to work together with other companies
and communities. Trains have always been a low-carbon modeof transport, but you only get those benefits in cases where
many people are using trains, like in cities. In the local regions,train usage is extremely low, so we aren't getting the benefitsof trains, and the current situation isn't very green. With thisin mind, I want to discuss what mobility in the local regions
should be like.
Trains themselves are also extremely efficient these days,
and when we switch to new rolling stock, we use trains that
consume less than half as much energy as their predecessors.
Real estate assets such as station buildings are another area
where we are carrying out environmental initiatives, such as
introducing efficient facilities and reducing the thermal load ofbuildings by improving insulation and promoting greening, withaims such as the acquisition of green building certification. We
are also researching alternative energy such as the introduction
and use of renewable energy and the use of storage batteries.

To our stakeholders
Our mission is to invigorate Kyushu by contributing
to the development of Kyushu as a whole
Invigorating Kyushu is our mission, and we see it as thereason for our existence. I feel this way all the more strongly
after what we have all experienced with COVID-19. Throughthe JR Kyushu Group's business, we will boost Kyushu's
appeal, dedicate ourselves to regional development, andcontribute to in the development of Kyushu to invigorate
Kyushu and fulfill our promise to make Kyushu a place where
people want to live, work and visit.
This is one of the driving forces in our efforts to return to a
growth track within the period of this Medium-Term Business
Plan, guided by our policies for the realization of our 2030
Long-Term Vision: implementing city-building initiatives forthe realization of well-being, with consideration for changes invalues, and expanding areas we work in that contribute to thesustainable development of Kyushu.
Dialog with our stakeholders will continue to be important
to us. We will provide thorough explanations of the JR Kyushu
Group's vision and initiatives and strive for even more fruitfulcommunication as we work to increase our value as a company.
I appreciate your understanding and long-term view of ouractivities, and promise that you can have high hopes for us.

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History of the JR Kyushu Group

History of the JR Kyushu GroupAt a GlanceHistory of the JR Kyushu Group

History of the JR Kyushu GroupThe JR Kyushu Group’s Corporate DNA
JR Kyushu was established following the breakup and privatization of Japanese National Railways in 1987.
At the time of privatization, railway operations were around ¥30 billion in the red. We took steps to improveincome and expenditure, but were also aware that we could not rely on our railway operations alone. We took
up the challenge of various other businesses as well and aimed for growth.
1989• Began selling MJR Sasaoka, our first condominium complex• Established JR Kyushu Fast Foods Inc.

HakataFukuoka Prefecture
Oita Prefecture

Saga Prefecture

Oita

Saga
NagasakiPrefecture

Nagasaki

Kumamoto
Kumamoto
Prefecture• Established JR Kyushu Retail, Inc.
• Established JR Kyushu Food
Service Inc.

• Opened Umaya in Akasaka, Tokyo

1998

2004

• Opened Station Hotel Kokura• Opened Amu Plaza Kagoshima• Opened Shin-Kokura Station building (Amu Plaza)

1992• Established Train d’Or Ltd.
• Opened JR Uchino Country Club
• Opened Hotel Blossom Fukuoka

MiyazakiKagoshima
Prefecture

Established Kyushu Railway
Company (JR Kyushu)

d

ate

Rel

1987

2000
• Completed the general
operations system JACROS

2001

es
ess

n

i
bus

1991
• Commenced electric service on the
Omura Line (Haiki to Huis Ten Bosch)1995• First fare revision

1990

2000

• Began operating Yufuin no Mori express

1987• First revision of timetable• Released new 2-ride and 4-ride concession tickets
for limited express trains• Commenced electric services on Sasaguri Line andChikuho Main Line (Fukuhoku Yutaka Line) (all of the
Sasaguri Line and between Orio and Keisen on the
Chikuho Main Line)

2003

1996

Railway business
1988

Kyushu Railway Company

2001

1997

MiyazakiPrefecture

Kagoshima-Chuo• Opened Amu Plaza Nagasaki and
JR Kyushu Hotel Nagasaki• Opened Huis Ten Bosch
JR ANA Hotel• International
passenger shiproute service Beetle
2 began sailing from
Fukuoka to Busan (2hours 55 minutes)• Opened Shato
Hanten, a luxury
Chinese restaurant

Kokura

2000

1995

1990

• Opened Miyazaki
Airport Line

1993

1999

• Launched Stationmaster's
Recommended Hot Springs,
a new travel product (Ekicho
Osusume no Yu)• Held first JR Kyushu
Walking event• Opened Kyushu Shinkansen line (between
Shin-Yatsushiro and Kagoshima-Chuo)• Began operating Hayato no Kaze, Kyushu
Odan Tokkyu, and Yufu DX limited express
services and Nanohana DX and Isaburo/
Shinpei special rapid services• Commenced electric
service on Hohi Main Line(between Kumamoto and
Higo-Ōzu)Integrated Report 2022

9

History of the JR Kyushu Group
History of the JR Kyushu Group2010• Established JR Kyushu Farm Co., Ltd., an agricultural
production company• Opened JR Hakata City2015
• Opened JR Oita City and JR Kyushu Hotel
Blossom Oita

2011
• Entered poultry farming industry andestablished JR Kyushu Tamago Farm, Inc.

2006
• Opened private nursing
home SJR Betsuin

2016

2021

• Opened THE BLOSSOMHIBIYA and THE
BLOSSOM HAKATA
Premier• Established JR Kyushu
Asset Management
Co.,Ltd• Opened Amu Plaza
Kumamoto• Acquired stocks in therestaurant Manbou Corp.

• Opened the JRJP
Hakata building• Opened Akasaka Umaya (Jing'an Temple)
Shanghai2019• Established Nurubon
Inc.

2009

2014

2018

2020

• Began signing up members
for JQ CARD, the JR Kyushu
Group’s credit card

• Opened JR Kyushu
Hotel Blossom Shinjuku• Entered hotelindustry in Thailand• Opened Amu Plaza
Miyazaki

2007

2012

2017

• Opened the hot spring inn Hana Beppu• Opened Ropponmatsu 421• Acquired stock in Drug Eleven Holdings Co., Ltd.

Business
Services• Opened Okuhita Onsen UMEHIBIKI• Began operating
SL Hitoyoshi service

2018• Began operating
Umisachi-Yamasachi limited
express service• Strategic alliance with
Alibaba Group in China

2015

2011

•	 Began operating Aso Boy! and Let’s
Take the A-Train limited express services• Began operating JRKYUSHUSWEET TRAIN Aru Ressha

2010

2019
• Finished renovation of Mojiko Station

2020

Transportation

2008

2010

2013

2016

2020

• Launched IC
card ticketing
service SUGOCA• Opened Safety Creation Center• Fully opened Kyushu
Shinkansen line
• Began operating Ibusuki no
Tamatebako limited express service• Began operating the cruise
train Seven Stars in Kyushu• Began operating DENCHA wire typebattery-powered train• Began operating Kawasemi Yamasemi
limited express service• Listed in the First Section of the Tokyo Stock
Exchange and in the Fukuoka Stock Exchange• Began operating 36+3
(Sanju-Roku plus San) express

Kyushu Railway Company

Retail andRestaurant
Construction• Acquired all stock in Caterpillar Kyushu Ltd.

2009

Real Estate andHotelsIntegrated Report 2022

10

History of the JR Kyushu GroupWe changed our segment classifications from the fiscal year ended March 2023 to strengthen the business portfolio on our Groupwide basis.
As a result, our segments have been reclassified from Transportation, Construction, Real Estate and Hotels, Retail and Restaurants, and Other
to Transportation, Real Estate and Hotels, Retail and Restaurants, Construction, and Business Services.

At a Glance
Business Overview

Transportation

Real Estate and Hotels

Operating Revenue by Segment*

Our Transportation business comprises businesses such as our railway
business, bus business, and passenger ship business. We operate a total of
22 lines (1 Shinkansen line, 8 main lines, and 13 regional lines), covering
2,273km across all seven prefectures of Kyushu. (As of March 31, 2022) Our
bus business consists of local bus, express bus, and charter bus services,while our international passenger ship business covers routes such as
Fukuoka to Busan. (As of March 31, 2022, international routes have beensuspended.)

Our Real Estate and Hotels Group operates a real estate lease business(commercial facilities, offices, rental apartments, etc.), a real estate salebusiness (condominiums), parking lot business, retirement complexes,
hotels, and tourist complexes, in addition to asset management for a private
REIT. Affiliated companies manage the station and office buildings we own,
primarily in major cities in Kyushu, as part of our property rental business.

Operating Revenue(to outside customers)(billions of yen)

200

30.2%

181.8

(billions of yen)

173.7

100

95.2

108.9

104.2

’21/3

’22/3

’22/3

0
’20/3

(billions of yen)

90.0

90.7

80.1

0
’20/3

’21/3

’22/3

104.0

Business Services

Our Business Services Group operates businesses such as an advertisingbusiness, sales and rental of construction machinery, and more. Our
advertising business plans and produces ads and carries out sales promotions.
Our business for sales and rental of construction machinery deals withmachinery such as construction machines, diesel engines, and generators,
with activities including sales, rental, maintenance, and training. Other services
include sales of railway materials, office appliances and other equipment,
contracting of employee lodging management, system development andoperation, shared financial services, and general security services.

-13.6

-14.1

-37.6
’20/3
’21/3

-22.2
’22/3

-22.7
’22/3

51.4

43.6

43.6

Operating Income

■

30.5

’21/3

’22/3

’22/3

93.8

96.5

19.1

9.9

’20/3

92.9

0

17.9

18.0

’22/3

8

’22/3
Current Segments

Operating Income

■

4.4

3.4

2.8

-1.1

0

0

’19/3

’20/3

-2.5
’21/3

-1.2
’22/3

-1.2
’22/3
Current Segments

Former Segments

4

50

’21/3

■EBITDA

Current Segments

95.7

31.9

5.0

(billions of yen)

99.3

31.8
22.2

-3
’20/3

Current Segments

Former Segments

3(billions of yen)

■EBITDA

7.2
6.2

Operating Income

■

7.6

8.0

8.0

8.0

6.5

6.9

7.0

7.0

’20/3

’21/3

’22/3

0

0
’19/3

’20/3

’21/3

’22/3

’22/3

’19/3

Current Segments

Former Segments

11.1%

25.4

’19/3

6

0

12.2%

-26.5

■EBITDA

35.6(billions of yen)

40

100

40

’22/3

104.6

Former Segments

Our Construction Group comprises businesses such as our construction
business, rolling stock and machinery construction, and electrical business. In
our construction business, we use our specialist railway technology to carry out
work related to railways, primarily civil engineering, track work, construction, andmaintenance. Our rolling stock and machinery construction business designs,
produces, installs, and performs maintenance for rolling stock and machinery.
Our electrical business constructs and maintains electrical, HVAC, andfirefighting equipment for public and private facilities, primarily electrical facilities
for railways. We also provide construction consultancy services.

29.5

Former Segments

Current Segments

80

13.2%

’19/3

Operating Income■0(billions of yen)120

27.4 19.8

20

40

’19/3

Construction

113.7

110.5

Former Segments

Our Retail and Restaurant Group operates in the retail, restaurant, andagriculture industries. Our retail business includes chains such as Meihingura
specialist souvenir shops and FamilyMart convenience stores. Our restaurant
business includes the Umaya tavern, fast food stores, the Train d’Or bakery,and the restaurant Manbou. Our agriculture business produces and sells
produce.

0(billions of yen)

120

33.3%

34.3

Current Segments

Former Segments

80■EBITDA

40

-40
’19/3

’19/3

Retail and Restaurant

EBITDA/Operating Income or Loss(billions of yen)(billions of yen)

80

6

72.6

72.1

63.6

69.5

60.0

40

3

0

0
’19/3

’20/3

’21/3

Former Segments

’22/3

’22/3
Current Segments■EBITDA

4.1

4.3

2.2

2.2

’19/3

’20/3

’22/3
Current Segments

Former Segments

Operating Income

■

5.2

5.7

2.8

3.3

3.7
1.7
’21/3

Former Segments

’22/3

’22/3
Current Segments*Breakdowns for each segment are calculated according to the current segment structure.

Kyushu Railway Company

Integrated Report 2022

11

Value Creation Story

Value Creation Story
Value Creation Process
The Process of Formulation of JR Kyushu Group Medium-TermBusiness Plan 2022-2024
Feature JR Kyushu Group Medium-Term Business Plan 2022-2024
Message from the CFO
Feature Local Community Invigoration: Sustainable city-buildingValue Creation Story

Value Creation Story
What we aim to be
The JR Kyushu Group aims to be a corporate group that will invigorate Kyushu and transmit
Kyushu vitality to the rest of Japan and Asia.
We have established three pillars that form our code of conduct, concepts that eachand every employee of the JR Kyushu Group can keep in mind and use as a touchstone ineverything that they do. These are Integrity, Growth and Evolution, and Local Community
Invigoration.
The JR Kyushu Group conducts its business activities according to a vision of what we aim
to be and conduct that we have established in order to achieve it, striving to improve our value
as a company and build a sustainable society.

Value Creation Process▶ P.14

A corporate group that invigorates Kyushu,
Japan, and Greater Asia with safety andservice as its foundation

2030 Long-Term Vision
We will contribute to the sustainable developmentof Kyushu through city-building initiatives thatleverage the distinctive characteristics of local
communities, centered on safe and secure
mobility services

Policies for the realization of the 2030 Long-Term Vision
Policy ① Implementing city-building initiatives
for the realization of well-being, withconsideration for changes in values
Policy ② Expanding areas we work in that
contribute to the sustainable
development of Kyushu

Material issues ▶ P.17
The three pillars
forming the JR Kyushu Group's
code of conduct「Integrity」「Growth and Evolution」「Local Community
Invigoration」

Kyushu Railway Company

JR Kyushu Group
Medium-TermBusiness Plan
2022-2024▶ P.18

Points that the JR Kyushu Group focuses on at all times

E Realization of a de-carbonized society
Safety and service, the foundation for all

S of our businesses

S Sustainable city-building
Development of human resources, theS source of value creation

G Sound corporate management

Integrated Report 2022

13

Value Creation Story

Value Creation Process

InputsBusiness Activities

Financial capital

Outcomes● Financial stability

JR Kyushu Group Medium-Term Business Plan 2022-2024 ▶ P.18

Human capital

Key strategy ①

Equity ratio: 40.8％ / Credit rating: AA- (R&I)● Employees who are eager to learn and take on challenges

Key strategy ②

Creating a model forbuilding cities that
promote well-being*1

Employees (JR Kyushu only): 7,647
Employees (all of the JR Kyushu Group): 14,872
Hours of training per employee: 17.5

Intellectual capital● R aising awareness about safety, the core principle of everything we doCompletingbusiness
structural reforms

Developing businesses
in new areas in which
we can contribute

Advancing personnel
strategy

Training sessions held at the Safety Creation Center: 240● Collecting knowledge about safety

Key strategy ③

Strengthening
management baseMaterial issues

Economic value
FY2025/3 targets
Operating revenue 
Operating income 
EBITDA 
ROE (reference) ¥440.0 billion¥57.0 billion¥94.0 billion
More than 8%

Financial soundness indicators(as of FY2025/3)
D/EBITDA Approximately 5 times
Equity ratio:  Approximately 40%

Views shared by employees about safety: 11,846

Points that the JR
Kyushu Group focuses
on at all times▶ P.17

E
Realization of ade-carbonized society● Technical capabilities / customization capabilities

cultivated through the railway business● Knowledge about city-building and community

development and collective competence in thedevelopment and operation of various businesses

Transportation

JR Kyushu Group companies: 43

Real Estateand Hotels

Retail andRestaurant

Construction

S

Business
Services

Manufactured capital● Providing sustainable mobility services

Stations: 568 / Railway cars: 1,674
Investment in safety: ¥18.7 billion
Sloping areas that have been reinforced: 4

Brand strength,
creditworthiness

Customerbase

Railway network/
network

Human resources(technical capabilities,
administrative capabilities)

AssetsFinancialbase

de-carbonized society

SUGOCA cards issued: 3.58 million
JR Kyupo members: 460,000
Discussions with customers held: 14●C ooperations with local communities, local

governments, companies, etc.

C ity-building and community development carried out
together with local communities
Participants in JR Kyushu Walking: 54,489

Natural capital● Rich, appealing natural assets in Kyushu

Number of World Heritage Sites (Kyushu and Okinawa): 6
Ranking for total volume of hot springs: 1 (Oita Prefecture)
From Usage of Hot Springs (Ministry of the Environment)● Energy usage

Sustainable city-building

 nsuring the utmost safety at all●E

Social and relationship capital● Customer base

Safety and service, thefoundation for all of ourbusinesses● I nitiatives for the realization of aStrengths of the JR Kyushu Group● Development areas around railway lines● Idle assets, such as space under elevated railway tracks

Social value

times

Outputs● Rail services around Kyushu

Passenger-kilometers on railway: 6.1 billion
Used by 730,000 passengers per day● Operation of services such as the cruise

train Seven Stars in Kyushu and D&S Trains● Operation of station buildings such as JR

Hakata City and Amu Plaza

Major station buildings (Amu Plaza): 7
R evenue of tenants in station buildings: ¥184.6 billion● I mplementing initiatives to● Operation of condominium complexes, hotels,

and retail and restaurant businesses in
Kyushu and elsewhere
Condominiums sold: 8,569
Rental condominiums: 4,704
Hotels and ryokan (traditional Japanese inns): 19
Retail stores and restaurants: 559

enhance our corporate culture
founded on service

 reating a model for building●C

cities that promote well-being

 eveloping businesses in new●Dareas in which we can contribute dvancing personnel strategy●A● Environmental burden*2CO2 emissions: 313 thousand t-CO2
Total industrial waste: 83 thousand tons

Development of humanresources, the source of value
creationGSound corporate management

 nhancing communication with●E

stakeholders

Crude oil converted: 201 ML*2

*1
As of April 1, 2022   *2 Facilities that are legally required to be reported under the Act on Rationalizing Energy Use.
* Unless otherwise specified, figures are for the fiscal year ended March 2022.

Kyushu Railway Company

Integrated Report 2022

14

Value Creation Story

The Process of Formulation of JR Kyushu Group Medium-Term Business Plan 2022-2024
When we established our new Medium-Term Business Plan from a long-term perspective, we assembled a workshop team. Composed primarily of young managers who will be the backbone of the
JR Kyushu Group in 2030, the team discussed and considered various points on the executive side.
Our Board of Directors also discussed the plan from an early stage, and gave its final approval at its meeting in March 2022 after multiple discussions.
Analysis of external

STEP2 environment and consideration of

Establishment of project

Creation of plan from a long-term perspective

 stablishment of strategies that were not fully fleshed out●Ein the previous Medium-Term Business Plan (2019-2021).
These are not merely an extension of the current situation
but are created from a long-term perspective.
 onsideration of how to handle significant uncertainty and●Cchanges in our environment created by situations like the
COVID-19 pandemic

Assembly of a workshop team composed
primarily of young managers

 ssembly of a workshop team based in our Strategy●AManagement Department and composed primarily ofyoung managers who will be the backbone of the JR
Kyushu Group in 2030

Stagnation of Japanese economy▶ P.16

Executive side

Interview with the workshop team

Changes in the external environment by 2030

● I dentification of factors in changes in our external

environment that may occur by 2030 from the perspectiveof PEST (politics, economy, society, technology)

Definition of policies for the realization of
the 2030 Long-Term Vision based on theconsiderations in step 22030 Long-Term Vision(continuation of a part of the previous medium-term business plan)

concept of well-being which have been influenced bychanges in the external environment
 onsideration from the perspectives of mind, body and●Csociety/environment

We will contribute to the sustainable development of
Kyushu through city-building initiatives that leverage thedistinctive characteristics of local communities, centeredon safe and secure mobility services.

 e focused on changes in people’s values regarding the●W

Consideration of multiple future scenarios
through scenario planning e considered future scenarios focusing on changes●Win “values regarding the concept of well-being” with anassumption that the external environment will have an
influence that exceeds expectations by 2030

A future in which there is a need for social
support through cooperation between thegovernment and the private sector

A future in which there is a need to maximize
consideration for the natural environment

A future in which there is a need for eachcompany to concentrate its activities on
profitable business areas

A future in which there is a need for services
based on a thorough customer-orientation

Pursuit of economic rationality

Interviews with executive officers to identify
management issues

Directors

Definition of policies
for the realization of the LongTerm Vision

Changes in people’s values regarding the conceptof well-being

Priority on social issues

External
stakeholders

STEP3

future scenarios

Growth of Japanese economy

STEP1

Changes in the external environment by 2030
Changes in “values regarding the concept of well-being”
Future scenarios that anticipate extreme changes

STEP4

Establishment of Medium-TermBusiness Plan

Establishment of this plan period as a time toreturn to a growth track he Group has been damaged by COVID-19, and we have●Tpositioned the period of this plan as an important stage
for working to rapidly return the Group to a growth track

Setting of key strategies for this plan period s key strategies in the Medium-Term Business Plan●A

2022-2024, we will complete the business structuralreforms and in addition, as the first steps toward therealization of the long-term vision, we will work to createa model for building cities that promote well-being, withconsideration for changes in values, and to develop
businesses in new areas in which we can contribute

Revising material issues and establishing nonfinancial KPIs
▶ P.17
 ased on changes in the external environment and the●B

Policies for the realization of the 2030
Long-Term Vision
Policy ① Implementing city-building initiatives
for the realization of well-being, withconsideration for changes in values
Policy ② E xpanding areas we work in that contributeto the sustainable development of Kyushu

specific policies for the realization of the 2030 Long-Term
Vision, we re-established our material issues
 e established non-financial KPIs associated with the●Wmaterial issues

Creation of draft by workshop teamOngoing discussion and consideration in internal meetings

Interviews to identify management issues, confirmation ofvalidity of results from analysis of external environment

Confirmation of direction of strategies and validity ofmaterial issues; interviews about ESG
Discussion at total of 4 Board of Directors' meetings
Reflection of opinions from various perspectives in plan

Final approval at Boardof Directors' meeting

For details on the JR Kyushu Group Medium-Term Business Plan 2022-2024, refer to P.18-21 and the page about it on our website:
https://www.jrkyushu.co.jp/company/ir_eng/policy/plan/

Kyushu Railway Company

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15

Value Creation Story
The Process of Formulation of JR Kyushu Group Medium-Term Business Plan 2022-2024

Interview with the workshop team
Our workshop team was composed primarily of young managers who will be the backbone of the JR Kyushu Group in 2030. In addition to
our Strategy Management and Finance & Accounting Departments, the team members represented a wide range of areas including our Railway
Operations Headquarters and Business Development Headquarters, bringing a wide range of perspectives to their active discussions.
Through a total of 22 workshops, the team established a worldview for 2030, worked in groups to consider future scenarios, and created adraft for our Medium-Term Business Plan.

Hiroyuki Yamate

Takuro Araki

Norihiko Miura

Deputy Manager
Transportation Safety
Department
Railway Operations
Headquarters
Joined Kyushu Railway
Company in 2002

Deputy Manager
Planning & Development
Department
Planning & Development Division
Business Development
Headquarters
Joined Kyushu Railway
Company in 2009

Deputy Manager
Recruiting and Diversity
Promotion Section
Human Resources Department
Joined Kyushu Railway
Company in 2000

We threw ourselves into BPR and this plan was
inspired by the result

City-building for development of appealing cities by acompany that invigorates communities

The workshop team was a personnel training
exercise in itself

Q. What were your impressions as a member of theworkshop team?

Q. What kinds of issues were you aware of?

Q. What did you struggle with while creating our MediumTerm Business Plan?

I work on management reforms in our railway business.
Establishing this plan gave me a new appreciation for the
tough conditions that railways are facing. The employees in our
Transportation Department threw themselves into BPR and thisplan was inspired by the result. The 14.0 billion yen reduction incosts achieved by the BPR is incorporated into this plan to help us
return to a growth track. I will work to complete the BPR measures
within the plan period and explore additional ways to reduce costs
so that we can keep JR Kyushu's railway business in the black andstrengthen our resilience against risks that might put our operating
revenue below the targets in the plan.

Q. What motivated you in the creation of our Medium-TermBusiness Plan?
In addition to returning to a growth track, I want to make itpossible for us to make future-looking investments that will enable
noticeable growth in future, such as technological innovations, andmake this a company where people want to work. The discussions
I had with team members from various different organizations weremy driving force. I will assemble a cross-sectional team within theTransportation Department too so that we can put the insights I havegained from these discussions to good use.

Kyushu Railway Company

I make plans for real estate strategies. I was aware of two issues.
One is that our Real Estate Department does not have enoughof a pipeline for land development by the JR Kyushu Group. In
future, we will need to compete with other real estate companies toacquire land and carry out more profitable development work. The
other issue is that because COVID-19 has brought about changes
in people's lifestyles, the office buildings and business hotels we
own may become less competitive. I found it motivating to discuss
this from various angles with the workshop team based on various
perspectives.

Q. What motivated you in the creation of our MediumTerm Business Plan?
This was the first time I had thought about things from theperspective of the whole company. It reaffirmed for me how much
the JR Kyushu Group coexists with communities, and showedme how difficult it is to find the right balance in our management.
During this plan period, I will work to find the right balance between
implementing city-building initiatives for the realization of well-being
and achieving good profits, and promote sustainable business sothat we can create appealing cities and contribute to improving the
JR Kyushu Group's value as a company.

I work on personnel plans and hiring. Until now, I had mainly been
involved in management of our railway operations. Coming up with
our worldview for 2030 was the first time I had been involved in
scenario planning. I struggled to come up with future scenarios when
the future is so uncertain and it was difficult for me to picture things
that could have a greater impact than expected and the changes that
could occur as a result, but by sharing issues facing the JR Kyushu
Group with the other team members and exchanging opinions
and information from various perspectives, I was able to create thefoundations of this plan. These discussions made me keenly awareof how narrow my view was, but I have grown as a result.

Q. What motivated you in the creation of our Medium-TermBusiness Plan?
The point I want to focus on in this plan is advancing humanresources strategies. I will work to maximize each employee's
individual strengths to adapt to changes in the environment aroundus and in our own management strategies through initiatives suchas promoting multi-skilling and hiring personnel with a high level ofexpertise, focusing on how I can achieve growth of the JR Kyushu
Group through those initiatives and on building systems for doing so.

Integrated Report 2022

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Value Creation Story
The Process of Formulation of JR Kyushu Group Medium-Term Business Plan 2022-2024

Material issues and non-financial KPIs
Based on changes in the external environment and the specific policies for the realization of the 2030 Long-Term Vision, we re-established our material issues and we established non-financial KPIs
for the period of the plan that are associated with the material issues.
The results of our employee awareness survey are a non-financial KPI of ours, and are a factor in our decisions about officer compensation (except that of outside directors and directors who are
Audit and Supervisory Committee members). See P.66 for details
Material issues(points that the JR
Kyushu Group focuses
on at all times)

E

S

S

Realization of a decarbonized society

JR Kyushu Group Medium-Term Business Plan 2022-2024
Principles of our material issues

We will contribute to the de-carbonization of society as a whole by providing andpromoting the usage of seamless mobility, centered on the railway business. To
support the realization of a de-carbonized society, we are aiming for net zero CO₂emissions by 2050.

Safety and service,
the foundation for allof our businesses

Safety and service is the foundation for all of our businesses, and remains asimportant as ever. The starting point of everything we do is providing our customers
and other stakeholders with peace of mind and earning their trust.

Sustainable citybuilding

Our city-building and community development projects are about making Kyushu a place
where people will want to live, work, and visit. The reason this is possible is because the
JR Kyushu Group has deep roots in the communities and has grown with them.
In addition to implementing city-building initiatives for the realization of well-being
for people that reflect the changes we have seen in our external environment andpeople's values, we will make use of the strengths we have built in our existing
businesses to expand areas we work in that contribute to the sustainable developmentof Kyushu.

Major initiatives

Initiatives for the realization of ade-carbonized society

Major objectives/indicators
 O₂ emissions●C●● Disclosure of environment-related●

information

JR Kyushu non-consolidated emissions in FY2031/3 ● Green building●

Ensuring the utmost safety at alltimes● Safety●Implementing initiatives toenhance our corporate culture
founded on service● Service●● Resident population in regions●Creating a model for building
cities that promote well-being
Developing businesses in
new areas in which we cancontribute

50% reduction compared to FY2014/3

Groupwide Scope 1 and 2 emissions ● Groupwide Scope 3 emissions 
Acquisition of green building certification: Tracking emissions
Starting to calculate
1 or more cases

Accidents in the railway business that result in fatalities among customers*1  0 cases
Occupational accidents that result in fatalities among employees, etc. 
0 cases●

Score of service ranking*2 

90 or more points

Monitoring indicators

around development areas● Creating employment through new

Monitoring indicators●development projects● Employee engagement

Results of employee attitude survey
Continued YoY improvement
Exchanges of opinions between executives and employees 40 times per year or more

●
●

S

G

Development of
human resources,
the source of value
creation*3

Sound corporate
management

It is our personnel who create the value of our company. In addition to efforts todevelop personnel who take the initiative to learn and take on new challenges, we areworking to make JR Kyushu a company that is easy and satisfying to work in. Creating
an environment where diverse personnel can thrive will further increase the value of
the JR Kyushu Group as a company and lead to sustainable growth.

We strive to achieve highly effective corporate governance to ensure transparency andfairness in our management. We will also work to enhance mutual communication
with our stakeholders and build steady, long-standing relationships of trust.

● Diversity (promoting women’s participation

Advancing personnel strategy

30% or more
10% or more

Ratio of male employees who take childcare leave 

50% or more

Ratio of special health guidance given to relevant employees 

80% or more●● Comfortable environments that are●easy and satisfying to work in● Health management

Enhancing communication withstakeholders

Ratio of female employees among new employees 
Ratio of female managers (end of FY2031/3) ●and advancement in the workplace)●● Re-skilling support

Development of employees skilled in digital technologies  500 people or more● Participation in external distance learning 
500 people or more per year

● Institutional investors●● Individual investors

● 

●

Continuing to hold financial results presentations, etc.; sharing of investors’
opinions at meetings of the Board of Directors● Large meetings (IR Day events)
offering opportunity to talk with outside directors  1 or more events per year

● Customers

Offering opportunities for exchange, such as presentations, tours, etc.
5 or more times per year
● Discussions with customers 
10 or more times per year

● Local communities● 

Building sustainable relationships with local communities*1. Accidents for which the Group is responsible *2. Survey of actual conditions for station/conductor service, conducted by an outside party (a perfect score is 100 points) *3. Objectives/indicators related to the development of human resources are for JR Kyushu

Kyushu Railway Company

Integrated Report 2022

17

Feature

JR Kyushu Group Medium-Term Business Plan 2022-2024
Principles of our Medium-Term Business Plan
The business environment surrounding the JR Kyushu Group has been changed dramatically by
COVID-19, further increasing the uncertainty of what business conditions we can expect in future.
When we established the 2030 Long-Term Vision and the JR Kyushu Group Medium-TermBusiness Plan 2022-2024, we focused on major changes in the external environment that are
anticipated in the period up to 2030 and how values regarding the concept of well-being willchange among the people who will be impacted by those changes, as well as considering futurescenarios in anticipation of extreme changes, so that we can achieve the 2030 Long-Term Visionand become what we aim to be despite these conditions.

We determined that the following two policies would be necessary in order to realize the 2030 Long-Term Vision.
Policy 1 is “Implementing city-building initiatives for the realization of well-being, with consideration for changes invalues.” Policy 2 is “Expanding areas we work in that contribute to the sustainable development of Kyushu.”

2030 Long-Term Vision
We will contribute to the sustainable development of Kyushu through city-building initiatives that leverage
the distinctive characteristics of local communities, centered on safe and secure mobility services.

Major changes in the external environment that are anticipated in the period up to 2030
Policies for the realization of the 2030 Long-Term Vision

Social issues on which we are focusing

Assumptions about economic activity• Increasing severity of natural disasters accompanying
climate change• Shift toward de-carbonized society• D eclining population and growing difference inpopulation between major cities and under-populated
areas• R esolution of the COVID-19 pandemic• Further acceleration in digital consumption and in the
consumption of intangible products and services• C hanges in working styles, such as the adoption of remote work
• A certain level of recovery in non-resident and mobile
population

Changes in people’s values regarding the concept of well-being
Mind

Body

Society, Environment• In addition to financial reserves (acertain level of ease in household
finances), people are also pursuing“ease” in terms of time and space.
• There is a trend toward the establishmentof lifestyles in which the accelerating
consumption of intangible products andservices facilitates the experience of
happiness (fun, amusement).

• In addition to physical protection
from natural disasters, people
are increasingly aware of selfprotection in the area of hygienein order to avoid suffering from acalamity and increasingly awareof health maintenance.

• P eople are pursuing work and study
environments that are aligned with lifestyles.
• P eople are reaffirming the importanceof connections with others and of social
communities, and they value social connections.
• T here is a trend toward the developmentof altruistic values and norms, such asenvironmental conservation.

Priority on social issues
A future in which there is a need for social
support through cooperation between thegovernment and the private sector

A future in which there is a need to maximize
consideration for the natural environment

A future in which there is a need for eachcompany to concentrate its activities on
profitable business areas

A future in which there is a need for services
based on a thorough customer-orientation

Pursuit of economic rationality

Growth of Japanese economy

Stagnation of Japanese economy

Future scenarios that anticipate extreme changes in values regarding the concept of well-being* Forecasts for FY2022/3 were used at the time our Medium-Term Business Plan was announced (March 23, 2022).
These have now been replaced with the actual figures (P18-21).

Kyushu Railway Company

Policy ① Implementing city-building initiatives for the realization of well-being,with consideration for changes in values
Policy ② Expanding areas we work in that contribute to the sustainable
development of Kyushu

Steps toward the realization of the long-term vision
The Group has been damaged by COVID-19, and we have positioned the period of this plan as animportant stage for working to rapidly return the Group to a growth track. Then, in the period following
the plan, we will aim to realize sustainable growth by expanding/strengthening the community byleveraging synergies among city-building initiatives and new fields in which we can contribute.
Return to a growth track

Realization of sustainable growth-2021

Medium-Term Business Plan 2022-2024

2025-2030

Implementing railway services
and city-building initiatives
with consideration for regional
characteristics

Creating a model for building cities
that promote well-being/ developing
businesses in new areas in which we
can contribute

Expanding/strengthening the community byleveraging synergies among city-building
initiatives and new fields in which we cancontribute

Categories of operating revenues :■Railway transportation revenues ■Other revenues

FY2022/3 (results)

FY2025/3 (target)

FY2031/3 (target)¥150.0 billion
25%¥145.0 billion
33%¥89.3 billion
27%
Operating revenue

Operating revenue

Operating revenue¥329.5 billion¥440.0 billion¥600.0 billion¥240.1 billion
73%

Operating income ¥3.9 billion¥295.0 billion
67%

Operating income ¥57.0 billion¥450.0 billion
75%

Operating income ¥70.0 billion

Integrated Report 2022

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Feature

JR Kyushu Group Medium-Term Business Plan 2022-2024

Policies for the realization of the 2030 Long-Term Vision
Policy ①: Implementing city-building initiatives for the realization of well-being, with consideration for changes in values

 e will progress beyond conventional city-building and to move forward by “implementing city-building initiatives for the realization of well-being, with consideration for changes in values.” We will divide Kyushu into two major areas for theWadvancement of enhanced city-building.

City-building initiatives in areas around our terminal stations and railway lines

City-building initiatives in local regions

We will provide comprehensive value with a focus on well-being, centered on terminal stations and areas
around railway lines, and build cities where people want to live, work, and visit.

We will work in cooperation with local governments and other modes of transportation to build andintroduce sustainable transportation infrastructure. In addition, we will rediscover and make effective useof regional resources. In these ways, we will aim to expand the non-resident population.
Safe, secure, seamless mobility services
Collaboration with other companies, centered on MaaS app

Safe, secure, seamless mobility services

Airports

Collaboration with other companies, centered on MaaS app

Areas around terminal stations

Airports

Areas around our railway lines
Other companies’
railway lines

RJR

Tourism sites, etc

HOTEL

New stations

To terminal station

MJR

StationStationAccommodation at Japanese-styleinns and traditional Japanese houses

Our railway lines“Michi-no-eki”
rest areas

Diverse consumption/experience content
that combines real and digital elements
Improving community formation foundation
RJR
MJR

・ Experience-type events and tenants
・Providing experiences centered on foodfrom the Kyushu region
・Personalized services, etc.

Infrastructure that enhances lifestyle convenience
Logistics, data centers, renewable energy

HOTEL・ Diverse, high-quality living environments /accommodation facilities
・ Bases for exchange among companies,
people, and research institutions
・ Safe, secure, and clean city functions

Development in areas around railway linesthat addresses lifestyle diversification
・ Diverse environments that are easy to live in・ Bases for exchange among companies, people, and research institutions
・ Commercial facilities and spaces for exchange that areclosely linked to lifestyles

Safe, secure, seamless mobility services

Providing appealing mobility experiences that connect cities and people

Building and rolling out transportation systems in cooperation
with local governments and other modes of transportation

Design & Story trains

Cooperation

Discovering and communicating the appeal of rural areas
Rediscovering and utilizing the rural, natural, and historicalresources of Kyushu

To terminal station
Local governments

Other transportation companies
Policy ②: Expanding areas we work in that contribute to the sustainable development of Kyushu
With consideration for the strengths that the Group has cultivated through its existing businesses, we will expand areas we work in that contribute to the sustainable development of Kyushu, which is our principal business region.

The Group’s strengths● Ongoing commitment to regional development

Brand strength, ● Providing safety and security, our mission as an infrastructure company
creditworthiness ● P roviding highly original designs/services, such as the cruise
train Seven Stars in Kyushu and Design & Story trains lanning and implementation capabilities for building attractive cities●P

Human resources ● Technical capabilities / customization capabilities cultivated(technical capabilities,
through the railway businessadministrative ●Management capabilities in diverse businesses
capabilities) ●Operations capabilities cultivated in multiple front-line settings● Base of customers from mobility services

Customer base ● P oints of contact with customers through station building

AssetsRailway network/● Network of railway lines and bases that extends throughout Kyushu● Connections with government / local communities
network

Financial basetenants with sales in excess of ¥200.0 billion

Kyushu Railway Company

Contributing
to theenvironment● Idle assets, such as space under elevated railway tracks● Real estate, buildings such as station buildings, etc.

 ound financial base that makes it possible to implement●S

aggressive growth investment

Contributing Contributing
to the regional to local
economy​ communities​• Revitalizing business in Kyushu​• Implementing Initiatives for therealization of a de-carbonized society• Re-improving strong social infrastructure• Government / local government support​

Integrated Report 2022

19

Feature

Key strategies of the medium-term business plan

Numerical management targets and shareholder return policy

The JR Kyushu Group has been damaged by COVID-19, and we have positioned the period of
this plan as an important stage for working to rapidly return the Group to a growth track. The plan
encompasses three strategies: in addition to completing business structural reforms that we havebeen working on during the pandemic, we will be creating a model for building cities that promote
well-being and developing businesses in new areas in which we can contribute based on ourpolicies for the realization of the 2030 Long-Term Vision.
We are also working on developing human resources for the implementation and realizationof strategies and building foundations for advancing strategies on a Groupwide basis for therealization of the long-term vision.

Construction business Retail and Restaurant business Hotel business Railway business

Completing business structural reforms

Key strategies for the realization of the long-term vision

Key strategy ①

Key strategy ②

Key strategy ③

Stabilizing profitability*● Completing BPR measures iscovering further measures to●D
reduce costs● Flexible use of humanresources

Creating a model for building
cities that promote well-being● Implementing multi-faceted citybuilding initiatives in areas aroundterminal stations, centered on
seamless transportation network● Implementing city-building throughdiscovery of regional resources, promotionof the appeal of those resources, andcooperation with other organizations

Developing businesses in new
areas in which we can contribute earching for new business areas●S
in which we can contribute /building a foothold for new
businesses trengthening business portfolio●Sby rapidly generating results

Increasing competitivenessof existing hotels● Rebuilding brand einforcing comprehensive●Rstrengths
Increasing thecompetitiveness of brands
and of stores/restaurants
 evising store-opening strategy●R trengthening existing brands,●S
taking on the challenge of
new business formats
Implementing transition inprimary focus from inside
the Group to outside● Advancing BPR strategy
 xpanding sales outside the Group●E* Business Process Re-engineering

JR Kyushu Group Medium-Term Business Plan 2022-2024

In the final fiscal year of the period of the plan, we are aiming for operating revenues of ¥440.0
billion. For operating income, we are aiming for ¥57.0 billion, the same level as in the final fiscal
year of the previous plan.

Numerical targets (billions of yen)

FY2022/3(results)

Fiscal year ending
March 2025 (plan)

Operating Revenue

329.5

440.0

Operating Income

3.9

57.0

EBITDA

30.7

94.0[Reference] ROE

3.4%

More than 8%

Numerical targets by segment (fiscal year ending March 2025)(billions of yen)
Operating
Revenue

Operating
IncomeTransportation

163.0

17.0

Real Estate and Hotels

133.0

27.0

Retail and Restaurant

65.0

3.0

Construction

95.0

7.0

Business Services

80.0

4.0

Segment nameShareholder return policy JR Kyushu places importance on the stable provision of return to shareholders
over the long term. Over the period to FY2025/3, we will aim for a consolidated
dividend payout ratio of 35%, with a minimum dividend per share of ¥93.0. We
will flexibly implement share repurchases as necessary.

Investment plan

Developing human resources for the
implementation and realization of strategies

Building foundations for advancing
strategies on a Groupwide basis

Advancing personnel strategy● Aiming to achieve growth
for the Group by maximizing
the individual capabilities of
employees, we will advancereforms in the formulation andapplication of our personnel
strategy (hiring and placement,
development, evaluation)▶ P.48Strengthening management base nhancing establishment●Eof strategy implementation
systems and frameworks for
management of customer
information / businessportfolio management
 uilding a digital technology●Bpromotion system,
developing human resources,and establishing digitaltechnology foundations

Over the period of this plan, we will accelerate growth investment, principally utilizing our debt
capacity, while maintaining financial soundness. In addition, we will work to secure safety and toadvance efficient maintenance and upgrade investment.
Major investment projects during the period of the plan

Capital investment plan (billions of yen)Type of investment

FY2020/3FY2022/3(results)

FY2023/3FY2025/3(plan)

Growth investment A

161.5

225.0

Maintenance andupgrade investment B

99.6

115.0

Safety Investment

57.5

58.0

261.2

340.0

Total

Growth investment A

Maintenance and upgrade investment B

Real estate / hotel related•N ew Nagasaki Station building• Kagoshima-Chuo Station west
entrance development• Ureshino Japanese-style inn
development• P roject for utilizing the space
above the tracks at Hakata Station• THE BLOSSOM KYOTO• T oranomon 2-chome office development
M&A initiatives targeting thedevelopment of businesses innew business areas in which
we can contribute

Railway business related① Projects related to the NishiKyushu Shinkansen• New production of Shinkansenrolling stock② O perations / maintenance reform③ Safety investment• U pdating 811 series main circuit• New production of the DD200
locomotives• New production of YC1 series
rolling stock.
• Self-driving related

Investments that contribute to increases in environmental
value (included in the above-mentioned growth investment andmaintenance and upgrade investment): approximately ¥60.0 billion* Based on projects that are eligible for the Green Bond framework, etc.

Kyushu Railway Company

Integrated Report 2022

20

Feature

Completing business structural reforms
In the railway business, we will aim to realize a sustainable,
stably profitable structure through the completion of BPR,
for which we are currently implementing initiatives, and theimplementation of further cost reductions. In future, we will
accelerate our initiatives to build a sustainable transport
network, such as taking our DX to the next level andconsidering new technologies to adopt.
In other businesses, we will advance initiatives targeting a
rapid recovery from the influence of COVID-19.

FeatureCreating a model for building
cities that promote well-being

Reductions in fixed costs
Accelerating the implementation ofcertain urgent cost control
measures and BPR initiatives

102.9

Reductions due to urgent control measures, revenue-linked expenses

Advancing city-building, positioning as
an opportunity the enhancement of the
Hakata Station terminal functions resulting
from the extension of the Nanakuma Line

-21.0*

-4.0
-17.0

125.0

-22.0
FY2022/3 (results)

Extension of Fukuoka City
Subway’s Nanakuma Line
(March 2023)

Completing BPR

20.0
FY2020/3 (results)▶ P.26

Fukuoka area

■Operating revenue ■Operating expenses ■Operating income

165.2 145.1

Sustainable city-building

Over the period of the plan, we will make it a priority tocreate a model for building cities that promote well-being in thewestern Kyushu area, with the opening of the Nishi-Kyushu
Shinkansen as a trigger, and in the Fukuoka area, where wewill position the extension of the Fukuoka City Subway's
Nanakuma Line as an opportunity.
We are also working to roll out MaaS services throughout
Kyushu and build a model for sustainable mobility services.

Railway business(Unit: ¥billion)

Local Community Invigoration-14.0*
・Further measures
to reduce costs
・Flexible use of
159.0
142.5 human resources

16.5

Opening of the
Nishi-Kyushu Shinkansen(September 2022)

Other areas

Western Kyushu area

• Rolling out MaaS services (my route)
throughout Kyushu• Building a model for sustainablemobility services

Advancing city-building, withthe opening of the Nishi-Kyushu
Shinkansen as a trigger

Key strategy ③

Developing businesses in new areas inwhich we can contribute
For the sustainable development of Kyushu, after
reorganizing our structure by revising our business segments,
we will work to strengthen B-to-B businesses and B-to-G
businesses. In this way, we will aim to expand the scope of ourcontribution and to enhance sustainability.
Business sustainability risks related to changes in the environment(extent to which Kyushu’s resident and non-resident population will
have an effect on businesses)
Less susceptible toinfluence of
population changes

Key strategy ②

More susceptible toinfluence of
population changes

Key strategy ①

JR Kyushu Group Medium-Term Business Plan 2022-2024

Policy ②
Strengthening B-to-G
businesses

Construction Segment
Business Services
Segment*
Real Estate andHotels Segment
Transportation Segment
Retail and Restaurant Segment

General consumers (B-to-C)

Policy ①
Strengthening B-to-B
businesses

Companies (B-to-B)

Scope of our contribution(customers who
contribute to thedevelopment of Kyushu)

Government / local governments (B-to-G)*Name changed in fiscal year ending March 2023

FY2025/3 (target)* Cost reductions are vs. FY2020/3 and exclude special factors.
 e will strengthen B-to-B businesses, centered on the●W
Strengthening Construction Segment and Business Services Segment.
 e will aim to grow these businesses into a pillar of●W① B-to-B
businesses
the Group’s operations, along with B-to-C businesses,
by actively strengthening M&A, expanding areas, etc.

The Future Railway Project
Creating the railway of the future to drive city-building in Kyushu

In April 2022, we launched a new internal project to the railway of the
future to drive city-building in Kyushu by bringing about evolutions in
mobility and strengthening the capabilities of our business based on theslimming down of our railway business through our BPR.
We set up a team with members from throughout our organization to
discuss the various points that need to be considered, such as futuretransportation systems, future services, and future equipment. Our
initiatives for the evolution of our railways go beyond cost reduction
and include active investment in growth, innovations in operational andmaintenance technology, and new revenue streams.
The project is employee-driven, with employees recruited from a wide
range of areas, including operations facilities.

Kyushu Railway Company

Enhancing mobility
Strengthening
management baseSecond stage - 2030
• Intelligent railways• Achieving sustainable transport networks

First stage - 2024
• Improvement of income and expenditurethroughout the Group• Building sustainable transport systems• Technological innovation to lay the foundations
for the second stage
Cost reduction

Cost reduction throughtechnological innovation

Securing
revenue

Investment in growth

Strengthening② B-to-Gbusinesses everaging the strengths of the entire Group, which●Lhave been cultivated through multi-faceted strategies, we will search for business areas in which
we can develop a competitive edge and expand ourbusinesses.

Revision ofmanagement of income
and expenditure

Cost reduction: reduction of ¥14.0 billion(ongoing)

Integrated Report 2022

21

Message from the CFO
Working to create value in both financial andnon-financial forms to achieve sustainablelong-term growth.
We are heavily implementing our key strategies to complete ourstructural reforms and realize our long-term vision, with the aimof creating economic and social value.

Becoming CFO during the pandemic
It has been two and a half years since COVID-19 began
ravaging the world and impacting societies and economies. At
the beginning of the pandemic, we didn't even know what thisvirus was or how it affected people's health. We took a variety
of measures in rapid succession, starting with measures toensure the safety of our passengers and staff. In addition toensuring capital to operate the railway, we began initiatives tomitigate the crisis for our trading partners, such as giving rent
discounts to the tenants of our commercial facilities. People
are no longer being ordered to stay at home, but while theflow of people has recovered to a certain extent, it's been
one step forward and one step back for JR Kyushu, sincepeople's movement is affected by the number of cases of
COVID-19. Looking back on the last two and a half years,changes that I thought would happen gradually over the
next ten years—such as the popularization of remote work,
online meetings, online shopping and food delivery services—
have happened all at once. It's caught us off guard.

Kyushu Railway Company

Chief Financial Officer

Takuma Matsushita

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22

Message from the CFO

When people's movement stopped, our sales plummeted,causing major damage to businesses like railways that have ahigh ratio of fixed costs. It also reversed the positive cycle we had
been creating where increases in railway passengers increased
the revenue and profits of the businesses around the stations.
But we refused to let a crisis happen without turning it into
an opportunity, and drastically reformed the structure of ourbusiness, particularly our railway business. Our management
were communicating with our employees almost every week
about how we should handle the circumstances we foundourselves in, and when we asked for ideas from employees
for ways to reduce costs, we received around 4,000. I think
our employees saw this crisis as their problem and that madethem think about ways to get through it. Through our project
to reduce fixed costs, which we call BPR (business process reengineering), we saved 4 billion yen in the previous fiscal year.
In the current fiscal year (FY2023/3), we expect to reach ourtarget of a 14 billion yen cost reduction, around 10% of our
fixed costs. We are also working to strengthen our businessportfolio, which suffered a downturn due to its dependence on
a flow of people in stations, by spreading our wings in areasof business that are not dependent on a flow of people, suchas logistics facility leasing. We have also seconded employees
to various companies in response to the temporary decreasein operations here due to COVID-19. Through these strategic
opportunities to play on another field, these employees havegained experience and knowledge that they would not havegained in the JR Kyushu Group, and have become forces tobe reckoned with as a result. There is no doubt in my mind
that these employees will be foundational in achieving our2030 Long-Term Vision and the next stage of growth.
While the battle with COVID-19 is not over yet, the JR
Kyushu Group has begun working on major transformation andevolution to adapt to the major social and economic changes
that have taken place over the last two and a half years.

Kyushu Railway Company

Evaluation of our results
In the fiscal year ended March 2021, the year COVID-19 hit
its stride, we ended up with a massive operating loss of 22.8
billion yen despite taking emergency measures to reduce costs
and limit spending in response to the rapid changes in ourbusiness environment.
In the fiscal year ended March 2022, however, ourconsolidated operating revenue increased 12.1% year-onyear to 329.5 billion yen, bringing us back into the black with
operating income of 3.9 billion yen. Businesses that haveremained comparatively strong during the pandemic, such as
our real estate lease and sale businesses, our construction
business, and our B-to-B business, were the foundation of thisprofit, while the rapid measures we took, such as BPR and othercost reduction and the reviews of our discount tickets, clinched
our success. Another major contributor to this profit was ourquick action to lay the foundations of a cyclical investment
model, including the establishment of our asset managementcompany at the start of the fiscal year and the commencementof our private REIT in March at the end of the fiscal year.
I think a company needs to be a going concern and that
there needs to be a balance between securing profit each year
and making investments that will yield profit in the long term.
In that sense, too, I am pleased with the way we spent the last
fiscal year steadily making long-term investments while also
turning a profit despite these difficult circumstances.

JR Kyushu Group Medium-TermBusiness Plan 2022-2024
One characteristic of our latest Medium-Term Business Plan isthat we established it by envisioning multiple future scenarios that
could occur by 2030 (the target year of our long-term vision) andthen thinking backwards to determine the strategies we need to
put in place to ensure that we will be able to handle whatever the
future brings. We spent some time considering how COVID-19
has changed society, the economy, and people's values about
wellbeing, and the impacts it is likely to have in future.
After multiple discussions by the Board of Directors, we havepositioned the three years of this Medium-Term Business Plan
as a period for returning to a growth track and the period from2025 to 2030 realizing sustainable growth.

Our three key strategies
The urgent issue of business structural reforms is the firstkey strategy in this Medium-Term Business Plan. In addition to
the BPR in our railway business, we will likewise take concretemeasures in our hotel business, another business with a highratio of fixed costs, including reviewing our branding.
After laying the foundations for growth by completingbusiness structural reforms (key strategy ①), we will employ
two strategies for realizing our long-term vision: creating amodel for building cities that promote well-being (key strategy② ), particularly in the Western Kyushu and Fukuoka areas,and developing businesses in new areas in which we cancontribute (key strategy ③), such as BtoB and BtoG. (Refer
to P.21 for details on these strategies.)

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23

Message from the CFO

Operating Revenue Operating Income¥440.0 billion¥57.0 billion

EBITDA(Reference) ROE¥94.0 billion

More than 8%

I think the JR Kyushu Group needs to strike a balance between
fulfilling its social responsibilities as a business that provides
support in the lives of people in Kyushu and creating economic
and social value. I see operating revenue as an indicator ofthe degree to which the products and services we provide arehelping many people, and operating income as evidence ofadded value that the JR Kyushu Group has created. This is
another sense in which those two targets are important. Ouroperating income target of 57.0 billion yen was our original target
for the fiscal year ended March 2022 in our previous MediumTerm Business Plan. That target ended up being retracted due
to COVID-19, but now we are aiming to return to a growth trackand our target in this plan reflects that. It will certainly not be aneasy target given the business conditions created by COVID-19,
but we've committed to achieving it and the whole of the JR
Kyushu Group will work together on efforts to that end.
At the same time, we have set an ROE target of 8% or moreas an indicator of the efficiency and profitability of our business,

Kyushu Railway Company

2 ３

Key points of changes
Positioning the “Construction Segment” andthe “Business Services Segment” as B-to-B
business areas, promoting the establishment
and growth of functional subsidiaries

Other

Retail and Restaurant

Construction

Real Estate and Hotels❶Changing the name of the “Other Segment” tothe “Business Services Segment”

Construction

Retail and Restaurant

4

Business Services

Transportation

Former segments

Summary of changes

Real Estate and Hotels

Consolidated numerical targets (FY2025/3)

Change in segment classifications (as of April 1, 2022)

Transportation

Financial strategies

based on our cost of equity. The most important thing will be toachieve recovery in our returns by working on the key strategies
I mentioned earlier throughout the three years of this MediumTerm Business Plan. We are taking bold action toward future
growth, with plans to make growth investments of 225.0 billion
yen for projects such as the development of the new Nagasaki
Station building to coincide with the opening of the NishiKyushu Shinkansen and the development of the area aroundKagoshima-Chuo Station. Obviously we will be consciousof capital efficiency as we make these investments, andinvestment decisions will be made according to strict criteria
upon discussions with the Board of Directors. We will not makejust any investments for the sake of profit. As CFO, I too have aduty to carefully discern which risks are worth taking.
This Medium-Term Business Plan forecasts operating cash
flow of 230.0 billion yen and capital investment of 340.0 billion
yen. Although capital investment is higher than operating cash
flow, this is based on the presumption that we will utilize our debt
capacity to accelerate our growth investments and set minimum
amounts for stable shareholder returns. With that said, ourcapital adequacy ratio has decreased by about 10% during thetwo years of the pandemic, which is highlighted that if we wereto plan for another pandemic like this one, we would need tomaintain a certain capital adequacy ratio. For this Medium-TermBusiness Plan, therefore, we have set a capital adequacy ratioof approximately 40% and a D/EBITDA rate of approximately 5
times. The private REIT that we have commenced is an option
for investing in a balance between financial soundness andgreater capital efficiency, and we are always conscious of making
use of it when selling and acquiring real estate.
Revising our business portfolio is another important financial
strategy for capital investment. While we have sold businesses
and carried out M&A thus far, our business portfolio is notcomplete. We will continue to revisit it, consider whether there
is a better structure for each business, and invest in improving
our long-term value as a company.

New segments

While Kyushu's population is expected to decrease, we canincrease the resident population, non-resident population, andemployment in areas around our railway lines by drawing on
the comprehensive strengths of the JR Kyushu Group to carryout city-building initiatives centering on transport networks. If
people are gathering in those areas for various purposes, thiswill make the areas more resilient, and make the JR Kyushu
Group more resilient too. I also think we can further contributeto sustainable development of Kyushu as a company rooted in
the area by applying the strengths we have built so far in new
areas of business.

1❷Transferring businesses to the “Business
Services Segment": JR Kyushu Service Support(cleaning, station service, etc.), JR Kyushu Linen(linen supply business)
Promoting growth by strengthening collaboration
with real estate businesses❸Transferring JR Kyushu Housing (residential
construction and sales) from the Construction
Segment to the Real Estate and Hotels Segment❹Transferring JR Kyushu Resort Development (golfcourse management) from the Other Segmentto the Real Estate and Hotels Segment

Non-financial value represents future financial value
When we consider the sustainable growth of the JR Kyushu
Group from a long-term perspective, non-financial value isa vital element in creating financial value in future. The JR
Kyushu Group has always conducted its business activities
according to a vision of what we aim to be and the threepillars of conduct that we have established in order to realize
it, striving to build a sustainable society and improve ourvalue as a company. When we created this Medium-TermBusiness Plan, we revised our material issues based on our
backcasting from 2030, and set and announced non-financial
KPIs based on the three elements of ESG. I feel that this has
reaffirmed how the perspective of sustainability is connectedto the JR Kyushu Group's management policies and businessstrategies. The non-financial component will play a significant
role in the improvement of the JR Kyushu Group's value as acompany and as CFO I will do everything I can to visualize thiscomponent to the greatest extent possible.
In terms of the environment, we have announced that weare aiming to achieve net-zero CO₂ emissions by 2050, andwe need to take a long-term view and work toward this goal.

Integrated Report 2022

24

Message from the CFO

In February 2021, we disclosed information based on the
TCFD recommendations, and we have now conducted ananalysis of the 1.5°C scenario and a quantitative evaluation ofsome of the financial impacts. In terms of our CO₂ emissions,while our volume of scope 2 emissions from the usage ofelectricity to operate our trains is high and will largely dependon the composition of power sources used by our electricity
suppliers, we will continue our thorough reduction of energy
usage, and we are considering measures such as the adoption
and use of renewable energy. Meanwhile, we are consciousof the need for a change in energy sources to reduce ourscope 1 emissions created by the use of diesel in equipment
such as our diesel rolling stock. As we work to achieve netzero CO₂ emissions by 2050, we will explore various options
while giving proper consideration to future trends in technology

Kyushu Railway Company

and economic viability. In this Medium-Term Business Plan,in addition to continuing to invest in energy-saving rollingstock, we aim to acquire green building certification for ourReal Estate and Hotels Segment so that we can improve theenvironmental value of this segment and increase the value of
future assets. We see our environmental initiatives as business
opportunities, and aim to approach them as a way of "playing
offense" as much as anything else.
And most of all, we are conscious that it is employees
who achieve our various business strategies. Whether you
look at where we are right now, where we'll be in 2030, or
what we'll do after that, employee development is the mostimportant point, in my opinion. It's a matter of how we'll get
the employees we need for our business strategies and how
we'll train them. I want human resources strategies to be thegreatest focus during this Medium-Term Business Plan, and am
already working on reforming our human resources systems.
Human resources strategies are an investment in the future.
As CFO, I will reform our systems based on the changes wehave seen in society and individuals' values so that employees
can be sure that their efforts and results will be rewarded, andwork on both financial and non-financial initiatives to turn that
into sustainable long-term growth for the JR Kyushu Group.

Closing
I place immense importance on communication with ourshareholders and investors. I have had many conversations
with shareholders and investors since I became CFO, whichhave given me many insights and things to think about in
depth. Opinions and feedback are not only reported to
the Board of Directors, but applied to internal operations
where necessary and incorporated into future strategies andmeasures.
Another important role of mine is to make sure everyone isaware of the JR Kyushu Group's policies and ESG initiatives
and how they are connected to our corporate values. I aim
to increase the quality and quantity of our conversations
and provide more in-depth communication. The Group has
been damaged by COVID-19, and the period of this plan is
an important stage for working to rapidly return the Group toa growth track. We will work steadily on this Medium-TermBusiness Plan with a long-term view and do everything we
can to build a sustainable society and improve the JR Kyushu
Group's value as a company.

Integrated Report 2022

25

FeatureE

Realization of a de-carbonized society

S

Safety and service, the foundation for all of our businesses
Sustainable city-building
Development of human resources, the source of value creation

G

Local Community Invigoration

Sound corporate management

Sustainable city-building

We approach our business with a strong sense of purpose as a corporate group that is
invigorating Kyushu. Even if our business environment has dramatically changed, this mindset
remains unchanged. Ever since we were first established, we have worked steadily to builda resilient railway and drawn on the comprehensive strengths of the JR Kyushu Group inproactive city-building and community development projects involving various facets of ourbusiness to create thriving communities with plenty of employment opportunities.
Our city-building and community development projects are about making Kyushu aplace where people will want to live, work, and visit. The reason this is possible is because
the JR Kyushu Group has deep roots in the communities and has grown with them.
When communities are invigorated, the JR Kyushu Group is invigorated too. Sustainable
development of communities leads to sustainable growth of our group.

Kyushu Railway Company

Integrated Report 2022

26

Feature

TopicsLocal community invigoration: Sustainable city-building

The Western Kyushu area

Maximizing the effect of the opening of the Nishi-Kyushu Shinkansen
Set to open on September 23, 2022, the Nishi-Kyushu Shinkansen has a total of around 66km of full(standard) tracks. At Takeo Onsen Station, passengers transfer to Shinkansen services on the same
platforms as limited express services operating between Hakata and Takeo-onsen on the conventional line.
This new infrastructure will provide more options for traveling between the Western Kyushu area and the
Fukuoka, Chugoku, and Kansai areas, and will play a key role in elevating not only the Western Kyushu area
but Kyushu as a whole.
We will aim to maximize the effect of the opening of the Nishi-Kyushu Shinkansen by using it as a trigger
for advancing development in the western Kyushu area over the period of the JR Kyushu Group MediumTerm Business Plan 2022-2024. Through initiatives such as the Saga and Nagasaki Destination Campaign(October-December 2022), we will work together with communities to promote the region and attract highvolumes of visitors to the whole of the Western Kyushu area. We will also carry out city-building initiatives inareas such as those around the Nishi-Kyushu Shinkansen line to create value in the Western Kyushu area.
In addition, there are many growth opportunities, including enhancement of urban functions such as
arenas and stadiums, increases in the attraction of companies to the area, and enhancement of areas
around stations by local governments. Accordingly, we will work together with local governments, othercompanies, etc., to invigorate the western Kyushu area.

Interest from the community

Ekimachi 1-chome Saga
Akane-sasu Hizenhamashuku
Japanese-style Inn Ureshino Yadoya(fall 2023)

Operating the TWO STARS 4047
(new D&S train)（September 2022）• Operating on two routes between

Takeo-onsen and Nagasaki,
this “Western Kyushu sea tour
train” makes a circuit aroundwestern Kyushu• I mplementing development at

Ureshino Onsen, one of Japan’s top
three hot springs for beautiful skin.
•D emonstrating consideration for
the environment, such as binary
power generation, use of heatfrom the hot springs, etc.

(January 2022)• Accommodation facility createdby renovating a private houseowned by a sake brewer.

(Spring 2023)•F ull renewal of the area to the

HakataTakeo-onsen

Saga

Kurume• Implementing a multi-faceted development project as the land gateway

to Nagasaki, an international tourism city. Including hotels (Nagasaki
Marriott Hotel), commercial facilities, offices, parking lots, etc.
• I mplementing environmental burden reduction, infection
countermeasures, introduction of next-generation AI/ICT.

Kyushu Railway Company

BeforeopeningAfter
opening

Shin-Omura
Isahaya

Kumamoto

Nagasaki
Expanding the MaaS (my route) area
・Saga Prefecture (January 2022)
・Nagasaki Prefecture (August 2022)

YufuinOperating segment:

Oita

Between Takeo-onsen and Nagasaki (approximately 66km)

Omura rail yard opened to the public (March 2022)•A round 2,600 people attended(chosen from a lottery of around 27,000 people)

Hakata to Nagasaki

Ureshino-onsen

New Nagasaki Station Building (fall 2023)

Nishi-Kyushu Shinkansen

Travel time

Hizen-Hama

Western
Kyushu area

Shimo-Sonewest of the elevated railway
tracks at Saga Station

Tosu

SaseboNishi-Kyushu Shinkansen (Kamome) welcome
ceremony (January 2022)•W e welcomed the rolling stock that will be used
for the service at Kawatana Port, together withlocal children.
•P eople gathered to watch Shinkansen cars
being transported in areas along the line, suchas adjacent roads and coastlines.

Kokura30

minutes
shorter

Shin-Osaka to Nagasaki
BeforeopeningAfter
opening

Nishi-Kyushu
Shinkansen
Shin-Yatsushiro
Kyushu Shinkansen

1 hour 50 minutes
1 hour 20 minutes on fastest service

4 hours 29 minutes
3 hours 59 minutes on fastest service

30

minutes
shorter

Test drive welcome ceremony (May 2022)•M embers of the community welcomed the train ateach station on the Shinkansen line.

Integrated Report 2022

27

Feature

Local community invigoration: Sustainable city-building

Working together with the community

Progress in city-building initiatives

Two D&S trains have already been introduced to Saga and Nagasaki, the two prefectures where the NishiKyushu Shinkansen will be opened. Aru Ressha has been operating for some time, and the 36+3 (SanjuRoku plus San) express service began operating in October 2020. 36+3 has been particularly popular withpassengers for the unique enjoyment that was created together with members of the community, such as
the hospitality provided at Hizen-Hama Station.
After the opening of the Nishi-Kyushu Shinkansen, 36+3 will operate between Hakata and Sasebo
and a new D&S train, TWO STARS 4047, will
operate between Takeo Onsen and Nagasaki. The
combination of the Kamome Shinkansen and these
D&S services will broaden the scope of tourism in theWestern Kyushu area and provide more options fortraveling around the area. The effects of the NishiKyushu Shinkansen will not be measured in points
on a map; they will ripple across the whole of the
36+3 (Sanju-Roku plus San) express service
Western Kyushu area.

Creating a model for building cities that promote well-being is one of the key strategies for the realizationof the long-term vision that are being employed in our current Medium-Term Business Plan. In the Western
Kyushu area, we will focus on measures such as implementing multi-faceted city-building initiatives inareas around terminal stations, centered on a seamless transportation network, along with discovery ofregional resources, promotion of the appeal of those resources, and cooperation with other organizations.
Our New Nagasaki Station building project includes integrated development of facilities such as a hotel(Nagasaki Marriott Hotel), commercial facilities, offices, and parking areas, and includes measures to reduce
environmental impact, prevent the spread of infectious diseases such as COVID-19, and introduce the next
generation of AI and ICT. We are also carrying out a total renewal of the western side of Ekimachi 1-chome
Saga, based on the concept Saga Hatsu, Saga Hatsu (From Saga, The First in Saga). This project seeks tocreate facilities that will be useful for tourists, business travelers, and members of the communities aroundthe stations alike. Our opening of Akane-sasu Hizenhamashuku in January 2022 will be followed by further
development of the areas around the NishiKyushu Shinkansen line, such as the opening ofUreshino Yadoya, a traditional Japanese-style inn,
in the fall of 2023.
The aim of initiatives like these is to createsynergies between the Nishi-Kyushu Shinkansen,
the new D&S train—TWO STARS 4047—andadvances in mobility, such as the expansionof MaaS services, and in doing so, expand
employment, resident populations, and visiting
Image of Ureshino Yadoya Japanese-style Innpopulations.

FeatureIn June 2022, we started the Western Kyushu Tourism and Citybuilding Award. This award will honor people and organizations whoraise the profile of the region through initiatives that preserve theregion's traditions. This award will be a way for JR Kyushu to take the leadin promoting the Western Kyushu area and getting people interested.

Members of the community

Ensuring that the whole area benefits from the Shinkansen opening
The Western Kyushu area, which encompasses Saga and Nagasaki Prefectures, has a wealth of tourist spots,
but tourism marketing tends to promote the same places every time. The Nishi-Kyushu
Shinkansen will provide faster access to areas that have previously been difficult to include intourism marketing, such as the Shimabara Peninsula, offering a wider range of options thatcan feasibly be recommended.
In the product development process, we gained many new insights that we ourselves
hadn't been aware of, such as initiatives carried out by community members and great things
about each community. By sharing all those points of appeal, we can grow the fan base not
only for the Western Kyushu area but for Kyushu as a whole.
Tourism promotion is about creating local assets. We want to work on creating true appeal
Atsushi Hori
Deputy Manager Marketingthat will outlast trends, so that we can invigorate each region and Kyushu as a whole.

and Sales Planning DivisionMarketing and Sales Department
Railway Operations Headquarters

Kyushu Railway Company

Residents of Kashima were concerned about the fact that the section of the Nagasaki Main Line from Hizen-Yamaguchi
to Isahaya will no longer be under the same management as the rest of the line. To alleviate those concerns, we haveworked on promoting tourist trains and creating a tourist plan for passengers boarding or alighting at Takeo-onsen,
Ureshino-onsen, and Shin-Omura Stations. A new D&S service, TWO STARS 4047, is scheduled to commence with the
opening of the Nishi-Kyushu Shinkansen, which is expected to attract more people to the southwestern area of Saga
Prefecture. We also plan to use the development of the new Shinkansen stations as the starting point for developing anintermodal public transport network. We will make use of features such as Yutoku Inari Shrine, Hizenhamashuku and the
mudflats on the Ariake Sea coast to attract more visitors to the area and elevate Western Kyushu as a whole.

Obama Onsen is a hot spring village that has been open for 1,300 years. The Iseya inn in the center of the village
has a history dating back to 1669. In 2019, it was reopened as a new style of inn combining a saltwater hot spring withinventive and delicious cuisine.
The opening of the Nishi-Kyushu Shinkansen this fall will enable passengers to get from Hakata to Nagasaki 30 minutes
faster than before, and with Obama Onsen less than an hour away from Nagasaki Station or Isahaya Station by car or bus,
visitors can relax in a hot spring there after sightseeing in Nagasaki City. We will work on hospitality initiatives throughout
the area so that visitors can get even more out of their train trip to Nagasaki.

Yuichiro Nakamura

ChairmanKashima City Tourism Association

Haruna Kusano
Proprietress
Iseya, Obama Onsen

Integrated Report 2022

28

Feature

TopicsLocal community invigoration: Sustainable city-building

Transitioning to BRT for the Hitahikosan Line

Hitahikosan Line to reopen as the BRT Hikoboshi Line in summer 2023
The area of the Hitahikosan Line between Soeda Station and Yoake
Station, along with the area between Yoake Station and Hita Station,
was damaged so severely by heavy rain in northern Kyushu in July
2017 that it was left unusable. In July 2020, it was decided that theline would be reopened as a BRT (bus rapid transit) system.
With the cooperation of the communities around the line, we arepreparing to open the line in summer 2023, with the aim of developinga BRT system that is kind to people, communities, and the future.

About the BRT on the Hitahikosan LineThe Hitahikosan BRT uses a dedicated road between Hikosan
Station and Hoshuyama Station (14.1km). The sections between
Soeda Station and Hikosan Station and between Hoshuyama Stationand Hita Station use general roads passing through residential areas,
providing greater convenience for the community.
Hitahikosan
Line↑To Kokura

Concept

Kind to people, communities, and the future

Soeda
General roads
HikosanDedicated road

We want the BRT to be a positive force for customers andcommunities, an environmentally friendly mode of transport,
and the key to a future where communities around ourrailway lines can live amid abundant greenery.
Nickname

BRT Hikoboshi Line (official name: Hitahikosan Line BRT)
Hoshuyama
Kyudai MainLine
←To Kurume

General roads
Kyudai Main Line
Yoake

Hita

Hikoboshi is the Japanese name for the star Altair, one of thetwo stars celebrated during Japan's Star Festival (Tanabata).
We nicknamed our BRT line this in the hope that it will be a
guiding light for the future of the communities around the
Hitahikosan Line.

Plan for BRT stations
We are planning to open a total of 37 stations in the area between
Soeda Station and Hita Station. The use of a dedicated roadwill ensure regular services, and the stations will be located near
key facilities in the community,
such as schools and hospitals,
to provide communities with amore convenient public transportsystem.

Kyushu Railway Company

Progress of construction
Despite the damage caused to many areas of
the Hitahikosan Line by the heavy rains in northern
Kyushu in July 2017, our team has finished removing
the old tracks and carrying out recovery work suchas embankment work in the area that will be used
for the dedicated road (between Hikosan Station andHoshuyama Station), and have almost finished building
the subgrade for the dedicated road.
They are currently working on upgrading
infrastructure such as Meganebashi Bridge, as wellas upgrading Soeda Station, which will offer crossplatform transfers between the BRT and the railway
line, and building roadbeds in some areas.

Community initiatives
We communicated with the communities around the line in various forms during
the design process, including inviting local government members from thosecommunities to be observers. In fall 2021, we worked together with members of thecommunities to set up three walking routes called Hitahikosan Line Connection Walks
After the disasteras part of our JR Kyushu Walking initiative. These routes showcased appealing areas
around what will become the BRT line. In July 2022, in keeping with the nicknameof our BRT line, we put up Star Festival decorations together with elementary andmiddle schools in the communities around the line. These are just a few of the ways
we have worked with the community to create a buzz about the opening of this line.

Now (June 2022)

DesignThe basic design was created by the team of JR Kyushu empioyees whoare carrying out the construction work, most of whom are young workers. They
communicated with members of the community while coming up with the design,
and are continuing to refine various elements. Forest green was chosen as thebase color to reflect the abundant nature of the area.
Logo

The logo represents the concept of "shining bright
together". The nickname Hikoboshi (the Japanese namefor the star Altair), symbolizes our hope that this service
will light the way through Soeda Town, Toho Village andHita City, connecting people with the tangible and theintangible and brightening the communities with new sources of appeal.

Caring for the environment
Electric buses
We plan to operate environmentally friendly
electric buses on the BRT line, and preparations
are already underway. These buses will be asymbol of our vision for the BRT Hikoboshi Line
as a public transport system that is kind to theenvironment.

BRT stations

Some of the BRT stations will have waiting booths. Wood materials are used toexpress the unique characteristics ofeach region, creating cozy spaces thateach have their own character. The other
BRT stations will feature station signs
unique to the BRT Hikoboshi Line that
capture the essence of Soeda Town,
Toho Village, and Hita City.

Resource recycling initiatives
The rails of the former railway line were
cut up and used as piles in the foundationsof the dedicated road. The ballasts weremixed with gravel and repurposed for thefoundations of the paving.

Integrated Report 2022

29

Feature

Topics

TopicsMaaS

Initiatives for MaaS and mobility services

Local community invigoration: Sustainable city-building

Aburayama Renewal Project

Our involvement in renewal for projects for areas such as Aburayama
Citizens' Forest in Fukuoka City An initiative for coexistence between people, the city and nature

We believe that mobility as a service (MaaS) will play a major role in the establishment of sustainablemobility services. The JR Kyushu Group launched its first MaaS initiative in the Kitakyushu area in May
2019, and have since expanded it to various areas of Kyushu.
In February 2022, we set up a Nishitetsu Bus commuter pass counter next to the JR Kyushu ticket officeat JR Kyushu Tobata Station in Kitakyushu City. The Kitakyushu City government has also been making
various upgrades to the plaza outside the station, including expanding the bus parking area, to make thecity's public transport more convenient.
In March 2022, we signed an agreement for a joint initiative between JR Kyushu, Kyushu Sanko Bus Co.,
Ltd. and TakuRoo Co., Ltd. to make Kumamoto Prefecture's transport services more convenient and build
sustainable transport networks. We have also been rolling out MaaS using a MaaS app called myroute tobroaden the effect of the Nishi-Kyushu Shinkansen. The service was launched in Saga Prefecture in January2022 and has since been expanded to Nagasaki Prefecture.
We aim to roll out broader, more in-depth MaaS measures in future, and are strengthening ouralliances with other organizations, including other transport providers, regional tourism associations, local
government bodies, and tourist facilities, to make that happen.

Located in the south of Fukuoka City (10km/around 30 minutes by car from the city center), Aburayama
Citizens' Forest is cherished among locals as a nearby place for enjoying nature.
JR Kyushu is a representative member of a group of companies on a renewal project for areas such as thisforest. The company was granted first right of refusal by the
Fukuoka City government, the organizer of the project, and is
working together with companies such as Snow Peak Inc.
This is a leading project in the Fukuoka Green NEXTinitiative. We are working together with the other participatingcompanies and the Fukuoka City government to makepreparations for the forest's reopening in spring 2023 basedon the project's vision of "coexistence between people, thecity, and nature".
Press conference with Soichiro Takashima, the mayor of Fukuoka City
Image of entire area

Progress on MaaS initiatives
Kitakyushu area
KokuraTenjin/Hakata area
Saga area

Shimo-Sone

Yufuin area
Tosu

SaseboThis is the logo of Fukuoka Green NEXT:
Nurturing Fukuoka's Forest to Protect,
Enjoy, and Utilize Our City Together. The
renewal of areas such as Aburayama
Citizens' Forest is one of the leading
projects of Fukuoka Green NEXT.

HakataSaga

KurumeKumamoto
NagasakiNagasaki area

YufuinOita

Kumamoto area

Shin-Yatsushiro

 et up a Nishitetsu Bus commuter pass counter next to the JR Kyushu ticket office at●STakanabeMiyazakiKagoshima-Chuo

NichinanMiyazaki area

JR Kyushu Tobata Station (Kitakyushu City) to improve convenience for passengers
 itakyushu City government is making various upgrades to the plaza outside the●Kstation, including expanding the bus parking area, to strengthen the station'sfunctions as a transport hub and provide support for cooperation between operators
The Aburayama project is significant to JR Kyushu for three main reasons.
● Introduced AI on-demand transport service using

myroute app● Transit bus, taxi, and railway operators are working

together to provide seamless local transport networks
 orking on initiatives to improve safety and peace●Wof mind for public transport users, contribute to
local communities, and improve the appeal andconvenience of tourism in Kumamoto Prefecture

Kyushu Railway Company❶ It is a new challenge for city-building outside our usual realm of stations and areas
around our railway lines.
❷ It is a project to create sustainable, appealing communities through initiatives that coverareas such as the environment, circular societies, and decarbonization.
❸ With a vision of "coexistence between people, the city, and nature", this project will
have a social impact that will enable a rebranding of Fukuoka as a city and facilitate
the next generation of city-building in Kyushu.
Through this project, we will work together with today's leading companies in various industries to create
the next generation of city-building that will add an abundance of value to the lives of people in Kyushu.

Hiroteru Koike

Deputy General Manager of Planning& Development Department,
Business Development Headquarters

Integrated Report 202230

Implementing corporate ESG

The JR Kyushu Group’s Corporate ESG

Implementing corporate ESG

The JR Kyushu Group’s Corporate ESG
Principles of our corporate ESG
The JR Kyushu Group aims to be a corporate group that will invigorate Kyushu and transmit Kyushu
vitality to the rest of Japan and Asia. Our vision of what we aim to be is a guideline for our mission tocontribute to a sustainable society by pursuing long-term, sustainable value.
The JR Kyushu Group often refers to the Japanese word okonai. This word means "conduct" or"actions", and it refers to what we must do as a corporate group. Our three okonai are "Integrity", "Growth

Framework for implementing corporate ESG
Board of Directors
Executive Committee
Office: ESG Promotion Office
ESG Strategy Committee
Special Sub-Committees for Social Issues

and Evolution," and "Local Community Invigoration". These are standards that every employee must follow
in order to achieve what we aim to be, and all of our employees take these very seriously. We bring theSpecial Sub-Committee on Environmental
Management
Special Sub-Committee on Energy Management
Special Sub-Committee on Environmental Pollutant
Management
Special Sub-Committee on Resource Conservation

okonai that have served us for all these years to our initiatives to solve material issues.

Our framework for implementing corporate ESG

From August 2021

In 2019, we opened our specialist ESG Promotion Office and established our ESG Strategy Committee,
led by our president, to strengthen and further implement initiatives in various areas of ESG. Our ESG
Strategy Committee positions corporate ESG as a company-wide issue and decides on how to strengthen
and further implement initiatives related to each environmental, social, and governance element. Mattersdetermined by the committee are reported to the Board of Directors when necessary.
In August 2021, we merged our previous environmental committee with the ESG Strategy Committee tostrengthen our Environmental Management System and further implement initiatives to tackle environmental
issues such as climate change as part of our corporate ESG. We have also established special subcommittees for environmental and social initiatives. Our Special Sub-Committee for Social Issues sharesissues for our Integrated Report and survey and discusses matters such as human rights initiatives. A
meeting was held in October 2021.
To further promote corporate ESG, an Outside Director who is knowledgeable about ESG attends ESG
Strategy Committee meetings as an observer. As we set non-financial KPIs based on the revisions of ourmaterial issues and put together our Integrated Report 2022, she impressed upon us the importance oftransparency about the process by which we established the JR Kyushu Group Medium-Term Business

Organization

Chairperson

ESG Strategy Committee

President and CEO

Members

Number of meetings held

(As of the fiscal year ended March 31, 2022)

3*

Main discussion topics

Committee Members: D irector General of Corporate Planning
Headquarters, Director General of Railway
Operations Headquarters, Deputy Director
General of Railway Operations Headquarters,
Director General of Business Development
Headquarters, Deputy Director General ofBusiness Development Headquarters, Corporate
Officer in charge of Public Relations Dept.,
Corporate Officer in charge of Administration
Dept., Corporate Officer in charge of Human
Resources Dept., Corporate Officer in chargeof Finance & Accounting Dept., Regional
Office Managers, General Manager of Strategy
Management Dept.
Observer: Outside Director● Editing policies for Integrated Report● Disclosure of non-financial information● Responding to ESG survey● Opinions from ESG investors, etc.
● Issuance of green bonds● Strengthening environmental management system● Future human rights initiatives

Plan 2022-2024, and provided objective, big-picture insights and advice for our value creation processes.
*Including meetings of former environment-related committees

Kyushu Railway Company

Integrated Report 2022

32

Implementing corporate ESG

The JR Kyushu Group’s Corporate ESG

Identifying material issues
We have identified key ESG themes that we focus on in our Medium-Term Business Plan 2019-2021. In
the fiscal year ending March 31, 2022, the ESG Strategy Committee discussed key ESG themes and we
defined material issues as points that the JR Kyushu Group must focus on at all times.
In the formulation of the JR Kyushu Group Medium-Term Business Plan 2022-2024, based on thespecific policies for the realization of the 2030 Long Term Vision, we re-established our material issues and▶ P.17

established non-financial KPIs associated with the material issues.

Development of human resources(Effective use of employees and making work fulfilling)
Ensuring transparent and fair management

E

Realization of a de-carbonizedsocietyS

Safety and service, thefoundation for all of ourbusinesses

S

Sustainable city-building

S

Development of humanresources, the source of value
creationGSound corporate management

Strengthening risk management, rigorous compliance
Extensive communication with stakeholders

Kyushu Railway Company● It's good that non-financial KPIs were included too, as these are also issues.
● There should be other indicators besides job creation for the implementation of

the city-building initiatives.
● In terms of enhancing communication with stakeholders, relationships with local communities are important. It's important that bothsides are continually working to build relationships.

New material issues

Contribution to local communities

Serviceprocesses that have been discussed by parties such as the ESG Strategy
Committee are important.

including the discussions that were conducted internally and with external stakeholders.

Previous material issues

Safety he material issues have been streamlined and are easy to understand. The●T● It is important to thoroughly explain the process by which the Medium-Term Business Plan was established in the Integrated Report,

Revision of material issues

Addressing environmental issues(climate change and resource conservation)

Main opinions from our directors about material issues
and non-financial KPIs

This is our fourth Integrated Report. The
first was published in August 2019. Our ESG
Strategy Committee has discussed feedback
from investors and shareholders and madeimprovements accordingly. We hold discussions
with the personnel in the ESG Promotion Officeand key personnel in each department so that ourIntegrated Reports provide a clear picture of thecurrent state of JR Kyushu. This communication
provokes new thought about the significance of JR
Kyushu as a company and the business activities
we conduct, and we believe that this fosters an
ESG mindset within the Group.
The revision of our material issues and thesetting of non-financial KPIs in our MediumTerm Business Plan was immensely significant.
It became easier to see how sustainability isconnected to what we aim to be, each of ourbusinesses, and the specific measures we aretaking. Now we just need to implement thosemeasures.
Our dialog with our investors and shareholders
is a valuable opportunity, raising a vast number of
insights and issues. I also exchange opinions with

Kuniko Muramatsu, an Outside Director who isknowledgeable about ESG, about points such as
my understanding of issues and the direction thatshould be taken in addressing them.
Major changes have taken place in ESG, and I
can see how important it is for me to absorb thisnew information and use dialogs as an opportunity
to think about it. As a group that is invigorating
Kyushu, we will push forward in our efforts to build
a sustainable society and improve JR Kyushu's
value as a company.

Mitsuko Kagawa
Manager
ESG Promotion Office
Strategy Management
Department

Integrated Report 2022

33

Environment

For Building a Sustainable Society
Realization of a De-carbonized Society
Other Initiatives

Environment

For Building a Sustainable Society
Basic Principle and Basic Policies

Information disclosure aligned with TCFD recommendations

Good environmental stewardship is essential for ensuring sustainable growth of the JR Kyushu Group.
The JR Kyushu Group has established the following Basic Principle and Basic Policies for initiatives totackle interlinked environmental issues, including climate change adaptation (reduction of CO2 emissions,etc.), resource recycling (effective use of energy and resources, etc.), and maintaining biodiversity.

In February 2021, we disclosed information aligned with TCFD recommendations.
Following the adoption of the Paris Agreement, activities targeting progress toward a de-carbonizedsociety have been rolled out around the world. The frequency and severity of natural disasters has
increased in recent years, and this trend is thought to be related to climate change. Business activities
have been significantly affected. Accordingly, the JR Kyushu Group has positioned realization of a decarbonized society as one of material issues and has advanced measures to address the climate change
issue. In August 2022, we analyzed the 1.5°C scenario and calculated the financial impacts of some of thequalitative risks that are expected to have the biggest impact and for which we have parameters for future
predictions.

Basic Principle
The JR Kyushu Group will implement initiatives for environmental conservation and stewardship in
all of its businesses and thereby contribute to the creation of a sustainable society.

Major scenarios used in scenario analysis

Basic Policies• To realize a de-carbonized society, we will take further measures against climate change, such as
efficient energy use and the adoption of new technologies, and strive to maintain biodiversity.
• We will take thorough measures to use limited resources such as water effectively and reduce
waste, and endeavor to build a circular society.
• We will endeavor to prevent pollution through measures such as appropriate management andtreatment of environmental pollutants.

Used primarily to analyze transition risks

IEA: NZE, SDS, STEPS, DRS

Used primarily to analyze physical risks

IPCC: RCP1.9, RCP2.6, RCP8.5

Calculations of increase in financial impact in 2050 based on each scenario
Risk

Environmental management system
To tackle environmental issues such as climate change, we have established the ESG Strategy
Committee, which is chaired by the president, as a body to deliberate and decide on necessary matters
including the basic policies. The committee has four specialized subcommittees and serves as anorganization for work such as creating action plans to tackle various environmental issues, setting targets,
reporting results and implementing. All of our group companies are part of our Special Sub-Committee on
Environmental Management.
In addition, when necessary, the Board of Directors receives reports about important matters that havebeen discussed at the ESG Strategy Committee and provides instructions.
▶ P.32
Environmental
Management System
Map
ESG Strategy
Committee

Special Sub-Committee on Environmental
Management
Special Sub-Committee on Energy
Management
Special Sub-Committee on Environmental
Pollutant Management
Special Sub-Committee on Resource
Conservation

Kyushu Railway Company

Centralized management of environmental issues, management of group-wide environmental
activities, addressing various laws and regulations, etc.
Energy management, addressing various laws and regulations, etc.

Increase in financial impact(billions of yen/year)

Expectations

Transition

Increase incarbon tax

Costs due to introduction of carbon
tax based on decrease in emission
coefficient

PhysicalIncreasedfrequency/
severity of natural
disasters

Costs incurred by damage to facilities
due to increase in natural disasters

4°C

2°C

1.5°C

—

+ approx.
1.5+ approx.
1.0+ approx.
15.0+ approx. 7.5

See our website for details▶ Information Disclosure Aligned with TCFD Recommendations
https://www.jrkyushu.co.jp/company/ir_eng/esg/

Management of environmental pollutants, addressing various laws and regulations, etc.
Resource conservation management, promotion of a circular society, addressing various laws andregulations, etc.

Integrated Report 2022

35

Environment

Realization of a De-carbonized Society

ERealization of a de-carbonized society

S

Safety and service, the foundation for all of our businesses
Sustainable city-building
Development of human resources, the source of value creation

GSound corporate management

Toward the realization of a de-carbonized society
The realization of a de-carbonized society was set as a material issue for the Group in the JR Kyushu
Group Medium-Term Business Plan 2022-2024. We will contribute to the de-carbonization of society as awhole by providing and promoting the usage of seamless mobility, centered on the railway business.

Major initiatives during the period of the Medium-Term Business Plan
We will carry out the following initiatives during the period of this Medium-Term Business Plan.
Proactive

Fundamental approach● Introducing/utilizing sources of renewable energy● Acquiring green building certification for real estate assets

Toward the realization of a de-carbonized society, we will work not only from a defensive perspective ofsimply reducing CO2 emissions but also from a proactive perspective of positioning the transition to a decarbonized society as an opportunity for business growth and creating new value. While collaborating withother companies, we will strive to achieve both business growth and enhancement of environmental value.
New value creation
Proactive
Mutually ecognizing the transition to a de-carbonized society● I mplementing initiatives to reduce energy usage in●Rcomplementary
anticipation of future energy cost increases
as an opportunity for business growth● Considering the introduction of energy conversion technologies through cooperation with other companies● Implementing energy saving for electricity used in train operations

Defensive● More-efficient, streamlined facilities

CO2 emissions reductions

Defensive urchasing CO 2-free electricity and non-fossil fuel●P reating environmental value through cooperation with●Ccertificates, etc.

other companies, and utilizing that value in-house or torecord a gain in sales

Investments that contribute to increasing environmental valueOver the period of this plan, we are planning environment-related investment of approximately ¥60.0
billion. These will be invested in projects/criteria that are eligible for the Green Bond framework that wasestablished in April 2021, energy-saving train cars, and real estate for which we intend to obtain green
building certification. We will also consider other investments, such as a renewable energy business.
Green Bond Framework

Roadmap toward the realization of a de-carbonized society

Eligible project/criteria

 ew model development of●N

The JR Kyushu Group has established a roadmap toward a de-carbonized society in the JR Kyushu
Group Medium-Term Business Plan 2022-2024. We will continue to set appropriate milestones and revise

Clean transportation

our roadmap where necessary, taking into account future trends in technology and economic feasibility.

Investments related to building, modification, andupgrades of electric and hybrid rolling stock

CO2 Emissions*2*1

92

Green buildingsGroup Companies

JR Kyushu
482

2013

Shinkansen train cars
● Renovation of 811 series train cars
 C1 series diesel-electric rolling●Y

stock equipped with storage battery(thousand t-CO₂)Group companies

Example of eligible project2022－2024

JR Kyushu
241

Net-zero

Until 2030

Until 2050

Investments related to the building of realestate around stations and facilities for JR
Kyushu for which we intend to obtain green
building certification

 ew Nagasaki Station building,
●N

hotel

Thorough energy usage reductions
Advancing the introduction of energy conversion technology
Advancing the introduction of environmentally friendly, efficient mobility services

Scope 1

Considering countermeasures while focusing on technology trends
Scope 2Introducing/utilizing sources of renewable energy
Purchasing non-fossil fuel certificates, etc.

*1 Aggregate value from periodic reporting stipulated in the Act on Rationalizing Energy Use*2 Scope 1 and 2 emissions

Kyushu Railway Company

Integrated Report 2022

36

Environment

Realization of a De-carbonized Society

Introducing/utilizing sources of renewable energy

Acquiring green building certification for real estate

JR Kyushu's Scope 2 emissions (emissions created by electric power) account for 80% of the total of
our Scope 1 and Scope 2 emissions, so we are working on decarbonization of electricity for net-zero CO2emissions by 2050.

assets● Renewable energy supplies for stations on the Chikuhi LineWe are providing environmental value with renewable energy that is
locally produced and locally consumed. In January 2022, we began
supplying renewable electricity, which combines electricity generated at
the Hizen and Hizen-Minami wind power stations in Karatsu City, Saga
Prefecture with energy from the same stations that has earned tracked*1
fossil fuel-free energy certification. The energy is supplied to 10 stations
on the Chikuhi Line (Hizen-Kubo to Imari).

The New Nagasaki Station building, set to be opened in fall 2023, will
be a complex including commercial facilities, a hotel, offices, and parking
based on our vision for the station as a gateway to the international city ofNagasaki with the opening of the Shinkansen.
We are introducing efficient facilities and reducing the thermal loadof buildings by improving insulation and promoting greening, as well as
adopting AI-based technology for optimized energy control and working
on measures to improve customers' comfort and preserve the naturallandscape. We aim to obtain CASBEE certification for the building.

Considerations for the adoption of energy conversion
technology in collaboration with other companies● Introduction of solar energy through an onsite PPA

From April 2022, our Nagasaki Engineering Works at our Nagasaki
Branch signed an on-site purchase power agreement (PPA) for solar
power facilities owned by a third party and began providing locally owned,
locally consumed solar power as a renewable energy source. Switching to
renewable energy for some facilities is expected to reduce our Nagasaki
Engineering Works' CO2 emissions by around 47%.

Some of our rolling stock run on diesel. We have already adopted
alternatives such as the BEC819 DENCHA, a battery-powered train, andthe YC1 Series of diesel-electric rolling stock equipped with a storage
battery. Biofuel is also attracting attention as an alternative to diesel.
In April 2022, we conducted a performance test at our Kokura Rolling
Stock Center for a single engine running on 100% FAME biofuel made byrefining waste oil.

● Renewable energy supplies for Hakata Station

Energy saving for electricity used in train operations

From July 2022, we switched JR Kyushu's electricity supplies at Hakata
Station*2 to renewable electricity. Some of this electricity is FIT electricity
from the Kusu Solar Power Station (Kusu District, Oita Prefecture) owned
by JR Kyushu Electric System Company, a JR Kyushu Group company,
and some is electricity from the same station that has earned tracked
fossil fuel-free energy certification. We expect to be able to reduce CO2
emissions by around 2,600 tons*3 per year.
Other group companies​have also installed solar power facilities in areas
such as previously vacant land and on rooftops.

We have adopted many energy-saving trains to save energy used in
the operation of our electric trains. Initiatives in recent years include theadoption of our 821 Series and the remodeling of our 811 Series. The
remodeling of our 811 Series included an upgrade of the driving motors
and control devices, a switch to a VVVF control mechanism using energyefficient SiC hybrid modules, the adoption of regeneration brakes, and aswitch to LED lighting in the cabins to reduce our environmental impact.
We have been considering energy-saving driving from the fiscal year
ended March 2022. We are collecting and analyzing sample data onelectricity consumption during driving with the optimization of driving
operations in mind, taking into account driving time and the gradient
between each station.

*1 Information such as the name, address, generation method, generated volume, and generation time is available.
*2 Excluding the station buildings and Shinkansen lines*3 Calculated according to the adjusted emission coefficient for the fiscal year ended March 2022.

Kyushu Railway Company

Integrated Report 2022

37

Environment

Other Initiatives
Biodiversity initiatives

Resource recycling initiatives

Management of chemical substances

Expansion of ESG financing

The climate and biodiversity are interrelated. We
are working on initiatives to preserve biodiversity
in addition to our measures against climatechange.

The JR Kyushu Group is helping to build a
circular society by implementing measures tomake effective use of resources through the three
Rs: reduce, reuse, recycle.

JR Kyushu appropriately manages anddisposes of chemical substances that affect theenvironment in accordance with the relevant laws.

Tree planting

Company social media page for giving

I n a d d i t i o n t o t re e p l a n t i n g a n d f o re s tdevelopment activities to provide habitats andrearing environments, we are contributing
to waterway improvement, improvement ofdisaster-proofing functions and preservation oflandscapes.

and receiving unwanted items

JR Kyushu is carrying out ESG financing
initiatives to solve social issues such as climatechange through our business and further
accelerate efforts to build a sustainable society.
In April 2021, we issued ¥20.0 billion in green
bonds based on our Green Bond Framework,
which has passed third-party evaluations by
Sustainalytics and the Rating and Investment
Information Center. In December 2021, we
published our annual report on the use ofproceeds and the environmental benefits, and we
endeavor to ensure transparency about our use offunds through dialog with investors.
We will continue to issue green bonds andcarry out more in-depth ESG financing suchas sustainability link loans as corporate ESG
initiatives that demonstrate to stakeholders
such as customers, communities, shareholders,investors, and employees that we are working
toward what we aim to be.

JR Kyushu
Kumamoto
BranchTook part in a tree planting activity on Mt. Kimpo(Kumamoto City) run by NPO21 Kumamoto KimpoAriake Environmental Council

Formed JR Kyushu Trading Mori Yunomae forestry
agreement with the municipal government of
JR Kyushu Trading
Yunomae Town in Kumamoto Prefecture, alongCo., Ltd.
with local companies and other organizations,from the fiscal year ended March 2020
Formed the Caterpillar Forest agreement forCaterpillar Kyushu forestry creation and maintenance with the
Ltd.
Nichinan City government as part of the Miyazaki
prefectural government’s company forest system
JR Kyushu Electric Participating in Tori-ga-Saezuru Midori-no-Kairo
System Company Tree Planting Events
Working on projects led by the Greenery by
JR Kyushu Resort
Golf Group such as greening and environmental
Development Co.,
conservation in spaces such as public facilities
Ltdand national parks

Reduction of plastic waste
JR Kyushu Hotels Inc., JR Kyushu Station Hotel
Kokura Inc., and JR Kyushu Huis Ten Bosch Hotel
Co., Ltd. are introducing amenities made fromlightweight materials and biomass materials.

Kyushu Railway Company

In the fiscal year ended March 2022, we set
up a community social media page for giving andreceiving unwanted items. We share information
on surplus and unneeded items within thecompany to reduce costs and make effective useof resources. Around 280 items were listed in
the fiscal year ended March 2022, around 100 ofwhich have been put to good use.

Use of water resources
Rolling stock centers such as the Kumamoto
Rolling Stock Center for our Shinkansen trains
and the Kokura Rolling Stock Center for ourconventional trains use large quantities of waterfor purposes such as washing rolling stock andparts. We are taking measures such as filtering
the wastewater at a treatment plant to enable it tobe reused as treated wastewater or gray water.
Station building companies such as JR Hakata
City Co., Ltd. and JR Nagasaki City Inc. are also
reusing rainwater and making effective use ofwater resources.

Reuse of uniforms

Measures against CFCs
As CFCs are greenhouse gases, we register
any CFCs used at each of our locations andappropriately manage filling and collection
volumes when using or disposing of CFCs.

Management of PCB waste
P C B s ( p o l y c h l o r i n a t e d b i p h e n y l s ) w e repreviously used as insulating oils for our rollingstock and electrical facilities, but we have now
switched to non-PCB oils by phasing out orredesigning older trains and facilities. Waste fromused PCBs is managed according to the relevantlaws and regulations. We now use mineral oil
as our insulating oil. As equipment without zero
PCB certification may contain traces of PCBs in
its insulating oil, we are analyzing PCB in the oil,storing the oil appropriately, and successively
disposing of it.

Initiatives under the PRTR Act
Chemical substances used in each area of ourbusiness, including asbestos and volatile organic
compounds (VOCs) such as toluene and xylene,
are appropriately treated and managed according
to the PRTR Act (Act concerning Pollutant Release
and Transfer Register).

▶ ESG financing
https://www.jrkyushu.co.jp/company/ir_eng/esg/

JR Kyushu Electric System Company
redesigned its uniforms in 2021. Around
2,100kg of old uniforms were recycled andrepurposed as soundproofing material for theengine compartments of automobiles.

Integrated Report 2022

38

SocialSafety and Service, the Foundation for All
of Our Businesses──Safety──Service

Development of Human Resources, the Source ofValue Creation
──Advancing personnel strategy
Development of Employees Skilled in Digital
Technologies
Human Rights Efforts

SocialSafety and Service, the Foundation for All of Our Businesses── Safety

E

Realization of a de-carbonized society

S

Safety and service, the foundation for all of our businesses
Sustainable city-building
Development of human resources, the source of value creation

G

Fundamental approach
We approach our safety improvement
initiatives with the mindset that safety requires
initiative.

Safety principles
Safety is the greatest thing we owe to ourcustomers.
1. E nsuring safety is based on exact observance ofrules and procedures, and is achieved through ourcontinuous effort.
2. Strict checks and thorough communication are themost important elements of ensuring safety.
3. Everyone in every role must work together to ensure
safety.
4. If you are unsure what to do, take the safest action.

Sound corporate management

The Two Pillars of Safety
The JR Kyushu Group is working on a three-year Medium-Term Safety Plan (2020-2022) to implement
measures that ensure the utmost safety at all times. There are two pillars in these initiatives. The first is a
Basic Safety Policy containing key points for each year based on
the Medium-Term Safety Plan. This is applied in each department,

Ensuring safety at all times

branch, and group company. The other is actions to ensure safety,

Basic Safety Policy

centering on key themes each year, based on the unchanging

Medium-Term Safety Planmindset that safety requires initiative.

2020 - 2022

Safety control structure

Safety Framework

With proactive involvement from top management, we have established safety management regulations
for the purpose of establishing a safety control structure and maintaining and improving transportation
safety. In addition, by appropriately operating a PDCA cycle for safety control and implementing activities
such as safety audits and safety checks, we carry out checks of our internal safety control structure in an
ongoing effort to further ensure safety.

Safety Promotion Committee
Meetings of our Corporate Safety Promotion Committee, led by our president, are held monthly to sharesafety information and discuss how to prevent railway accidents, hindrances to transportation, and occupational
disasters and how to prevent reoccurrence of any incidents that do occur. Matters such as measures andinformation that are adopted by the committee are disseminated mainly through Safety Promotion Committee
meetings held in each department and distribution of video summaries of those meetings. Furthermore, toensure unified safety practices among the whole of the JR Kyushu Group, these Safety Promotion Committee
meetings are attended by persons in change of safety at JR Kyushu Group companies, and measures andsafety-related information that are adopted are disseminated to group companies.

Meetings of the Corporate Safety Promotion Committee

Kyushu Railway Company

Safety Promotion
Campaigns

Video Distribution of Agenda

Setting Targets
To turn our principleof ensuring the utmost
safety at all times into
tangible improvements,
targets are set according
to the following
principles.

Accidents causing passenger fatalities or injuries

Eliminate theroot cause
0 cases all year

Disasters causing fatalities to employees, etc.
Fatalities
Injuries

Three major occupational accidents (collisions, electric shock (high voltage), falls)
Accidents in the operation of our railway (for which the JR Kyushu Group is responsible)
Incidents

Aim to eliminate

Incidents requiring instruction (hazardous incidents)

Dangerous accidents
and incidents

0 cases/year reached(Republished) Signal violations(Republished) Collision violations
Accidents in the operation of Blocked crossing accidents
our railway(for which the JR Kyushu Group Accident due to person on
track
is not responsible)
Rolling stock faults

Inconvenient accidents
and incidents

Track faults

Faults(transportation faults)

10
10
15

Target for final
fiscal year

0Power line faults

0Security equipment faults

0

Incidents requiring instruction (nuisance incidents)

Capital investment related tosafetyIn the fiscal year ended March 2022, weinvested ¥18.7 billion in replacement of obsolete
facilities, safety and disaster-damage prevention
measures, measures for reliable transportation,and rolling stock projects. ¥25.9 billion was also
spent as repair expenses for the maintenanceand management of railway facilities,for a total of¥44.6 billion.

(billions of yen)5

Capital Investment

Maintenance Costs

60
50
40

54.2

50.1
17.8

24.7

52.9
22.9

30

42.2

44.6

15.9

18.7

26.3

25.9

20
10

32.3

29.5

30.0

0

’18/3

’19/3

’20/3

’21/3

’22/3

Integrated Report 2022

40

SocialSafety and Service, the Foundation for All of Our Businesses ── Safety

Initiatives to ensure safety
Initiatives to eliminate signal violations and collision violations*

Prevention of signal violations
 se of measures such as simulator training to ensure that employees understand the importance●Uof carrying out basic operations correctly and are committed to doing so.
 horough checks to ensure correct execution of basic operations and ongoing instruction until●Tthese become second nature.

Our system for views shared by employees about safety is used to allow employees to share opinions
and concerns about safety, unsafe incident experiences, and unsafe incidents that may occur to prevent
accidents and other hazards before they occur. Details and solutions are reported to the Executive
Committee within two weeks and information is shared with all employees via our intranet.

Kyushu Railway Company●●

Related units(control office)Training at the Safety Creation Center

On-site simulator

Selfimprovement

Within two weeks

Safety promotion subcommittees (weekly)
Executive Committee (weekly)

Response

Assessment
and response
Results ofmeasures(head office, regional offices,
departments)

Confirmation of
response

Available to all employees

Ongoing initiatives❶Enhancement of systems to improve safetyS afety audits and inspections, safety conferences, safety discussion
gatherings, views shared by employees about safety❷Improvement of the skills of employees, etc. in ensuring safety
Self-improvement, competitions, abnormal event training, various other training❸Prevention of railway accidents, etc.
Preparation of backup equipment, measures for railway accidents and incidents❹Strong measures against intensifying environmental issues
Measures for earthquakes and tsunamis, stronger disaster prevention, caseby case measures for situations such as terrorism❺Prevention of accidents involving trains and facilities
Replacement of trains and facilities and renovation of trains

Response,
dissemination,
instruction

Planning & Transportation
Safety Department

The accident in 2017 that damaged the railway facilities at our
Nogata Rolling Stock Center taught us that there are cases wherean employee knows something intellectually but cannot act on it ina real situation. To counteract this, we have introduced a simulator
on site and have revised our training system to improve employees’
understanding of how to handle abnormal situations and ability torespond to these situations. Training takes place on site in small
groups and in general training sessions attended by all relevant
employees.

Views

●
●

Simulator training

Entered in system
・Response by site

Company intranet:
Views shared by
employees about
safetyEmployees* Collisions that violate our rules on collision prevention

Entered in systemor reported
・Crew logs
・Memorandums
・Safety Up cards●● Thorough training on prevention of collisions for employees, etc.
● Use of train collision warning system to prevent collisions caused by human error.
● Safety patrols for assessment and improvement of workplace conditions.

 pinions and concerns about safety
O
Unsafe incident experiences

Prevention of collision violations*

Report to and discussion among senior managers

Process for views shared by employees about safety
Manager of relevant area, assistantmanager, etc.
Deliberation on measures, etc. within
workplace

Top priorities

Views shared by employees about safety

Measures for
sloping surface

Further installation of ATS-DK

Our Safety Creation Center was opened in January 2011 to
keep past accidents and other incidents fresh in our memory,
impart a strong understanding of basic operations and safetymeasures, and give our employees the training they need toensure the safety of our customers and employees. In March
2021, a new Safety Creation Center was opened with therebuilding of our employee training center. The new Safety
Creation Center is conducting a sixth round of training thatseeks to foster understanding about why our rules are importantand equip employees with the ability to put that understanding
into practice by thinking for themselves about what they need to
do to follow our rules. As of the fiscal year ended March 2022,
a total of 54,524 employees, including employees of Group
companies, have attended training at the Safety Creation Center
since it was first opened.

Integrated Report 2022

41

SocialSafety and Service, the Foundation for All of Our Businesses ── Safety

Examples of improvements as a result of views shared by employees about safety
In the fiscal year ended March 2022, we received 11,846 messages with feedback, observations, or
details about unsafe incident experiences. 369 of these required measures to be taken, and we haveaddressed these and/or established policies about measures to be taken.

Examples of improvements

TOPICS
Annual terrorism and crime drills are held so that our employees will have a better understandingof what to do in the event of a terrorist attack or criminal action. There was a spate of stabbing
attacks on Tokyo's Odakyu and Keio Lines in 2021, and there was an arson attempt on a moving

View

MeasureThere was a steep slope in the area
between the platform and ticket gate at
one station due to tree removal work,
which posed a falling hazard for customers.

To ensure safety, the area was fenced to

Kyushu Shinkansen train. After this, we held training with the police at our head office and branch
offices about how to handle emergencies that could occur on a train.

prevent customers from falling down the slope.

We also strengthened ourStrong measures against intensifying environmental issues: measures fordisasters caused by heavy rain
In the fiscal year ended March 2022, we carried out work in 4 areas to reinforce sloping areas alongside
the tracks that may be affected by heavy rain or typhoons and prevent rockfall and collapse due todeterioration over time.

Examples of increased antiterrorism measures

measures against railway
terrorist attacks during the Tokyo
Olympics and Paralympics in
2021. This included increasing
security patrols by employees
and other personnel, using
posters, announcements,

鉄道の警戒警備を強化しています！
We enhance railway security measures during the Tokyo 2020 Olympic and Paralympic Games!

7月23日（金）〜8月8日（日）に東京オリンピックが、
8月24日（火）〜9月5日（日）に東京パラリンピックが開催されます。

この期間中、鉄道の警戒警備を強化いたします。

駅及び車内への危険物の持ち込みは禁止されています。
お客様の安全のため、手荷物の点検をお願いする可能性がありますので、ご理解とご協力をお願いいたします。
Hazardous items are prohibited on trains and at the station.
Please note that personal baggage may be checked
to ensure a secure environment for all passengers.
Thank you for your understanding and cooperation.
警戒警備強化のため、駅のゴミ箱・ロッカーを封鎖する場合があります。
In order to enhance railway security,
trash cans and lockers may be removed.

不審な行為・不審物を見かけたら・
・・
係員・警察官へご一報を！
If you notice any suspicious items or behavior,please notify staﬀ or the police immediately!

不審物発見時の三原則

Three safety rules when you see suspicious items.

触れない！

嗅がない！

動かさない！

Don t smell!

Don t move it!

× × ×Don t touch!

国土交通省・警察庁・内閣官房

messages on onboard screens
asking passengers to notify us if
they found any suspicious items
in a station building or train, andusing sealed or transparent trashcans.
Before the measures were carried out

Kyushu Railway Company

After the measures were carried out

Integrated Report 2022

42

SocialSafety and Service, the Foundation for All of Our Businesses ── Safety

New initiatives
Advances in digitalization of operations

Adoption and use of smart devices

Advances in autonomous driving technology

We have been adopting digital technology in operations andmaintenance to improve efficiency.
A particularly effective measure has been the use of footage fromcameras in inspections. This method is now being implemented
in various departments. In future, we will make greater use of AI inwork such as monitoring and preventive maintenance.

We are working to improve efficiency through measures such as
digitalization and operational support using smart devices. All drivers
are given smart devices and a driving support app called Shiraserukun is used to assist in their driving. Various other apps have beendeveloped to digitalize our operations.

Trains, like other modes of transport, are seeing advances in
automated driving technology. We have developed a self-driving trainsystem based on ATS (Automatic Train Stop)-DK*. Test driving began in
December 2020 in one section of the Kashii Line, and was expanded tothe entire Kashii Line in March 2022. We will work toward autonomous
driving systems that will be operated by other onboard crew (GOA
(Grades of Automation) 2.5) by the fiscal year ending March 2025.
*An intermittent type ATP system

Winner of the 5th Infrastructure
Maintenance Award from the
Minister of Land, Infrastructure,
Transport and Tourism

Inspection of facilities aroundtrain lines

Check area around tracks

Technology such as onboard
cameras is used to improvethe efficiency of inspections

Previous inspection
and checking method

Current inspection andchecking method

A staff member rides
on a commercial train
to check the areaaround the tracks
and make judgments

Video footage is automatically transferred forautomatic judgments about faulty areas

Shiraseru-kun driver support app
This app has various functions that provide support
while driving

Automation of driving using existing ATS

Driving support
The GPS of the smart device obtains information on the train's
location and alerts the driver with an on-screen message and alarm
when they are approaching a station where the train needs to stopand the area before each station where they need to slow down toprevent human error by drivers.

Features

You are approachinga slowdown zone

You are approachinga stop nly system used in ATS zone, which encompasses the majority●Oof conventional lines● Only autonomous driving used in zones with crossings
 irst autonomous driving system used on a JR line (as of●F

DeviceHousing

Station A
CamerasStation B
Slowdown zone

Pre-stop

Image of clearance limit
analysis results

Images of the facilities from the rooftop 4K cameras
are checked and judged from an inspection office

Equipment on roof of train

Kyushu Railway Company

Image of inspection of facilities
around train lines using images
from cameras

December 2020)
Results of test driving (end of June 2022)

Timetable display
Location of equipment
on train

A staff member walks
around the area tocarry out checks andmake judgments

Self-driving train equipment (FS-ATO)

The app is synced with a base system for creating timetables andsaves timetables to each smart device. The driver can then enter
the number of their service to display the timetable before they startdriving. This means that in the event of an issue, measures can betaken quickly when changing to a different train.

* A portable timetable for thedriver's route is displayedon the screen of the driver's
smart device.

Screen with driving
support + timetable

Total distance driven

115,576 km

Total number of stops 50,735
Process/schedule
December 2020

Test driving started (Saitozaki Station - Kashii Station)

March 2022

Expanded zone and trains used for test driving (entire
Kashii Line, 40% of trains)
Added functions (number of cars, snow removal,
economical driving)

End of fiscal year ending Autonomous driving systems that will be operated byMarch 2025 (target)
other onboard crew

Integrated Report 2022

43SocialSafety and Service, the Foundation for All of Our Businesses── Service

E

Realization of a de-carbonized society

S

Safety and service, the foundation for all of our businesses
Sustainable city-building
Development of human resources, the source of value creation

G

Fundamental approach

Listening to customer feedback

Since 1991, JR Kyushu has worked toenhance service through a variety of measures.
In 2003, we formulated the Service Charter,
which employees recite each day and always
keep in mind. Since the fiscal year ended March
2008, we have accelerated our initiatives tofurther promote a corporate culture founded onservice. Themes are set for each year’s activities
for further implementation. Our theme for the
fiscal year ending March 2023 onward is further
improvement of service based on the mindset"I, [name], will listen to customer feedback
and think and act to the best of my ability as arepresentative of the company."

We listen to all feedback from passengers tounderstand what customers are concerned about
and what they are not satisfied with. We place
the highest importance on responding rapidly tocustomers’ requests.

sense of hospitality and rememberthat every customer is important.

Response

Railway Operations Headquarters General
Managers’ Meeting (once per week)
Executive Committee (once per week)We always greet customers with aInquiry,
consideration ofcountermeasures,
response

Report to senior managers, deliberations

3

Visit, telephone,e-mail etc.

Related units

customer satisfaction.

Customer feedback

customer's perspective, and pursue

2,000

1,931

1,505

1,558

’21/3

’22/3

1,163

1,000
500
0

’18/3

’19/3

’20/3

Driving skills

6

Searches/protection of lost children

9

Other

Guidance announcements

30

111

Topics of
positive feedback

Assistance for people using wheelchairs
and other people with disabilities

1,558

16

Courteousguidance832

messages

Attitude toward work

100

Search for lost items

Care for injury and illness

322

132

6,000

7,495

’19/3

’20/3

6,656

6,583

’21/3

’22/3

4,000
2,000
0

’18/3
Other

490

Service by employees

829

Injuries

4

Train schedule

Onboard service

552

Other passengers' behavior

645

Areas around our railway lines

527
Within two weeks

7,513
6,441

Sales operations

Kyushu Railway Company

1,675

1,500

8,000

(head office, regional offices,
departments)

We are grateful to the customers who

We listen to customers, think from the(Number)(Number)

Flow of customer feedback

select JR Kyushu.
2

Number of compliments

Number of feedback messages and requests

Customer Service
Department

1

As we mention in our Service Charter, customer
feedback is the starting point of our efforts toenhance service. We listen to customer feedback
and strive to understand what customers
are concerned about and what they are notsatisfied with. We place the highest importanceon responding rapidly to their requests and on
working to enhance service.
In addition to messages received directly

Customer consultation center, stations, etc.

Service Charter

Initiatives to address customer
feedbackfrom customers, we seek feedback throughvarious avenues such as online and by phone.
We received around 8,100 feedback messages
in the fiscal year ended March 2022, containing
compliments, feedback, and requests. We strive
to report feedback to senior managers, deliberate,
and provide a response to the customer within
two weeks, and to rapidly share and analyze
the feedback within the company and apply it tospecific improvement measures.
In the event that it is difficult to make
improvements immediately, future measures are
considered by the Committee to Enhance Our
Corporate Culture Founded on Service, which
has the president and other related officers as
members. In these ways, we are working toenhance service quality.

Sound corporate management

1,200

Topics of feedback
and requests

6,583
messages496

Response toabnormal conditions

420

Station facilities

771

Rolling stock facilities

649

Integrated Report 2022

44

SocialSafety and Service, the Foundation for All of Our Businesses ── Service

Initiatives to enhance service quality
We are implementing a variety of initiatives toenhance service quality. We periodically obtainthe cooperation of customers in answering theCustomer Satisfaction Questionnaire, which we
use to measure customer satisfaction and toenhance various services based on the content
of the evaluations received. We also implementa Service Ranking, which involves formulating
evaluation standards for each service and utilizing
external research to conduct evaluations.
The diagram below shows the flow of initiatives toleverage customer feedback and enhance service
quality.

P (Plan)

D (Do)C (Check)A (Act)Service measure formulation

Service provision

Service Ranking
Customer Satisfaction Questionnaire
Customer feedback analysis

Committee to Enhance Our Corporate
Culture Founded on Service
Improvement activities in the workplace
A Presentation of Initiatives to Enhance
Our Corporate Culture Founded on Service

Kyushu Railway Company

Committee to Enhance Our Corporate
Culture Founded on Service
To comprehensively consider items related toservice at JR Kyushu, we implement improvement
activities based on the formulation of service
strategies, and advance the establishment ofa foundation for the enhancement of service
quality, a committee chaired by the president andincluding general managers and regional officemanager among its members that meets once
per month. Praise and feedback from customers
are analyzed and information on initiatives toimprove service in each area is shared.
In the fiscal year ended March 2022, we
conducted an employee survey about service
and found that many employees felt that service
was a part of our company culture and strove
to approach their work with gratitude to ourcustomers.
All of our employees will continue working
together to improve customer satisfaction basedon the survey results.

Service ranking
In our station and train crew units, we ask an
external surveying organization to conduct a thirdparty evaluation of our service level once each year.
We then identify issues from the results andcarry out initiatives to improve service, or relay the
results to sites where there are issues and ask
them to make improvements urgently. Excellent
practices are rolled out at other sites. We arealso fostering a sense of positive competition by
quantifying and ranking the results of the surveys.
Through this initiative, we are working to enhanceawareness of customer reception at each worksite and promote active improvement of service.

From the previous fiscal year, we have been
providing training for managers to strengthen
weak areas that were identified in the survey
results and raise overall service standards.
One of the material issues in the JR Kyushu
Group Medium-Term Business Plan 2022-2024
is "Safety and service, the foundation for all of ourbusinesses". "Implementing initiatives to enhance
our corporate culture founded on service" is oneof our non-financial KPIs: our target is a service
ranking of 90 points or higher, and we are striving
to further improve service.
In a survey in the fiscal year ended March 2022,
many respondents said that it was difficult to hear
employees' greetings through their masks, and it
was also difficult to discern their expressions. For
this reason, in the fiscal year ended March 2022,
we carried out training about facial expressions
on a daily basis so that employees' smiles were
evident and their greetings could be heard easily
despite their masks. In the fiscal year ending
March 2023, in addition to the facial expression
training, we will conduct training to makeemployees aware of their tone of voice to improve
the quality of our hospitality.

Service rankings from the perspectiveof a station unit
Service rankings are an essential index for
improving service at my station, as they are a way
to regularly visualize our day-to-day service, andenable us to see how much we have grown andidentify issues.
Our service rankings for the fiscal year ended
March 2021 showed that Nagasaki Station needed
to improve when it came to smiling and greetingcustomers, so we placed a particular focus on thatin our initiatives in the fiscal year ended March
2022. Specifically, we set key focus areas for eachmonth, such as smiling and eshaku (a small bow).
Our Service Committee played a central role in
implementing various initiatives to improve the levelof service throughout our workplace. Employees
were also filmed serving customers and reflected oninteractions with their managers. With the openingof the Nishi-Kyushu Shinkansen, we are expecting a
lot more customers in the fiscal year ending March
2023. I want us all to greet them with a cheerful
smile as they arrive at the gateway to Nagasaki.

Trends in service rankings
Stations(points)

Conductors

100
90
80

86.4

88.6

83.0

70

90.5

89.8

82.2

80.2

88.0
83.1

Shotaro Otsubo

71.4

60

’18/3

’19/3

’20/3

’21/3

’22/3

Assistant Manager,
Nagasaki Station

Integrated Report 2022

45

SocialSafety and Service, the Foundation for All of Our Businesses ── Service

Fostering awareness of service
Developing employees who provide
excellent service
We are rolling out roleplay-based training for all
station and onboard employees based on likely
scenarios such as service at the ticket gates andon board trains, as well as situations such as
passengers who need to be accompanied andassistance for blind passengers using a cane. A
Customer Company Championship is also held
for our station and onboard staff, with regionaland company-wide competitions. Employees
compete to improve customer satisfaction, working on elements such as speech and demeanor.
We invite elderly passengers and passengers withdisabilities to attend customer support training

about the best ways for station and onboard
staff to assist passengers who may need help.
In the fiscal year ended March 2020, we beganawarding qualifications as Service Care-Fitters*1.
Over 256*2 employees hold this qualification. thisqualification. We will continue to pursue initiatives
to ensure passengers’ safety, peace of mind, andcomfort as they use our railway services.
*1

An employee who learns the spirit of hospitality andassistance techniques for helping the elderly or people with disabilities, and is able to help them while
putting them at ease. (Source: Website of The Nippon Care-Fit Education Institute.)*2

As of March 31, 2022

Examples of training in FY2022/3
Name of training

Number ofparticipants

Overview

Customer
reception seminar

Approx. 50
peopleThis training aims to enhance guidance and customer service abilities.
Participants learn how to ensure that the type of service that is necessary on
the front lines is well established in worksites, and they acquire know-how
about responding to feedback from customers.

Customer
Support training

Approx. 80
peopleTo enable customers with physical disabilities and elderly customers to use
stations and trains with peace of mind, this training aims to have employeeson the front lines (station employees, train crew members, etc.) learn about
new accessibility laws and regulations and acquire knowledge and skills
related to appropriate support, and then apply this training in each workplace.

E-learningAll
employees

This training aims to deepen understanding of "Toward a Corporate Culture
Founded on Service 2021"

Training for theService CareFitters qualification

Approx. 60
peopleEmployees seek to qualify through learning the techniques and hospitality necessary
to make train travel stress-free for elderly passengers and passengers withdisabilities.

Kyushu Railway Company

Initiatives to enhance a culture ofmutual praise
We believe that through praise we can draw out
the motivation and independence of employees,
recognize each other's contributions, and, in
doing so, further enhance service based on theadded value created by each employee. We are
implementing a range of activities on that basis.
Specifically, we have established a variety ofrecognition systems for employees who havereceived compliments from customers.
We will use the excellent initiatives of award
winners as a reference in ongoing work to share
information to facilitate the provision of services
that are aligned with the sentiments of customers.

Our thank-you cards
Our thank-you cards are a tool for employees topraise a colleague whom they saw providing excellent
service to a customer, who took a measure or lenta hand to improve service, or who helped to handle
an unusual situation, etc. We believe that praisingeach other encourages employees to recognize eachother's contributions and makes employees' work
more fulfilling. Around 58,000 thank-you cards weresent in the fiscal year ended March 2022.

Examples of initiatives to create aculture of mutual praise essages●Mof praise and gratitude from
customers about each employee are written on
the employees' pay slips
 hank-you cards are used as a way for●T
employees to express gratitude to each other mployees who have provided outstanding●E
service and received messages of gratitude
from customers and colleagues are recognizedeach month with awards
 Service Round-Table Discussion is held twice●Aa year, where employees who have received
awards exchange opinions with the President
and the general manager of the Customer
Service Department
 e recognize employees who have provided●W
especially superior service through the Serviceof the Year Awards

Service of the Year Awards

Integrated Report 2022

46

SocialSafety and Service, the Foundation for All of Our Businesses ── Service

Initiatives to implement safety promotion campaigns and enhance our corporate culture founded on service

Ensuring safety andenhancing our corporate
culture founded on service

Director and Managing Corporate
Officer, Director General of Railway
Operations Headquarters

Hiroyuki
Fukunaga

FY2022/3 presentation on 2021 safety promotion campaigns and initiatives toenhance our corporate culture founded on service
At our presentation on safety promotion campaigns and initiatives to enhance our corporate
culture founded on service, employees from selected workplaces in each area, including groupcompanies, shared the results of their initiatives to address issues. This presentation is an
important way to encourage further improvement, as employees who hear about initiatives in otherworkplaces can implement them in their own workplaces.

Grand Prize(Safety)
Theme

As we mention in our statement about what we aim to be, safety and service is thefoundation for all of our businesses, and remains as important as ever. The linchpin of
all of our businesses is development of the employees who are responsible for safety
and service to ensure that we earn the trust of our customers and other stakeholders.
Developing human resources is a source of value creation.
I firmly believe that it takes everyone at a site to ensure safety and service. The JR
Kyushu Group places importance on presentations where personnel can share the resultsof initiatives to improve safety and service at their sites. I, too, find these presentations tobe an opportunity to think once again about what should be important to the JR Kyushu
Group and gain new insights. Excellent initiatives shared at these presentations are rolled
out in other workplaces to improve safety and service throughout the JR Kyushu Group.
Our initiatives to improve safety and service in our daily operations are also part of thepersonnel development we do in order to achieve the tenets of "Integrity / Growth andEvolution / Local Community Invigoration" in "Our Conduct".
In the fiscal year ended March 2022, I saw a number of cross-sectional initiatives thatwent beyond specific systems, and initiatives that broke from conventional thinking. The
structural reforms of our railway business that we are working on at present, such as our
BPR initiatives, will also be an important element in further improvements in safety andservice in future. No matter how much our work becomes automated or systematized,
safety and service will ultimately still come down to people. Safety and service are thesource of value creation, and we will continue to dedicate ourselves to these elements andto development of the personnel responsible for them.

Kyushu Railway Company

Kokura Electric Maintenance
Depot

Considerations about using training
on real instant judgments to eliminate
collision violations

To eliminate collision violations*, the team realistically recreated unpredictablesituations that could occur during their actual work to create situations where workers had to make instant judgments. The
workers were then taught how to carry out train protection in situations of that nature, enabling them to develop practical skills
that are difficult to master in a classroom. This measure has been rolled out in other workplaces, and has improved safety.
* Collisions that violate our rules on collision prevention by employees

Grand Prize (Service)
Theme

JR Kyushu Retail, Inc.
Family Mart Kumamoto City Hospital Store

Three Resolutions

As this store is located in a hospital, the team created three resolutions to make people in the hospital smile: to stock productsthat would meet medical workers' needs, to make their sales floor more accessible to patients such as those in wheelchairs,
and to create positive interactions with the people in the hospital, such as gifting picture books to children in hospital.

Examples of award systems to encourage development of personnel
Unsafe Incident Open Awards
These awards recognize employees who have actively shared an unsafe
incident experience they have encountered and made a major contribution
to preventing accidents or other serious incidents, ensuring reliable transport
services or preventing workplace injuries.

Thank-You Awards
We have a thank-you card selection process where the managers of each workplace review thank-you cards sent between
employees and recommend particularly excellent cases. This award is given to leading workplaces that have the highest number of
selected thank-you cards for each employee.

Integrated Report 202247

SocialDevelopment of Human Resources, the Source of Value Creation── Advancing personnel strategy
Fundamental approach
It is our personnel who create the value of the JR Kyushu Group.
In addition to efforts to develop personnel who take the initiative
to learn and take on new challenges, we are working to make JR
Kyushu a company that is easy and satisfying to work in. Creating
an environment where diverse personnel can thrive will further
increase the value of the JR Kyushu Group as a company and leadto sustainable growth.

Advancing personnel strategy
To link the individual capabilities of employees to the growth of
the Group, we will advance reforms of the personnel system torealize the formulation/operation of personnel strategies aligned withchanges in management strategies, business models, and labormarkets.
It is our human resources who will be a major pillar in supporting
the implementation of these key strategies in the Medium-TermBusiness Plan 2022-2024. Our vision for the period of this plan
is to achieve growth for the Group by maximizing the individual
capabilities of employees. In implementing the key strategies, wewill once again plan and advance personnel strategy from an overall
perspective.
With management strategies and business models undergoingchanges, and with changes in labor markets, we once again
discussed issues with our current personnel strategy. On that basis,
we will reform the personnel system in regard to the aspects of hiringand placement, development, and evaluation.
Specifically, we will implement such initiatives as increasing thevisibility of career paths, supporting re-skilling, promoting women’s
participation and advancement in the workplace, strengthening
mid-career hiring, and revising the wage system. In this way, we will
maximize the individual capabilities of the diverse employees whowill support the strategies, and we will achieve growth for the Group.
This development of human resources is a key management
theme, and the results of the employee awareness survey are a KPI
for officer compensation.

Realization of a de-carbonized society

S

Safety and service, the foundation for all of our businesses
Sustainable city-building
Development of human resources, the source of value creation

G

Achieving growth for the Group by
What we will aim for overmaximizing the individual capabilities ofthe period of the plan
employees

Sound corporate management

Completion of new training center for employees

Changes in management strategies / business models• Expansion and specialization of operations• L ack of balance in personnel allocation accompanying business revisions.

Etc.

Changes in labor markets that need to be taken into consideration• Increase in labor mobility• Increase in need for working styles that are not limited by time or place.

Etc.

In March 2022, our employee training center was transformed into
a future-looking, environmentally friendly facility. The center features a

Planning andadvancing personnel
strategy from an
overall perspective

 tilizing the individual capabilities of employees●Uacross the organization

 stablishing/evaluating the degree of achievement●Eof the personnel strategy as a KPI for officers,
reforming the Group’s development of humanresources from the management level

Companywide personnel
management based on the
personnel strategy

Personnel strategy
achievement, feedback

Developing personnel for the implementation and realization of strategies
Human resources system reform

training building with extensive training facilities and a lifestyle building tofacilitate communication, providing total support for employee training. We
aim to make this an ideal place to develop personnel who take the initiative
to learn and take on new challenges, and a place that draws on our pasthistory and traditions while equipping personnel with the skills they needas railway professionals in future.
Specifically, we are digitalizing training materials, such as theintroduction of full-scale motion mock-ups, to improve the quality of
training for onboard staff and provide a greater level of understanding
among the trainees. The layout of mock-up

 ealizing a personnel portfolio aligned with strategies
R• Taking an inventory of current personnel portfolio (creating
employee skill matrix, etc.)• Strengthening flexible mid-career hiring of specialist personnel
to address shortages• P romoting women’s participation and advancement in the workplacerolling stock, stations, and ticket gates is carefully ealizing diverse careers, making full use of human resourcesR• Enhancing/expanding the educational environment for the human resources
who will support safety and service (Rebuilding Employee Training Center)• Advancing the acquisition of multiple skills
Development• Increasing visibility and flexibility of career paths (applications
for transfers, etc.)• S upporting enhancement of employee expertise and re-skilling (strengthening
strategic seconding, DX education, introducing video study, etc.)

in the classrooms and selecting equipment with

Hiring /Placement

Evaluation

Kyushu Railway Company

E

considered to provide all-encompassing training
for employees such as station employees andconductors. We are also diversifying our lesson
formats, including adopting electronic chalkboards
group work in mind.
Trainingbuilding

General practical training
room for conventional lines

Lifestylebuilding

Rie Endo
General Manager, Employee
Training Center

CafeteriaIncreasing employee engagement• R evising wage system to place value on results and taking on challenges• Continuously implementing exchanges of opinions among
employees and officers, etc.
• Advancing health management

Integrated Report 2022

48

Social── Advancing personnel strategy

Development of Human Resources, the Source of Value Creation

Realizing a personnel portfolio aligned with strategies
JR Kyushu strives to ensure that our workplaces
are healthy, comfortable, and safe for all
employees, and is carrying out initiatives to ensurethat a diverse range of employees can thrive.

Creating workplaces where women will thrive
JR Kyushu has formulated an action plan forthe promotion of women’s participation andadvancement in our company based on the
Act on Promotion of Women’s Participation andAdvancement in the Workplace. During the periodof the plan that extended from April 1, 2019 toApril 1, 2022, we set an objective to raise retentionof female employees to 95% or more but fell justshort of this. For the period of our current plan (April
1, 2022 to April 1, 2025), we have announced
objectives to raise our ratio of female managers
to 7.5%. We are working to establish a workplaceenvironment that facilitates the continual
participation and advancement of women.
In November 2019, we received grade 2 Eruboshi
certification from the Ministry of Health, Labour andWelfare, recognizing our strong implementationof initiatives to promote the participation andadvancement of women according to the Act

on Promotion of Women’s Participation andAdvancement in the Workplace. We are buildingon this progress to create a working environment
where women can continue their career and thrive
at JR Kyushu. We are actively working to facilitate
the participation and advancement of women sothat all of our employees have something to aim forand a workplace that brings them fulfillment.

Support for those raising the next generation
On December 13, 2021, we received thePlatinum Kurumin for the first time. This special
mark is issued by the Ministry of Health,Labour and Welfare pursuant to Article 15-2of the Act on Advancement of Measures
to Support Raising NextGeneration Children (Law 120,
2003). We are actively working
on further measures to provide
support for those raising thenext generation, centering on
policies of enabling employees
to balance work and childcare
and creating environments thatare easy for all employees towork in.

Main indicators for the promotion of women’s participation and advancement in our company
Item

Results for '22/3

KPIs of this Medium-Term Business Plan

Ratio of Female Directors

20%*1

Ratio of Female Corporate Officers*2

20%*1

Ratio of Female Managers

6.5%*3

Ratio of Female Employees

16.3%*3

Ratio of Female Employees Among New Employees ─ (none hired as new employees)*3
Retention Rate of Female Employees

94.4%

Ratio of Male Employees who Take Childcare Leave

76.3%*1 As of end of June 2022
*2 Excluding those in dual roles as directors and corporate officers*4 As of April 1, 2031
*5 As of April 1, 2025

Kyushu Railway Company

10% or more (fiscal year ending March 2031)*4
30% or more (fiscal year ending March 2025)*5
50% or more (fiscal year ending March 2025)*3 As of April 1, 2022

Male employees who take childcare leave
As part of our initiatives to make JR Kyushu
a workplace where employees can balance
work and childcare, we have been carrying out
initiatives to increase the ratio of male employees
who take childcare leave.
We have already introduced partner childbirthleave in addition to employees' standard accrued
leave to make it easier for employees to takeleave when their partner is giving birth.
From April 2022, we have taken measuresahead of the amendment of the Child Care andFamily Care Leave Act, including adopting aframework for employees to take childbirth andchildcare leave when their partner gives birth andallowing employees to divide their childcare leave.
The number of male employees who takechildcare leave is increasing every year as a resultof initiatives like these.

Active efforts to hire a diverse rangeof employees
When we hire employees, we consider
candidates regardless of their age or experience in
the industry, and make sure our recruitment activities
include Japanese candidates who have studied
at an overseas university, students from overseas,and students with disabilities. All candidates aretreated equally in selection processes, regardlessof attributes such as religion, gender, age, sexual
orientation, disability, or nationality, and a variety of
personalities are welcomed.
In the fiscal year ended March 2022, we
expanded our internship program to include
online internships and workplace-specific formats
that provide an in-depth understanding of thework, so that a wider range of people have theopportunity to learn about our business activities.
As part of our initiatives to promote theadvancement of women at JR Kyushu during

the period of this Medium-Term Business Plan,
we have announced an objective to increase theratio of female employees among new employees
to 30% or more by the fiscal year ending
March 2025*. We make use of internships andinformational events to actively inform candidates
about our initiatives to make it easy for employees
to balance work and childcare, such as childcare
leave, reduced hours, and flex time, and what it islike for women to work here. We will continue tohire the best employees for every job, regardlessof gender.
*As of April 1, 2025

TOPICS
Handbook
Support for employees raising children or
caring for a family member
To provide all-encompassing support for
employees who are raising children or caring fora family member, we provide each employee witha handbook called Family Support: Support for
Employees Raising Children or Caring for a Family
Member. This handbook provides easy-to understandexplanations of our work systems and payment
systems for employees who are raising children or
caring for a family member. This ensures that boththe employees themselves and their supervisors andcolleagues are aware of our systems and makes
it easy for anyone in the company to use thesesystems.

Integrated Report 2022

49

SocialDevelopment of Human Resources, the Source of Value Creation── Advancing personnel strategy

Realizing diverse careers, making full use of human resources
Through initiatives such as our new businessproposal system and strategic seconding, we
enable employees to explore a wide rangeof careers and provide new experiences thatoffer opportunities for growth. This increases
motivation and fulfillment and maximizes theindividual capabilities of employees.

Future Creation Program HIRAMEKI
From the fiscal year ended March 2019, westarted the Future Creation Program HIRAMEKI
as a representative initiative for our "workplaceenvironment that fosters action." This is a new

business proposal system to which any JR
Kyushu employee can submit ideas, regardless of
their years of service at JR Kyushu or experience.
A key feature of this system is that when an idea is
proposed and adopted, the employee who madethe proposal is assigned to the new businessproject. This is not a system where people makeproposals and then let someone else implement
them. Personnel reassignments are a part of thesystem, which fosters an eagerness to contributedirectly to the realization of a new business idea.
We received 469 proposals between the fiscal
year ended March 2019 and the fiscal year ended
March 2022.

HIRAMEKI proposals that have led to projects
Year of proposal

Details of proposal

Workplace of proposer'19/3

Establishment of a business succession fundAccounting Division, Finance & Accounting Dept.

'19/3

Project to restore old houses

Kagoshima Railway Operations Dept. Headquarters (Engineering)'20/3

Businesses using space in stations

Rolling Stock Division, Transportation Dept.

'20/3

Subscriptions for samples of shochu (distilled spirits)

Accounting Division, Finance & Accounting Dept.

'21/3

Campsite management

Customer Service Division, Customer Service Dept.

Comments from a HIRAMEKI proposal-maker: Project to restore old houses, '19/3
In Kyushu, there are still many old streets and houses that give the area a unique landscape and culture, butthese are increasingly being demolished or abandoned for reasons like the high maintenancecosts, and the area's distinctive landscape and vitality are being lost. I proposed this project
because I want to work together with local governments on appeal-creating and city-building
initiatives that make use of historic buildings in order to attract a visiting population, rebuild
the local community and contribute to the continuous development of Kyushu. When I started
this new project, I was struck deeply by the passion that various employees had aboutchanging Kyushu and the company, and the experience led to personal growth for me. “Akane Ryota Haba
Sasu” is an accommodation brand that works together with local governments and people to Land Development Division,& Development
turn historic buildings into accommodation. I want to create local "holiday homes" that offer Planning
Department, Businessluxurious spaces and experiences.
Development Headquarters

Kyushu Railway Company

Strategic seconding
The Group has positioned strategic seconding
as an important initiative in the developmentof personnel. Through strategic seconding,employees gain diverse experience. This is
not only linked to the promotion of diversity in
the Group’s human resources but also directly
connected to sustainable growth.
We second employees not only within theGroup but also to companies in various industries
outside the Group. The number of seconded
employees increased to 221* in April 2021. The
employees provide reports on their activities atthe other company, which are then shared with all
employees.
These employees who have increased their skills
through strategic seconding will play central roles
in future advancement of the Group’s businessstrategy.
*As of July 1, 2022

Examples of strategic seconding• DX promotion manager / data scientist• CFO of a hands-on fund• Corporate management of a company that
became part of JR Kyushu Group via M&A,
etc.

Discussions between management andseconded employees
Two conferences were held to facilitate
discussions between employees who are being
seconded to various companies and our President
and the General Manager of Human Resources.
After all the seconded employees talked about
their work at each of their temporary posts, theyfrankly shared their thoughts about points such as
the difference between JR Kyushu and the company
they were seconded to and positive things about
JR Kyushu that they appreciated for the first timeafter taking on the secondment. A sense of solidarity
emerged from their shared struggles as seconded
employees, and there were many points that theseconded employees agreed on.
Furthermore, since the employees were working
in many different industries, the conference becamea business opportunity (a number of employees
were seen exchanging business cards) in addition
to being a valuable opportunity to interact and share
information.

Integrated Report 2022

50

Social── Advancing personnel strategy

Development of Human Resources, the Source of Value Creation

Increasing employee engagement
We have published the JR Kyushu Group
Health Declaration to further promote healthrelated management in the JR Kyushu Group.
In addition to establishing basic policies basedon the JR Kyushu Group Health Declaration, JR
Kyushu will spend the fiscal year ending March2023 carrying out a variety of activities to promote
specific actions in which employees work more
actively to improve their health, based on theslogan “I will get healthy! Creating a culture ofperseverance”.
We treat this as an important measure in
the company's management and engage inwork such as establishing a framework for thepromotion of health management, with ourpresident as the supervisor of health-related

management. We report on this to the Boardof Directors. We have also established a HealthManagement Office within the company. The
office’s activities include workplace visits andhealth consultations, with a central role played byindustrial physicians and public health nurses. In
these ways, we are working to support employee
health management.
We were recognized as "Health and Productivity
Management: Outstanding Organization" fortwo years in a row as a result of our initiatives
in health-related
management thus
far. We will carry out
future health-related
management with theaim of ear ning thiscertification again.

Progress in implementation of basic policy for health management in the fiscal year ending March 2023 (KPIs)
Target for theend of '25/3

Item

Knowledge
and learning

Results
for '21/3

Employees who have attended an annual health checkup

100%

100.0%

100.0%

Employees who have received a stress check100%

100.0%

99.9%

Employees who are subject to special health guidance

15% or less

20.2%

20.4%

Special health guidance given to relevant employees

80% or more

— (note)77.7%

Employees who have not received a comprehensive
health exam in 3 years

15% or less

29.8%

30.3%

Participants in Minna De Hokatsu

60% or more

59.4%

41.9%

Percentage of participants who achieved an average of
8,000 steps over the period of Minna De Hokatsu

50% or more

42.4%

47.2%

Employees who smoke

25% or less

27.5%

28.6%

Employees who regularly eat breakfast

75% or more

69.9%

70.9%

Employees who have received a flu vaccination

80% or more

70.3%

79.1%

Percentage of annual paid leave used*3

85% or more

72.1%

77.0%

*1

Execution

Results
for '22/3*2*1 A walking event held by JR-Kenpo*2 At least five days per week (self-reported to health checkup personnel)*3 Calculated based on 20 days given per year   (Note) Not calculated as this is being conducted from October 2021 to September 2022

Kyushu Railway Company

Average overtime

The supervisorof health-related
management(hours/month)
20(President & CEO)

Cooperation

Head of HealthManagement Promotion（Corporate Officer in chargeof Human Resources Dept.）

Health insurance
association

Department in charge
Branch offices, etc.
Each workplace

Cooperation

Health management

14.1

13.9

’19/3

’20/3

10

Secretariat

Human Resources
Department

11.3

11.4

’21/3

’22/3

0

Industrial physician
Public health nurse(Health Management Office)Group companies​• H ealth management managers
D
epartmentin charge of•promotion

Prevention of overworking
To prevent overworking and promote a goodwork-life balance, as a general rule, employees
must not do more than eight hours of overtime in
one day, and overtime and working on nonwork
days must total less than 45 hours per month and360 hours per year. Our main initiatives are as
follows.
●
Working hours are assessed through objective
records using equipment such as an IC card
●Regular monitoring of overtime and work on
non-work days
●Employees whose overtime and work on nonwork days exceed 80 hours per month to meetwith an industrial physician● Overtime and work on non-work days for eachquarter are reported at a meeting of the Work
System Reform Committee, which is attended
by management.

Building Systems that Support
Diverse Working Styles
Changes in our management environment
include a decreasing working population due toa declining birth rate and an aging population,
as well as the diversification of values regarding
working style. To respond flexibly to thesechanges, we have taken steps to establish
systems that support diverse working styles.
we have raised the maximum age to 70 for
employees who wish to work past the age of 65.
In addition, we have introduced flex time andteleworking in our planning department and set
up satellite offices in Company-owned facilities toenable employees to balance work and childcare
and improve productivity.
We have also revised our system to allow
annual paid leave to be taken in hourly units from
April 2022.

Integrated Report 2022

51

SocialDevelopment of Human Resources, the Source of Value Creation── Advancing personnel strategy

Employee awareness survey
JR Kyushu conducts regular surveys to assess employees’ awareness. The survey ascertains employees’
awareness about their job and workplace. We analyze factors that influence employees’ awarenessaccording to their age and the nature of their work and apply this data to future measures to invigorate ourorganization and improve employee satisfaction.

FY2021/3

Survey results

Initiatives based on the survey results● Improvement since the last fiscal year in● Communicate clearly about subjects such

satisfaction with supervisors / workplaces andloyalty to the company● Increase in the number of employees who were
anxious about the company's results, growthand/or development● A need remains for initiatives that engage
employees who feel that they are just going
through the motions in their work

● Decrease in satisfaction regarding JR Kyushu’s

FY2022/3

future prospects for growth in the market andattractiveness to employees● Company loyalty remains an issue

as initiatives related to the JR Kyushu Group
Medium-Term Business Plan 2019-2021 andfacilitate self-improvement and workplace
improvement initiatives based on our Basic
Training Plan
● Hold discussions between the General Manager
of Human Resources and employees● Implement initiatives to support employees
who apply for a transfer, etc., based on these
discussions● Further promote our company principles to

employees through ongoing discussions
between management and employees● Promote initiatives to improve satisfaction suchas sharing these results with each department
and site manager and identifying specific issues

JR Kyushu’s prospects for future growth

Sense of fulfillment in work

FY2022/3

4.00

Attractiveness to employees

3.80

Sense of adaption to work

FY2021/3

3.60
3.40

3.20

Development in market

3.00
2.80

Satisfaction about workplace

2.60
2.40

Satisfaction

2.20
2.00

Sense of burden in
workplace relations

Satisfaction about supervisor

Sense of burden
Sense of burden in workload
Sense of burden in work quality

Loyalty to company
Sense of routine in work

After reporting the results of this survey to the Board of Directors, we received feedback that
regular reports are necessary because these results will contribute to increasing the value of JR
Kyushu in the medium to long term.

Discussions with employees
Management is continuing to speak directly with employees by holding discussions at workplaces throughout Kyushu. A
non-financial KPI in the JR Kyushu Group Medium-Term Business Plan 2022-2024 is that exchanges of opinions between
executives and employees are to be held 40 times per year or more. ▶ P.74
Furthermore, company-wide characteristics and issues in specific organizations that were revealed in the results of theemployee attitude survey were analyzed and discussions were held between the General Manager of Human Resources andemployees to find ways to improve our practices and change the way we think.

Kyushu Railway Company

14 discussions attended by about 190 employees were held in various areas, covering employees in numerous roles. A
wide range of views were exchanged between the General Manager of Human Resources and the employees with a focus on
initiatives aimed at alleviating the sense that employees are just going through the motions at work and at improving loyalty to
the company and satisfaction about our workplaces.
We are working to improve employee satisfaction by continuing to use this survey as a tool for dialog with employees andcarrying out PDCA cycles.

Integrated Report 2022

52

SocialDevelopment of Employees Skilled in Digital Technologies

E

Realization of a de-carbonized society

S

Safety and service, the foundation for all of our businesses
Sustainable city-building
Development of human resources, the source of value creation

GSound corporate management

Fundamental approach
We believe that DX promotion is one of the most important
approaches as we consider how to strengthen our managementbase to support the key strategies in the JR Kyushu Group MediumTerm Business Plan 2022-2024. During this Medium-Term Business
Plan period, we will build technology promotion frameworks anddigital platforms for the implementation of various measures utilizing

What we aim
to bedigital technologies.

JR Kyushu Group DX Strategy 2022-2024
We have established the JR Kyushu Group DX Strategy 20222024 to provide more details on the initiatives to promote DX thatare described in this Medium-Term Business Plan.
This DX Strategy seeks to use digital technologies for optimization
and reforms in areas such as providing more valuable experiences

Operations / maintenancereformWorking style reforms /productivity improvement

We will provide valuable
experiences that meet customers'
needs by utilizing data andcollaborating with organizations
throughout the Group as well as avariety of external organizations,centered on JR KYUPO.

We will pursue safety andefficiency in railway operations
and maintenance through the useof digital technologies.

Through the automation/mechanization of operations
and the improvement of digital
workplaces, we will support
employee working-style reforms
and productivity improvement

 trengthening group customer●S

Optimization
Enhancing existing
businesses

strategies
 xpanding online rail reservations /●E

introducing ticketless services● Improving CX in all businesses

Specific
initiatives

for customers and reforming operations and maintenance to

Reformbecome what we aim to be. We are placing a particular focus

Creating and reforming
future businesses

on development of employees skilled in digital technologies andIncreasing customer
experience value romoting MaaS●P tilizing smart devices●U tilizing drones●Ustations

maintenance ealizing driverless automated operation●R ackling new city-building initiatives●T xpanding digital workplaces​●E tilizing digital tools and SaaS●U onsidering automation of operation
●C

Cloud

 romoting citizen development●P(in-house app creation)
 romoting civic data analysis●P

control

Building the foundation for potential
promotion of digital strategies

Optimization of Group-wide useof digital technologies(cloud network security)(governance and cost optimization)

Environment
maintenance
Human
Resources /Systems● Improving operation systems

 ransitioning to CBM in railway●T onsidering new technologies for●C

Platforms

Kyushu Railway Company

technologies

 onsidering new businesses●C

strengthening our frameworks to strongly promote DX.

The Japanese government has an application-based DX
certification system that recognizes organizations conducting
excellent DX-related initiatives based on guidelines formulatedby the government. The JR Kyushu Group was certified under
this system on March 1, 2022.

 tilizing IoT / image recognition●U

Key themes

Development of employees skilled in digital technologies(development of core human resources and raising overall standards)
Strengthening of systems for strong promotion of DX
Improving company-wide digital capacity through the promotion of
citizen development

Integrated Report 2022

53

SocialDevelopment of Employees Skilled in Digital Technologies

Development of employees skilled in digital technologies

Digital-1 Grand Prize

Development of employees skilled in digitaltechnologies is a key theme of the JR Kyushu
Group’s 2022-2024 DX Strategy Report. In
keeping with this, we will clearly define the typeof workers we want our employees to become,and will carry out education and development
initiatives accordingly. In the fiscal year ended
March 2021, we established the Digital CoE(Center of Excellence) as a control tower forGroupwide promotion of digital technologies. The
Digital CoE is driving operational reforms throughmeasures such as developing a business app thatuses Microsoft Power Platform and conducting
data analysis using programming languages
such as Python. We have also appointed digitalpromotion managers in key departments. After
specialist training, these managers work together

The Digital-1 Grand Prize was held in the fiscal
year ended March 2022 to encourage employees
to find ways to improve operational efficiency bydeveloping apps using RPA and Power Platform
or using our BI tool (MotionBoard). There were
19 entries from various departments of the JR
Kyushu Group, eight of which were presented
online after a document screening and final
selection process. Employees who use digital
tools to create initiatives to improve work efficiency
are mostly from young generations and each year
the bar is raised. Many of their ideas, such as
combinations of RPA and app development, werestrong enough to be turned into actual operational
systems, and have potential not only to be usedwith the Digital CoE to lead transitions to digitaltechnologies in each department. In terms ofapp development, in order to strengthen our
citizen development systems (systems throughwhich any employee can develop an app), weare working on systems for a company-wide
transition to digital technologies by creating
platforms, development and operation rules, andcommunities of developers.
Development of employees skilled in digitaltechnologies like this are well poised to drive
improvements in operational efficiency andincreases in sales through the use of digitaltechnologies. By the fiscal year ending March
2025, we aim to have trained a total of at least
500 employees across all fields to be skilled indigital technologies.

in their own department but to be rolled out
throughout the whole company.
Through initiatives like these, we will remain
dedicated to creating a climate for improving
the efficiency of our work by encouraging our
employees to learn about digital technologies anddigitize our work processes.

Interview with Digital CoE

Interview with the winner of the Digital-1 Grand Prize

Q What is the Digital CoE working on?
We are working on proposing approaches to achieve operational efficiency and create new measures by analyzing

Q Tell us about your projecta wide range of data, thinking beyond conventional frameworks such as those of the technology division and sales
division.

Until now, when inspecting railway tracks, we had to ride on rolling stock and take notes by hand to specify the areasthat needed to be inspected. For this project, I worked to make the inspection process more efficient by creating asystem that links latitude and longitude data with kilometers of our railroads,

Q What are your strengths?
Our strengths include analysis skills such as video analysis using natural

enabling records to be created simply by taking a photo of the relevant area.
Q How did it feel winning the Digital-1 Grand Prize?

language processing and neural network technologies and detection of
anomalies in the signal patterns acquired from IoT devices, along with skills

My entry into the Digital-1 Grand Prize was a chance to create a system forfor constructing architecture for analysis platforms using AWS. In addition to

an inspection method that presented an issue in my workplace, and won the

expanding those skills horizontally into data analysis in other departments,

Grand Prize as a result. It's currently still in the developmental stage, but I

we aim to utilize them in the development of analysis personnel.

plan to continue working with everyone at the Digital CoE to create a system

Q What is your outlook for the future?
We want to impress upon all employees the importance of data analysis,
entrench a data-driven philosophy throughout the company and further
accelerate DX in the JR Kyushu Group by further strengthening our analytical
capacity and fostering employees who will take a central role in JR Kyushu’s
data analysis work.

Kyushu Railway Company

that can be expanded throughout the entire company.
Q What do you want to do in future?

Masashi Higashimura

I want to continue studying programming and work on digital solutions to

Corporate Planning Headquarters
IT Strategic Planning Department

what I feel are issues in my workplace.

Masanori Tsuyama
Saga Railway Operations Department
Saga Engineering Depot

Integrated Report 2022

54

SocialAdvancement of Efforts that Respect Human Rights

E

Realization of a de-carbonized society

S

Safety and service, the foundation for all of our businesses
Sustainable city-building
Development of human resources, the source of value creation

G

Fundamental approach

Sound corporate management

Building a remedial action mechanism (establishment of a consultation desk)

The JR Kyushu Group has established the JR Kyushu Group Basic Policy on Human Rights as a guideline

The JR Kyushu Group has established a whistleblowing desk to allow all employees, business partners,

for promoting efforts to respect human rights and fulfilling responsibilities tied to those efforts. This policy iscustomers, and members of the community to consult about issues such as human rights. The desk

positioned at the highest level of policy regarding human rights and is the basis for all business activities in

accepts anonymous reports, and in the case that a report is not anonymous, details such as the reporter's

the group. We will contribute to the creation of a sustainable society by working to respect human rights inname will be kept strictly confidential. Due diligence will be conducted to fact check each report, andaccordance with this policy.

remedial action will be taken if an issue is found.

The JR Kyushu Group Basic Policy on Human Rights

Human rights promotion system

Aiming to realize the JR Kyushu Group’s vision of becoming a “corporate group that invigorates Kyushu,

The JR Kyushu Group has established the JR Kyushu Group Human Rights Promotion Committee toJapan, and Greater Asia with safety and service as its foundation”, the JR Kyushu Group conducts sincere,

promote efforts related to the JR Kyushu Group Basic Policy on Human Rights. Matters determined by thefair and transparent business to contribute to the creation of a sustainable society.

committee are reported to the Board of Directors when necessary.

We recognize that human rights may be impacted as a part of the process of conducting business.
To express our intent to honor the human rights of all people involved in business operations, we haveestablished the JR Kyushu Group Basic Policy on Human Rights.

■ The JR Kyushu Group's human rights promotion system
JR Kyushu Group Human Rights Promotion Committee
Reviewing of points such as basic policies and targets
related to human rights, along with action plans andprogress on relevant measures
Committee chair: JR Kyushu President & CEO
Members: Full-time corporate officers

Human rights due diligence efforts
The JR Kyushu Group promotes efforts in human rights due diligence based on the JR Kyushu Group
Basic Policy on Human Rights. Human rights due diligence proceeds according to the following four steps:(1) identification of human rights risks, (2) prevention and mitigation initiatives, (3) surveys on the results of

JR Kyushu Group Human Rights Promotion Committee Control Officeefforts, (4) disclosure of information.
Furthermore, the following efforts are regularly implemented for each.

P Identification of Human Rights Risks● Harassment incidents● Excessive work hours● Privacy rights violations● Gender equality issues● Fostering discrimination due to lack of understanding or

consideration (DOWA problem, LGBTQIA+, people withdisabilities, cultural differences due to nationality or identity)● Safety issues● Lack of knowledge of the employee consultation office● I mproper operation of the international technicaltraining system nnual disclosure of information regarding efforts to●Arespect human rights via our website.

Kyushu Railway Company

JR Kyushu Group Human Rights Promotion Subcommittee

JR Kyushu Group Company

Issuing of instructions to organizations such as operations
facilities under our authority about points decided by thecommittee and promotion of initiatives related to human rights
Members: Managers of planning departments
Branch vice presidents

Implementation of necessary human rights initiatives
Person in charge: JR Kyushu Group Company President
Members: Human rights promotion members

D Prevention and Mitigation Initiatives● Implementation of human rights promotion training

through e-learning, rank-based systems, etc● Information dissemination, including human rights

promotion handbooks, internal information, etc.
 fforts that utilize the feedback of both employees and●Ecustomers

C Surveys on the Results of Efforts● Implementation of surveys→Conducting surveys to

A Disclosure of Information

Head of control office: General Manager of Administration
Department
Control office: A dministration Division, Administration Department
Human Rights Promotion Office,Administration Department

determine the level of proficiency after e-learning or training● Implementation of interviews →Monitoring overtime toprevent excessive work hours
Interviews with group companies that employ
international technical trainees

The JR Kyushu Group Human Rights Promotion Efforts
(1)
(2)
(3)

Implementation of human rights promotion training throughe-learning, rank-based systems, etc.
Creation and distribution of a handbook on the JR Kyushu Group’s
human rights initiatives
Activities as a secretariat company of the Fukuoka City Corporate
Social Inclusion Promotion Council (JR Kyushu)

Seminars on human rights promotion▶ See our website for details on our human rights initiatives
https://www.jrkyushu.co.jp/company/ir_eng/esg/

Integrated Report 2022

55

GovernanceSound Corporate Management── Corporate governanceRound-table discussions for outside directors
── Risk management, compliance── Enhancing communication with stakeholders

GovernanceESound Corporate Management ── Corporate GovernanceRealization of a de-carbonized society
Safety and service, the foundation for all of our businesses

S

Sustainable city-building
Development of human resources, the source of value creation

GSound corporate management

Structure of the Board of Directors *As of June 23, 2022
Representative Director and Chairperson
Corporate Officer

Representative Director, President,
Corporate Officer, and Chief Executive Officer

Director and Managing Corporate
Officer

Director and Managing Corporate
Officer

Toshihiko Aoyagi

Yoji Furumiya

Toshihiro Mori

Hiroyuki Fukunaga

Chairperson of the Board of Directors

Chief Executive Officer
In charge of Auditing Department

Director General of Business Development
Headquarters

Director General of Railway Operations Headquarters,
General Manager of Northern Kyushu Regional Head OfficeAttendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned:
12,046 shares

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned:
7,616 shares

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned:
2,172 shares

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned:
2,262 shares

ProfileProfileProfileProfileApr. 1977	Joined Japanese National Railways
Apr. 1987	Joined Kyushu Railway Company
Jun. 1998	General Manager of Transportation Department of Technology and Operations Headquarters, Kyushu Railway Company
Apr. 2001	General Manager of Transportation Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2004	General Manager of Kagoshima Regional Office, Kyushu Railway Company
Jun. 2005	Director, General Manager of Kagoshima Regional Office, Kyushu Railway Company
May 2006	Director, Deputy Director General of Railway Operations Headquarters, General Manager of Planning
Department of Railway Operations Headquarters and General Manager of Transportation Safety
Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2008	Director, Director General of Railway Operations Headquarters and General Manager of Planning
Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2008	Managing Director, Director General of Railway Operations Headquarters and General Manager ofPlanning Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2010	Managing Director, Director General of Railway Operations Headquarters, General Manager ofPlanning Department of Railway Operations Headquarters and General Manager of Northern Kyushu
Regional Head Office, Kyushu Railway Company
Aug. 2010	Managing Director, Director General of Railway Operations Headquarters and General Manager ofNorthern Kyushu Regional Head Office, Kyushu Railway Company
Jun. 2012	Senior Managing Director, Director General of Railway Operations Headquarters and General
Manager of Northern Kyushu Regional Head Office, Kyushu Railway Company
Jun. 2013	Senior Managing Director and Representative Director, Director General of Railway Operations
Headquarters and General Manager of Northern Kyushu Regional Head Office, Kyushu Railway Company
Jun. 2014	Representative Director and President, Kyushu Railway Company
Jun. 2018	Representative Director, President and Corporate Officer, Kyushu Railway Company
Jun. 2019	Representative Director, President and Corporate Officer and Chief Executive Officer, Kyushu Railway Company
Apr. 2022	Representative Director and Chairperson, Corporate Officer, Kyushu Railway Company (current)

Apr. 1985	Joined Japanese National Railways
Apr. 1987	Joined Kyushu Railway Company
May 2005	General Manager of Planning Department of Railway Operations Headquarters, Kyushu Railway
Company
May 2006	General Manager of Transportation Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2010	General Manager of Marketing & Sales Department of Railway Operations Headquarters, Kyushu
Railway Company
Jun. 2011	General Manager of Customer Service Department of Railway Operations Headquarters and General
Manager of Marketing & Sales Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2012	General Manager of Administration Department, Kyushu Railway Company
Jun. 2012	Director and General Manager of Administration Department, Kyushu Railway Company
Sep. 2012	Director, General Manager of Cruise Train Division of Railway Operations Headquarters and General
Manager of Administration Department, Kyushu Railway Company
Jun. 2013 Director, General Manager of Administration Department, Kyushu Railway Company
Jun. 2016	Managing Director, Director General of Railway Operations Headquarters and General Manager ofNorthern Kyushu Regional Head Office, Kyushu Railway Company
Jun. 2018	Director and Managing Corporate Officer, Director General of Railway Operations Headquarters andGeneral Manager of Northern Kyushu Regional Head Office, Kyushu Railway Company
Jun. 2019	Director and Senior Managing Corporate Officer, Director General of Railway Operations Headquarters
and General Manager of Northern Kyushu Regional Head Office, Kyushu Railway Company
Jun. 2020	Director and Senior Managing Corporate Officer, Director General of Corporate Planning
Headquarters, Kyushu Railway Company
Apr. 2022	Representative Director, President and Corporate Officer and Chief Executive Officer, Kyushu Railway
Company (current)

Apr. 1991	Joined Kyushu Railway Company
May 2007	Director, Drug Eleven Holdings Co., Ltd.
Jun. 2009	President, Drug Eleven Holdings Co., Ltd.
May 2011	General Manager of Fund Management Department, Kyushu Railway Company
Jun. 2013	General Manager of Finance & Accounting Department, Kyushu Railway Company
Jun. 2014	General Manager of Marketing & Sales Department of Railway Operations Headquarters, Kyushu
Railway Company
Jun. 2015	General Manager of Customer Service Department of Railway Operations Headquarters and General
Manager of Marketing & Sales Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2017	Director, General Manager of Travel Services Headquarters, Kyushu Railway Company
Apr. 2018	Director, Deputy Director General of Corporate Planning Headquarters and General Manager ofStrategy Management Department of Corporate Planning Headquarters, Kyushu Railway Company
Jun. 2018	Senior Corporate Officer, Deputy Director General of Corporate Planning Headquarters and General Manager
of Strategy Management Department of Corporate Planning Headquarters, Kyushu Railway Company
Jun. 2019	Director, Managing Corporate Officer, Chief Financial Officer, Deputy Director General of Corporate
Planning Headquarters and General Manager of Strategy Management Department of Corporate
Planning Headquarters, Kyushu Railway Company
Apr. 2022 	Director and Managing Corporate Officer, Director General of Business Development Headquarters,
Kyushu Railway Company (current)

Apr. 1990	Joined Kyushu Railway Company
Jun. 2013	General Manager of Shinkansen Operational Management Department of Railway Operations
Headquarters, Kyushu Railway Company
Jun. 2015	General Manager of Cruise Train Division of Railway Operations Headquarters and General Manager
of Transportation Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2016	Director, Deputy Director General of Railway Operations Headquarters, General Manager ofCruise Train Division of Railway Operations Headquarters and General Manager of Transportation
Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2018	Senior Corporate Officer, Deputy Director General of Railway Operations Headquarters, General
Manager of Cruise Train Division of Railway Operations Headquarters and General Manager ofTransportation Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2020	Director and Managing Corporate Officer, Director General of Railway Operations Headquarters andGeneral Manager of Northern Kyushu Regional Head Office, Kyushu Railway Company (current)

Important information on concurrent posts:

Important information on concurrent posts:

Incorporated Chair of Fukuoka Association of Corporate Executives

Important information on concurrent posts:
None

Important information on concurrent posts:
None

None

Director, Managing Corporate Officer
and Chief Financial Officer

Takuma Matsushita
Chief Financial Officer
Director General of Corporate Planning
Headquarters
In charge of Public Relations Department
and Finance & Accounting Department
Number of shares in JR Kyushu owned:
1,991 shares

Director and Senior Executive Adviser

Director

Koji Karaike

Toshihide Ichikawa O

Full-time member

Part-time member

Part-time member

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned:
7,449 shares

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned: –Tenure as outside director of the Company:
3 years

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned: –Tenure as outside director of the Company:
3 years

Director

Shinji Asatsuma

I

O

I

ProfileProfileProfileProfileApr. 1991	Joined Kyushu Railway Company
May 2011 Deputy General Manager of Administration Department, Kyushu Railway Company
Jun. 2011	General Manager of Strategy Management Department of Corporate Planning Headquarters, Kyushu
Railway Company
May 2014	President of JR KYUSHU DRUG ELEVEN CO., LTD.
Jun. 2017	Director, Deputy Director General of Business Development Headquarters and General Manager
of Planning & Development Department of Business Development Headquarters, Kyushu Railway
Company
Jun. 2018	Senior Corporate Officer, Deputy Director General of Business Development Headquarters andGeneral Manager of Planning & Development Department of Business Development Headquarters,
Kyushu Railway Company
Jun. 2019	Managing Corporate Officer, Deputy Director General of Business Development Headquarters andGeneral Manager of Planning & Development Department of Business Development Headquarters,
Kyushu Railway Company
Apr. 2022	Managing Corporate Officer, Chief Financial Officer, Director General of Corporate Planning
Headquarters
Jun. 2022	Director, Managing Corporate Officer, Chief Financial Officer, Director General of Corporate Planning
Headquarters (current)

Apr. 1977	Joined Japanese National Railways
Apr. 1987	Joined Kyushu Railway Company
Mar. 1995	General Manager of Restaurant Business of Distribution Operations Headquarters, Kyushu Railway Company
Apr. 1996	President, JR Kyushu Food Service Inc.
Jun. 1997	General Manager of Strategy Management Department of Corporate Planning Headquarters, Kyushu Railway Company
Jun. 2000	Representative Director and President, JR Kyushu Food Service Inc.
Jun. 2003	Director, Deputy Director General of Railway Operations Headquarters, General Manager of Customer
Service Department of Railway Operations Headquarters and General Manager of Marketing & Sales
Department of Railway Operations Headquarters, Kyushu Railway Company
Jun. 2005	Director, Deputy Director General of Railway Operations Headquarters, General Manager ofCustomer Service Department of Railway Operations Headquarters, General Manager of Marketing& Sales Department of Railway Operations Headquarters and Director General of Travel Services
Headquarters, Kyushu Railway Company
Jun. 2006	Managing Director, Deputy Director General of Corporate Planning Headquarters and General Manager
of Strategy Management Department of Corporate Planning Headquarters, Kyushu Railway Company
Jun. 2008	Managing Director and Deputy Director General, Corporate Planning Headquarters, Kyushu Railway Company
Jun. 2008	Senior Managing Director, Representative Director, and General Manager of Corporate Planning
Headquarters, Kyushu Railway Company
Jun. 2009	Representative Director and President, Kyushu Railway Company
Jun. 2014	Representative Director and Chairperson, Kyushu Railway Company
Jun. 2018	Representative Director and Chairperson, Corporate Officer, Kyushu Railway Company
Apr. 2022 Director and Senior Executive Adviser, Kyushu Railway Company (current)

Apr. 1977	Joined Mitsui Fudosan Co., Ltd.
Apr. 2003	General Manager of Roppongi-Project Development Planning Department, Mitsui Fudosan Co., Ltd.
Apr. 2005	Managing Officer, General Manager of Roppongi-Project Development Planning Department, Mitsui
Fudosan Co., Ltd.
Aug. 2005	Managing Officer, General Manager of Tokyo Midtown Development Department, Mitsui Fudosan Co., Ltd.
Apr. 2008	Executive Managing Officer, General Manager of Tokyo Midtown Development Department, Mitsui
Fudosan Co., Ltd.
Apr. 2009	Executive Managing Officer, Chief Operating Officer of Accommodations Business Division, Mitsui
Fudosan Co., Ltd.
Jun. 2011	Executive Managing Director, Executive Managing Officer, Chief Operating Officer ofAccommodations Business Division, Mitsui Fudosan Co., Ltd.
Apr. 2013	Managing Director, Mitsui Fudosan Co., Ltd.
Apr. 2013	Advisor, Mitsui Home Co., Ltd.
Jun. 2013	Specially Appointed Advisor, Mitsui Fudosan Co., Ltd.
Jun. 2013	Representative Director and President, President and Executive Officer, Mitsui Home Co., Ltd.
Oct. 2018	Group Senior Officer, Mitsui Fudosan Co., Ltd.
Apr. 2019	Advisor, Mitsui Fudosan Co., Ltd. (current)
Apr. 2019	Standing Advisor, Mitsui Home Co., Ltd. (current)
Jun. 2019	Director, Kyushu Railway Company (current)

Apr. 1984	Joined Kansai Paint Co., Ltd.
Apr. 2012	Executive Officer, General Manager of Corporate Planning Office, Kansai Paint Co., Ltd.
Apr. 2015	Managing Executive Officer, General Manager of International Div., Kansai Paint Co., Ltd.
Jun. 2016	Director, Managing Executive Officer, General Manager of Administration Div., Kansai Paint Co., Ltd.
Apr. 2017	Director, Managing Executive Officer, General Manager of Administration Div., General Manager ofCorporate Administration Div., Kansai Paint Co., Ltd.
Apr. 2018	Director, Managing Executive Officer in charge of Management, Corporate Planning, Human
Resources Planning, General Manager of Administration Div., Kansai Paint Co., Ltd.
Apr. 2019	Director, Kansai Paint Co., Ltd. (retired June 2019)
Jun. 2019	Director, Kyushu Railway Company (current)

Important information on concurrent posts:

Advisor, Mitsui Fudosan Co., Ltd. Standing Advisor, Mitsui Home Co., Ltd.

Important information on concurrent posts:
None

Important information on concurrent posts:

Important information on concurrent posts:
None

O Outside director
I Independent director

Chairperson of Kyushu Tourism Organization

Kyushu Railway Company

Integrated Report 2022

57

GovernanceSound Corporate Management ── Corporate GovernanceDirector

Kuniko Muramatsu O

Director

I

Michiaki Uriu

DirectorO

I

Part-time member

Part-time member

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned:
318 shares
Tenure as outside director of the Company: 2 years

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
9/11 (81.8%)
Number of shares in JR Kyushu owned:
158 shares
Tenure as outside director of the Company: 1 year

Hitomi Yamamoto O

Director, Audit and Supervisory
Committee member

I

Koji Otabe

Part-time member

O

I

Full-time member
Chairperson of Audit and Supervisory
Committee
Number of shares in JR Kyushu owned: –Tenure as outside director of the Company: ─

Number of shares in JR Kyushu owned: –Tenure as outside director of the Company: ─ProfileProfileProfileProfileOct. 1983	Joined Texas Instruments Japan Limited
Jan. 1995	General Manager of Public Relations Department, Texas Instruments Japan Limited
Nov. 2003	Head of Corporate Ethics Office and Officer in charge of Diversity Promotion, Texas Instruments
Japan Limited
Sep. 2009 Retired from Texas Instruments Japan Limited
Oct. 2009 Chief Researcher, Business Ethics Research Center
Jan. 2010 Representative Director, Wellness Systems Institute (current)
Jan. 2014 Director, Japan Professional Football League (J.LEAGUE)
Apr. 2016 Representative Director, GEWEL (retired March 2019)
Jun. 2016 Outside Director, C’BON COSMETICS Co., Ltd. (retired June 2019)
Jun. 2016 Outside Director, YOKOWO CO., LTD. (current)
Apr. 2018 Councilor, Japan Professional Football League (retired February 2021)
Apr. 2018 Senior Researcher, Business Ethics Research Center (current)
Jun. 2019 Outside Director, NEC Networks & System Integration Corporation (current)
Jun. 2020 Director, Kyushu Railway Company (current)

Apr. 1975 Joined Kyushu Electric Power Company, Incorporated
Jun. 2006 General Manager of Environmental Division, Kyushu Electric Power Company, Incorporated
Jun. 2007	Executive Officer & Senior Manager of Corporate Planning Division, Kyushu Electric Power Company, Incorporated
Jul. 2008 	Executive Officer & General Manager of Corporate Planning Division, Kyushu Electric Power
Company, Incorporated
Jun. 2009	Director, Senior Managing Executive Officer & General Manager of Thermal Power Generation
Division, Kyushu Electric Power Company, Incorporated
Jun. 2011	Executive Vice President (Representative Director) & General Manager of Thermal Power Generation
Division, Kyushu Electric Power Company, Incorporated
Apr. 2012	President (Representative Director), Kyushu Electric Power Company, Incorporated
Jun. 2013	Outside Director, THE NISHI-NIPPON CITY BANK, LTD.
Oct. 2016	Outside Director, Audit and Supervisory Committee Member, THE NISHI-NIPPON CITY BANK, LTD. (current)
Jun. 2018	Representative Director and Chairperson, Kyushu Electric Power Company, Incorporated (current)
Jun. 2020	Outside Audit & Supervisory Board Member, Kyudenko Corporation (retired June 2021)
Jun. 2021	Director, Kyushu Railway Company (current)
Jun. 2021	Outside Director, RKB MAINICHI HOLDINGS CORPORATION (current)

Apr. 1981	Joined ALL NIPPON AIRWAYS CO., LTD.
Apr. 2011	General Manager of Inflight Service Crew Department II, Inflight Services Division, ALL NIPPON AIRWAYS CO., LTD.
Nov. 2012	Deputy General Manager of OSC Quality Promotion Office, ALL NIPPON AIRWAYS CO., LTD.
Apr. 2013	Leave of absence under Human Resources Department, ALL NIPPON AIRWAYS CO., LTD. (seconded
to ALL NIPPON AIRWAYS TRADING CO., LTD.)
Apr. 2015	Executive Vice President, Deputy Manager in charge of Operations Division, and General Manager ofInflight Services Center, ALL NIPPON AIRWAYS CO., LTD.
Apr. 2016	Executive Vice President, Manager in charge of ANA Brand Inflight Services Division, Deputy Manager in chargeof Operations Division, and General Manager of Inflight Services Center, ALL NIPPON AIRWAYS CO., LTD.
Apr. 2017	Member of the Board, Executive Vice President, Manager in charge of Promotion of Advancement of
Women in the Group, Manager in charge of ANA Brand Inflight Services Division, Deputy Manager
in charge of Operations Division, General Manager of Inflight Services Center, and Deputy General
Manager of Tokyo Olympic and Paralympic Games Promotion Division, ALL NIPPON AIRWAYS CO., LTD.
Apr. 2019 Member of the Board, Managing Executive Vice President, Manager in charge of Promotion of Advancementof Women in the Group, Manager in charge of ANA Brand Inflight Services Division, Deputy Manager incharge of Operations Division, General Manager of Inflight Services Center, and Deputy General Manager ofTokyo Olympic and Paralympic Games Promotion Division, ALL NIPPON AIRWAYS CO., LTD.
Apr. 2020	Member of the Board, Managing Executive Vice President, in charge of Group D&I Promotion
Department, ANA Blue Base Integrated Training Center, and Office for Government Aircraft
Operations, ALL NIPPON AIRWAYS CO., LTD. (retired March 2021)
Apr. 2021	Director and Vice President, ANA Strategic Research Institute Co., Ltd. (current)
Jun. 2022	Director, Kyushu Railway Company (current)

Apr. 1987 	Joined National Police Agency
Aug. 2015	Director-General of Gunma Prefectural Police
Apr. 2017 	Deputy Director-General of Policy Evaluation, Commissioner-General’s Secretariat, and Deputy
Director-General of Commissioner-General’s Secretariat, National Police Agency (in charge ofCommunity Safety Bureau)
Apr. 2018 	Deputy Director-General of Commissioner-General’s Secretariat, National Police Agency (in chargeof Community Safety Bureau)
Aug. 2019	Vice President of National Police Academy and Deputy Director-General of Commissioner-General’s
Secretariat, National Police Agency (in charge of Community Safety Bureau)
Jan. 2020 	Director-General of Community Safety Bureau, National Police Agency
Sep. 2021 	Retired from National Police Agency
Feb. 2022 	Advisor, Nippon Life Insurance Company (retired June 2022)
Jun. 2022 	Director, Audit and Supervisory Committee member, Kyushu Railway Company (current)

Important information on concurrent posts:
Representative Director, Wellness Systems InstituteOutside Director, YOKOWO CO., LTD., Outside Director, NEC Networks & System Integration
Corporation

Important information on concurrent posts:
Representative Director and Chairperson, Kyushu Electric Power Company, Incorporated,
Outside Director, Audit and Supervisory Committee Member, THE NISHI-NIPPON CITY BANK, LTD.,
Outside Director, RKB MAINICHI HOLDINGS CORPORATION

Director and Vice President, ANA Strategic Research Institute Co., Ltd.

Policy and procedures for nominating Directors

Director, Audit and Supervisory
Committee member

Koji Higashi

Yasunori Eto O

Full-time member
Audit & Supervisory Committee Member

Part-time member
Audit & Supervisory Committee Member

Part-time member
Audit & Supervisory Committee Member

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
13/13 (100%)
Number of shares in JR Kyushu owned:
790 shares
Tenure as outside director of the Company: 4 years

Attendance at meetings of the Board of Directors
during the fiscal year ended March 31, 2022:
11/11 (100%)
Number of shares in JR Kyushu owned:
158 shares
Tenure as outside director of the Company: 1 year

Director, Audit and Supervisory
Committee member

I

Hiromi Fujita O

ProfileProfileProfileApr. 1990	Joined Kyushu Railway Company
Mar. 2009 	Deputy General Manager of Administration Department, Kyushu Railway Company
Jun. 2009 	Representative Director and President, Inc Train D’orJun. 2013 	General Manager of Fund Management Department, Kyushu Railway Company
Jun. 2014 	General Manager of Finance & Accounting Department, Kyushu Railway Company
Jun. 2017 	General Manager of Kumamoto Regional Office, Kyushu Railway Company
Jun. 2018 	Corporate Officer, General Manager of Kumamoto Regional Office, Kyushu Railway Company
Jun. 2019 	Senior Corporate Officer, General Manager of Administration Department, Kyushu Railway Company
Apr. 2022 	Managing Corporate Officer, General Manager of Administration Department, Kyushu Railway
Company
Jun. 2022 	Director, Audit and Supervisory Committee member, Kyushu Railway Company (current)

Apr. 1995	Appointed as a public prosecutor
Apr. 2009	Deputy Chief Prosecutor, Kagoshima District Public Prosecutors Office
Apr. 2011	Public prosecutor, Osaka District Public Prosecutors Office
Sep. 2011	Retired as public prosecutor
Oct. 2011	Registered as an attorney at law
Attorney at law, Bengoshi Hojin Hino Sogo Law Office (current)
Jun. 2018	Director, Audit and Supervisory Committee member, Kyushu Railway Company (current)

Apr. 1980 	Joined Nissho Iwai Corporation
Sep. 1985 	Retired from Nissho Iwai Corporation
Jan. 1996 	Part-time Lecturer, Daiei Educational System Inc.
Jun. 1997 	Joined Shiraishi Accounting Firm
Jun. 2000 	Retired from Shiraishi Accounting Firm
Sep. 2000 	Established Hiromi Fujita Tax Accountant Office
Oct. 2014 	Yuwa Partners Tax Accountants’ Corporation
Oct. 2015 	Representative Partner, Sakura Yuwa Partners Tax Accountants’ Corporation (current)
Jan. 2020 	Outside Director, Audit and Supervisory Committee Member, IKK Inc.
Jun. 2021 	Director, Audit and Supervisory Committee member, Kyushu Railway Company (current)
Nov. 2021	Outside Director, Audit & Supervisory Board Member, IKK Holdings Inc. (current)

Important information on concurrent posts:
None

Important information on concurrent posts:
Attorney at Law, Bengoshi Hojin Hino Sogo Law Office

NoneImportant information on concurrent posts:

Director, Audit and Supervisory
Committee member

Number of shares in JR Kyushu owned:
706 shares

Important information on concurrent posts:

Important information on concurrent posts:
Representative Partner, Sakura Yuwa Partners Tax Accountants’ Corporation
Outside Director, Audit & Supervisory Board Member, IKK Holdings Inc.

I

Candidates for directorship are chosen by the Board of
Directors on the basis of selection standards specified by
the Board of Directors, which include a high level of ethics,
personality, character, and management performance,
based on a report by the Nomination and Compensation
Advisory Committee. If a Director ceases to satisfy theselection standards, significantly impairs the corporate
value of Kyushu Railway Company through negligence of
their duties, or falls under any reason for disqualification,
the Board of Directors will deliberate on the dismissal of
the Director according to a report by the Nomination andCompensation Advisory Committee and propose dismissal
to the General Meeting of Shareholders. When nominating
candidates for Directors who will also be an Audit andSupervisory Committee member, consent must be obtained
from the committee in advance.
O Outside director
I Independent director

Kyushu Railway Company

Integrated Report 2022

58

GovernanceSound Corporate Management ── Corporate Governance

Skill sets in the Board of Directors

Corporate Officers (excluding Corporate Officers who are also Directors)

JR Kyushu's Board of Directors nominates a diverse range of Board of Directors candidates who have theknowledge and experience necessary to fulfill the company's mission of sustainable business operations (see (1) in thetable) and to run the company (see (2) in the table).
Furthermore, COVID-19 has had serious effects on the Company’s business, and as we are now at an important stage
in which we must come together as a region to overcome the current challenging business environment, knowledge on
Kyushu is becoming increasingly important.
In the JR Kyushu Group Medium-Term Business Plan 2022-2024, the Company upholds the 2030 Long-Term Visionand the policy to realize it, and aims to evolve products and services, mobility, and areas. To realize the 2030 LongTerm Vision, the Company revised material issues and set non-financial KPI. Within this, the Company also believes
that the promotion of human resources strategy going forward is important.
Areas of expertise that are particularly expected from eachdirector
Name

Positions, etc.

(1)

Toshihiko Aoyagi

Chairperson Corporate Officer

●

●

●

Yoji Furumiya

President Corporate Officer

●

●

●

Toshihiro MoriManaging Corporate Officer●●

Hiroyuki Fukunaga

Managing Corporate Officer●●

Takuma Matsushita

Managing Corporate Officer

●

●

●

Koji Karaike

Senior Executive Adviser

●

●

●

Toshihide Ichikawa O
Shinji Asatsuma O

I

Female Representative Director, Wellness Systems InstituteI

Hitomi Yamamoto O
Koji Otabe A O

I

FemaleRepresentative Director and Chairperson, Kyushu
Electric Power Company, Incorporated
Director and Vice President, ANA Strategic ResearchInstitute Co., Ltd.

●●

Hiromi Fujita A O

Attorney at law, Bengoshi Hojin Hino Sogo Law OfficeI

Senior Partner Tax Accountant, Sakura Yuwa Partners
Tax Accountant Corporation

Female

●

●
●

●

●
●

●

●

●

●

●

●

●

●

●

●

Senior Corporate Officer Yumi Akagi Female

Deputy Director General of Corporate Planning Headquarters
and General Manager of Strategy Management Departmentof Corporate Planning Headquarters, in charge of IT
Strategic Planning Department

Senior Corporate Officer Shinji Sawakame

Deputy Director General of Business Development
Headquarters, General Manager of Condominium
Development Department

Senior Corporate Officer Hisashi Yamane

General Manager of Administration Department, incharge of Human Resources Department

Corporate Officer

Wataru Tanaka

General Manager of Nagasaki Regional Office

Corporate Officer

Tomonori Uwabu

General Manager of Regional Strategy Department,
Corporate Planning Headquarters

Corporate Officer

Hidenori Matsuo

General Manager of Cruise Train Division of Railway
Operations Headquarters and General Manager ofTransportation Department

Corporate Officer

Hiroyuki Nakamura

General Manager of Kagoshima Regional Office

Corporate Officer

Motomichi Miura

General Manager of Customer Service Department andMarketing & Sales Department, Railway Operations
Headquarters

Corporate Officer

Kozo Takeda

General Manager of Tokyo Regional Office

Corporate Officer

Mikiko Nakano Female

General Manager of Kumamoto Regional Office

Corporate Officer

Toshinari Yoshino

General Manager of Oita Regional Office

Corporate Officer

Manager of Hotel Development Department,
Machiko Hamada Female General
Business Development Headquarters

Corporate Officer

Isamu Nakamura

General Manager of Development Department, Business
Development Headquarters

Corporate Officer

Hiroki Koga

General Manager of Planning Department, Business
Development Headquarters

●
●

●

●

●

(%)
20

●

10
5

O Outside

I Independent Director

Kyushu Railway Company

A Audit and Supervisory Committee member

20.0

15

●
●

*As of June 23, 2022

Ratio of female corporate officers(Excluding those in dual roles as directors and corporate officers)

●

●
I

●

●

Koji Higashi A
Yasunori Eto A O

Human
resources andremuneration●

Chairperson of Audit and Supervisory CommitteeI

M&A andfinance●

Former Director, Kansai Paint Co., Ltd.

I

Kuniko Muramatsu O
Michiaki Uriu O●

Adviser, Mitsui Fudosan Co., Ltd.

I●

Deputy Director General of Railway Operations
Headquarters, General Manager of Planning &Transportation Safety Department(2)

Real estate
Legal affairs
Railways
ESG and
Corporateand local
and risk
and mobility
community sustainability management
management
services
development●

Senior Corporate Officer Michiya Sadakari*As of June 23, 2022

11.8
5.9

5.6

’19/3

’20/3

* Scope: K yushu Railway
Company alone

0
’21/3

’22/3

* As of the end of June in thefollowing fiscal year

Integrated Report 2022

59

GovernanceSound Corporate Management ── Corporate GovernanceRound-table discussions for outside directors

Michiaki Uriu

Shinji Asatsuma

Izumi Kuwano

Toshihide Ichikawa

Kuniko Muramatsu* Outside Director Kuwano resigned upon the conclusion of the 35th Annual General Meeting of Shareholders held on June 23, 2022.

Our Medium-Term Business Plan 2022-2024
started in April 2022.
We talked with outside directors aboutbuilding a sustainable society and improving
the corporate value of the JR Kyushu Group.

Moderator
Senior Corporate Officer & General Manager ofStrategy Management Department, Corporate
Planning Headquarters

Yumi Akagi

Kyushu Railway Company

Q

How was the process for formulating the
new Medium-Term Business Plan?

■ Kuwano I have overseen the JR Kyushu Group as an
outside director since before it went public, and having several
opportunities to discuss the formulation of the Medium-TermBusiness Plan at the Board of Directors meetings has beena big change. I believe that having outside directors such as
myself giving various opinions and suggestions while enabling
two-way communication between the corporate officers andoutside directors has enabled us to evolve the plan each timethat we hold discussions.
■ Uriu I felt that the corporate officers recognized the issues
and were discussing them in a substantive manner. It was
great to be able to hear the thoughts and opinions of thecorporate officers and exchange opinions at the Board of
Directors meetings. I hear that the corporate officers took
a trip together to discuss the Medium-Term Business Plan,emulating the training camps that are common for Japanese
athletes. I would have loved to join.
■ Muramatsu Indeed. Having an opportunity to join
informal discussions can help us share our understanding ofmanagement issues and the strategic direction, and enable a
deeper exchange of opinions.
■ Ichikawa I think that we were successful in opening up theformulation process. I think that the formulation of such a plan
often involves a closed process where the corporate planningdepartment brings together the ideas of top management.
This time it felt like we included diverse opinions from outside
directors and had a significant amount of debate on thecorporate side. Surely this process will become a strong driving
force when it comes to actually executing the strategy.
■ Asatsuma Honestly speaking, I would have liked toparticipate from an earlier stage of the formulation process. The
Medium-Term Business Plan should involve discussion on what
to do in the next three years, based on our long-term ideas. I
would like to participate in discussion from the stage where we
consider things from a more long-term perspective. We need topaint a long-term, systematic picture in financial terms, which
details the balance sheet and cash flows to aim for.

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60

GovernanceSound Corporate Management ── Corporate Governance■ Muramatsu I also monitor ESG Strategy Committee
meetings as an observer. This time, the formulation processincorporated ideas from an ESG perspective, such as scenario
planning methodology and backcasting from 2030, andevaluated key points for implementing ESG management.
Having young managers think about the preliminary draft ina workshop is also a wonderful way of promoting personnel
development. On the other hand, we need to enhance debate
on the integration of financial and non-financial aspects andour long-term capital policy, and this remains a future issue
that we need to address.
●

Q

●

●

Would you please tell us more about any issues or expectations recognized during theformulation of the new Medium-Term Business Plan?

■ Asatsuma I gave my opinion on how we should tackle
development in regional areas. In regard to regional development,
it is particularly important to think about geography separatelyfrom business, and consider things that will enable future sourcesof revenue. We need to create a system where we can have an

Kyushu Railway Company

income even when people do not move around. It is difficult todo so with one company alone, so I would like the entire JR
Kyushu Group to work together to achieve this goal.
■ Kuwano The JR Kyushu Group states "city-building
initiatives that leverage the distinctive characteristics of local
communities" as one of our goals in the Long-Term Vision for2030. I conveyed my expectations for confronting the issue ofcity-building and community development in the new MediumTerm Business Plan. At Board of Directors meetings, I also
talked about looking ahead to 2030 with diverse regional
development models for enriching lifestyles, as well as the needto consider regional connections. The formulation of a policy
for achieving our Long-Term Vision for 2030 gives us an idea ofcity-building and community development that the JR Kyushu
Group is aiming for, and I have high expectations for realizingthat policy. The policy mentions support for administration andlocal governments as a means to expand our contribution to
the sustained development of Kyushu, and this will lead to us
creating new things together in the region. It is important toapproach development together with local communities.
■ Uriu Another long-term challenge is how we can build
sustainable mobility services. For example, I think good modelcases, such as community buses that combine self-driving
technologies with MaaS, have growth potential. If we could
partially take over local government services, it may help solve
regional social issues.
■ Muramatsu I think one strength of the JR Kyushu
Group is that we are in a unique position to connect various
stakeholders in Kyushu. I believe that an important missionof the JR Kyushu Group is to become a hub for regional
resources and regional cooperation. Many people think of JR
Kyushu when they hear "Kyushu," and I think that is becauseof our brand value. I want the JR Kyushu Group to lead the
Kyushu economic zone, and I think that we are in a position to
do so.
■ Ichikawa I have been saying this for a long time, but I
believe that our management needs to transform the waythat they see the company, from "a company that operates
railways" to "a company that also operates railways." In
regard to regional development, we need an overview of otheroperations that creates businesses and creates new markets.
Our predecessors have already leaped ahead to create a newmarket for luxurious train trips on the Seven Stars in Kyushu.
I think that the emergence of young people with the power tocreate new markets, rather than creating businesses in existing
markets, would enable us to become a better company, and I
expect we can do so.
■ Asatsuma The JR Kyushu Group utilizes the land it owns
for development in areas around railway lines, which achieves
growth via the synergy of the railway business and related
businesses such as commercial facilities. This has worked for
us up until now, but I believe that we are now at a turning point
where we must make decisions about how to proceed to thenext stage.
■ Ichikawa In order to achieve sustainable growth for thecompany, I think that it is important to conduct business ina manner that effectively utilizes railways. I hope that we canutilize the synergy that comes with being a railway company toavidly pursue various other businesses.
■ Kuwano “Creating a model for building cities that promote
well-being” is given as an important strategy in the new
Medium-Term Business Plan, and I think that the key to this liesin the creation of new businesses based on mobility services in
Kyushu.

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61

GovernanceSound Corporate Management ── Corporate Governance■ Muramatsu It is extremely important to develop personnel
and ensure diversity in order to create new markets. Surely
new businesses require personnel with diverse perspectives
and backgrounds from all walks of life to work together toachieve results.
●Q●visualizing this as a concrete material issue in the formulation
process for the Medium-Term Business Plan, I feel that it has
become easier to understand the perspective of sustainability
and management strategy, and how they relate to substantive
efforts.

●●

Q

We conduct business activities based on theidea that when communities are invigorated, the JR Kyushu Group is invigorated too.
What do you think about the realization of asustainable society and the future growth of
the JR Kyushu Group?

■ Uriu In regard to sustainability, I believe that the declining
population in Kyushu remains our greatest challenge.
■ Kuwano The JR Kyushu Group aims to "make Kyushu aplace where people will want to live, work, and visit." I believethat the "work" part of this is particularly important. The JR
Kyushu Group's strengths lie not only in expanding bothliving and visiting populations, but also our ability to create
employment. We need to leverage these strengths in our citybuilding and community development. Mobility services areseeing new people becoming involved and a diverse array of
personnel and technologies gathering. I believe that the JR
Kyushu Group can play a central role in mobility services, with
its network around Kyushu and roots in the region.
■ Asatsuma This means we have to think about how we canincrease the working population. I hope that by creating work
opportunities, we can make Kyushu an area where the working
population is increasing.
■ Muramatsu In "What we aim to be," we state that JR
Kyushu Group's activities seek to invigorate Kyushu. I believethat the flow of ESG and sustainability brings possibilities for
us to create new markets. I hope that we can utilize thesestrengths to do so. In the new Medium-Term Business Plan,
we revised the material issues for achieving our long-term
vision, and one of those was "sustainable city-building." By

Kyushu Railway Company■ Uriu Our group companies all have their own distinct
personalities, and do not necessarily need to work
together. I think that we need to utilize things such as digitaltransformation to create a system for extracting and sharing
information.

■ Ichikawa We also need to think about group governance,or how we want to handle the organization of the entire groupin the long term.
■ Asatsuma Opportunities for expanding our businesshave been increasing, such as with M&A and the creation of
new businesses. However, increasing our number of groupcompanies brings with it the risk of labor shortages and a lackof cooperation. The management environment and businessenvironment are changing, and we need to figure out whatkind of organization system and administration will contributeto improved corporate value.
■ Muramatsu We need to strategically think about groupmanagement from various aspects such as risk management,
personnel and organizational development, and groupsynergy promotion, and I believe that the importance of doing
so will only increase in the future. On the other hand, there
is no correct answer or final form when it comes to group
governance, as it is a challenge that must be tackled on acontinual basis.

●●

Our corporate system was renewed in April
2022. What are your expectations for the
new corporate officers?

■ Muramatsu The JR Kyushu Group faced its greatest crisis
since the founding of the company due to COVID-19. I praisemanagement for their swift response that prioritized safety
above all else, as well as their rapid review of our business inlight of the realization that the flow of human movement will not
return in the short term.
Our employees have been working extremely hard during
these difficult two years. I hope the new corporate officers focus
on communication with employees and improving motivation.
■ Kuwano I believe that top management need to convey
the importance of each job to each worker in order to improve
employee engagement.
■ Uriu It is extremely important to improve engagement.
I hope that top management will convey messages so that
employees will take pride in their jobs. At a Board of Directors
meeting, I stated that phased human resource development
is an important step of our Long-Term Vision for 2030, andthat proactively talking with employees about human resource
management, recruiting/placement, and career paths isan effective form of messaging, so we should include suchinformation in the Medium-Term Business Plan. I hope thatmanagement can also work on inner branding to ensure thateach and every employee considers the new Medium-TermBusiness Plan to be of importance to themselves so that they
can work with a positive attitude.

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62

GovernanceSound Corporate Management ── Corporate Governance■ Muramatsu Personnel strategy is an essential part ofsustainable corporate growth. Human resources will be an
important factor as our business portfolio continues to change.
I understand that up until now the JR Kyushu group has
focused on the development of personnel and implemented
various initiatives to do so, but I have been suggesting that we
make more strategic efforts, with an eye on the big picture.
I believe it is a sign of progress that the new Medium-TermBusiness Plan formulates a personnel strategy that is linked
with the management strategy, and discloses that information
both inside and outside the company. I think that setting nonfinancial indicators to be linked with director remuneration* isalso a big step forward, as it shows that the JR Kyushu Group
has a strong determination to develop personnel, and I lookforward to seeing the results.
* From July 2022, performance-based remuneration for directors (excluding
outside directors and directors who are Audit and Supervisory Committee
members) will reflect the results of our employee awareness survey, one of
the non-financial KPIs set in our current Medium-Term Business Plan.

P.66■ Ichikawa In terms of personnel development, it is also
important to consider how to develop personnel who will carrythe company forward in the future. Up until now, employees
have had the opportunity to gain experience and polish their
management skills while they were young, which led to acareer path, but the situation looks set to change in the future.
■ Uriu It is extremely important for employees to gain
experience for their career path within the entire organization,
including the separate group companies. At the same time, I
believe it is necessary to have systems that enable employees
to take on challenges without fear of defeat, and systems that
support them in such endeavors.
■ Ichikawa We need a good balance of defense and offense,
which will enable us to leverage our strengths, which are ourendeavoring spirit and activeness, while also maintaining
governance.
COVID-19 has had an extremely large impact on the JR
Kyushu Group, but also gave us an opportunity to review
various things. The period of this Medium-Term Business Plan
is important for the JR Kyushu Group to get back on the pathto growth, after the damage caused by COVID-19. As an
outside director, I too have a role to play in this.

Akagi Upon hearing what everyone had to say, I
strongly felt the need for each and every employee tocome together and take steps toward new endeavors. A
crisis will remain a crisis if nothing is done, and this is the
only way that we can turn a crisis into an opportunity.
As we look ahead to our Long-Term Vision for2030, I hope that our employees can continue to work
together at the JR Kyushu Group to invigorate theregion with both zeal and integrity.

Kyushu Railway Company

Integrated Report 2022

63

GovernanceSound Corporate Management ── Corporate GovernanceFundamental approach

The JR Kyushu Group is involved in a variety of businesses
based on safety and service born of our own strengths. Fromthe base of our operations in Kyushu, we continue to take on
the challenge of invigorating Kyushu, Japan as a whole, andthe greater Asia area in a tireless and enthusiastic manner.
In order to realize this objective, JR Kyushu aims to be a
corporation that earns lasting trust from customers, local
community members, business partners, employees andtheir families, and shareholders. To this end, JR Kyushu
is establishing and improving frameworks and systems
for decisive and prompt decision-making, as well as forappropriate disclosure of information, while guaranteeing
transparency and fairness in management. We are also further
enhancing our efforts in corporate governance to realize
continuous growth and improvement in corporate value overthe medium to long-term.

Strengthening our corporate governance framework
based on communication with investors and thirdparty evaluations

From June 2018, JR Kyushu transitioned to a company
with an audit and supervisory committee and introduceda corporate officer system. The purpose of these changes
was to strengthen the supervisory function of our Board of
Directors, enable faster decision-making by management,
and ensure efficient corporate management, in addition to
separating management’s decision-making and supervisionfrom the business operations of the company.
The current composition of the Board of Directors includes
five Independent Outside Directors out of eleven Directors
who are not Audit and Supervisory Committee members, andthree Independent Outside Directors out of four Directors who
are Audit and Supervisory Committee members, ensuring
the effectiveness of management oversight by having eight
Independent Outside Directors out of fifteen Directors.
Furthermore, based on the diverse experience and expertise of
Outside Directors with knowledge in each field, we held evendeeper discussions at meetings of the Board of Directors.
Additionally, we have established a Nomination andCompensation Advisory Committee with an extremely
high level of independence, composed of five Independent

Governance transition

Governance

Board ofDirectors

FY2019/3

FY2020/3

FY2021/3

FY2022/3

FY2023/3

Organization

Shifted to a company with an Audit Committee

→

→

→

→

Committee(→→

Established the Nomination andCompensation Advisory Committee
Assigned an outside director as Chairperson
9 members in total: 8 external and 1 internal

Nomination and Compensation
Advisory Committee→)of members streamlined( Totaltonumber)
6, 5 external and 1 internal

Initiatives toStrengthen GovernanceIntroduced Corporate Officer system→→→
Developed a succession plan→

Number of
Directors

13

15
Clarified the position of CFO

→

→

→

Independent
Outside Directors(# of Directors/%)

6/46.2%

8/53.3%
Added two Outside Directors withexpertise in real estate and IR/finance

8/53.3%
Added one outside director
with expertise in ESG

7/46.7%

8/53.3%

Female Directors(# of Directors/%)

2/15.4%

1/6.7%

2/13.3%

3/20.0%3/20.0%

Performance-based
compensation plan
Introduced "Board Benefit Trust"→→

Added monetary remuneration to
performance-based remuneration
Set non-financial KPIs as criteria
for share-based remuneration→→

Implemented in-house

Implemented in-house(scheduled)Compensation

Board Effectiveness Evaluation

Introduced board effectivenessevaluations by a third-party organization

Ratio of independent outside directors

Ratio of female directors

Independent Outside Directors

Inside Directors
7

60

Ratio of independent
outside directors

53.3

53.3

46.2

46.7

53.3

40

53.3%

3

Ratio offemale directors

20.0%

20

Independent Outside Directors

8

Female Directors

Female Directors

（%）

（%）

20
15

15.4

0
18/3

19/3

20/3

21/3

22/3

Male Directors
12

20.0

20.0

21/3

22/3

13.3

10
5

*As of the end of June in the following year

Kyushu Railway Company

initiatives are based on evaluations and discussions at theBoard of Directors effectiveness evaluation implemented
every year. We confirm the effects of initiatives in the Board of
Directors effectiveness evaluation and are holding discussions
at meetings of the Board of Directors to further improve
effectiveness.

Outside Directors and one Inside Director and chaired by an
Independent Outside Director. Furthermore, as part of ourefforts to improve governance, we held exchanges of opinions
among analysts, institutional investors, and Independent
Outside Directors, working to improve the transparency of
the Board of Directors. This issues awareness and these

6.7

0
18/3

19/3

20/3

*As of the end of June in the following year

Integrated Report 202264GovernanceSound Corporate Management ── Corporate Governance

Board of Directors

who are Audit and Supervisory Committee members. Eight

well as important items pertaining to JR Kyushu’s operation.

The Board of Directors makes decisions on matters

independent outside directors have been appointed in order toFurthermore, JR Kyushu has set up the Group Executive

determined by law and important matters stipulated by thefurther strengthen the supervisory function over the Board ofCommittee, which deliberates management strategies such as

rules of the Board of Directors. The Board also supervises the

Directors.

the JR Kyushu Group’s management vision and the allocation

business operations of directors, senior corporate officers,

In addition, JR Kyushu has established the Executiveof management resources as well as important items related toand corporate officers. The Board of Directors meets once

C o m m i t t e e , w h i c h i n p r i n c i p l e m e e t s o n c e a week .

individual companies in the JR Kyushu Group. By overseeinga month, as a general rule, and comprises a total of 15

In accordance with the stipulations in the Articles ofthe management of group companies, the Group Executive

members, including 11 directors (excluding directors who are

Incorporation, the committee deliberates items determined byCommittee works to enhance the JR Kyushu Group’s

Audit and Supervisory Committee members) and four directors

the Board of Directors regarding the delegation of authority ascomprehensive strengths.

Audit and Supervisory Committee
The Audit and Supervisory Committee receives reports on

Corporate Governance Structure (as of July 1, 2022)

important matters related to audits, holds discussions, andGeneral Meeting of Shareholders
Appointment/Dismissal

Appointment/Dismissal

Management and Supervision
Nomination andCompensation
Advisory Committee
Directors: 6(including 5 independent
outside directors)

Auditing

Board of Directors

Consultation

Appointment/Dismissal

Directors (excluding those who are Audit
and Supervisory Committee members): 11

Reporting
Cooperation(including 5 independent outside directors)

members (including three independent outside directors)
and conducts audits concerning the execution of duties by

Accounting auditors

directors, senior corporate officers, and corporate officers.

Directors who are also Audit and Supervisory Committee members: 4(including 3 independent outside directors)

Report ofFindings

Nomination and Compensation Advisory Committee

Delegation, selection, dismissal, supervision

Reporting information

Auditing

Reporting

Cooperation

Cooperation

Auditing

JR Kyushu has established the Nomination andCompensation Advisory Committee, which serves as an

Execution of duties
President and CEO

Instructions
Reportingadvisory body to the Board of Directors. The committee

Auditing Department

comprises five independent outside directors and one inside

Executive Committee
Delegation
Commands

meets once a month, as a general rule, and holds extraordinary
meetings when necessary. The committee consists of four

Audit and Supervisory
Committee

Auditing
Supervisionpasses resolutions. The Audit and Supervisory Committee

Group Executive Committee

Auditing
Internal auditing

Internal auditing

ESG Strategy Committee

director, and is chaired by an independent outside director. In
JR Kyushu Group Corporate
Internal control
Ethics Committee

compensation of corporate directors, decisions are made by
the Board of Directors with consideration for reports from theHead office, branch offices, operations facilities
Cooperation/Collaboration

regard to the appointment and dismissal of directors and theManagement/leadership

Internal control

Nomination and Compensation Advisory Committee.

Group Companies

Kyushu Railway Company

Integrated Report 2022

65

GovernanceSound Corporate Management ── Corporate Governance

Remuneration for Directors

1 Goal of changes

Changes to the policy for determining director
remuneration (excluding outside directors and directors who
are Audit and Supervisory Committee members)
We made a decision on changing the policy for determining
director remuneration at the Board of Directors meeting heldon May 10, 2022.

●M onetary remuneration has been added to the remuneration

linked to business performance, in order to ensure that the
JR Kyushu Group Medium-Term Business Plan 2022-2024
is executed reliably and that directors produce meaningful
results by achieving the numeric targets for each fiscal year.
● The performance-based remuneration of our directors now
reflects the results of our employee awareness survey, oneof the non-financial KPIs set in our current Medium-TermBusiness Plan, have been incorporated into. The results of ouremployee awareness survey are a key quantitative indicatorof the degree to which we have achieved our personnel
strategies, which are a critical foundation for achieving thetargets in this Medium-Term Business Plan and our long-

Key Points Regarding Changes to the Director Remuneration System (excluding outside directors and directors who are audit and supervisory committee members)
Old system

Remuneration structure(annual short-term remuneration)

Basic remuneration : remuneration
linked to business performance(share-based remuneration)
=8:2

Notes

Monetary remuneration is given to incentivize
ongoing accomplishment of numericaltargets for each business year

Monetary
remuneration

Linked to business performance
Performance-linked KPIs
(short-term incentives)— (not included in system)

Performance-linked KPIs

Evaluation index of 0.0-2.0 based on
accomplishment (standard score 1.0,
maximum 10% of basic remuneration)

Paid monthly for duration of role─

Paid according to position

Paid according to position(no change)

Fixed share-based remuneration also neededin order to share profits and losses withshareholders

Short-term incentives

Annual consolidated operating
incomeAnnual consolidated operating income(no change)

Multiplied by evaluation index of 0.0-2.0
based on accomplishment(standard score 1.0)

Long-term incentives

TSR for the period of the MediumTerm Business Plan (relative to
TOPIX growth rate)

TSR for the period of the MediumTerm Business Plan (relative to industry
competitors)

Multiplied by evaluation index of 0.02.0 based on ranking among competitors(standard score 1.0)

Non-financial(long-term incentives)— (not included in system)

Results of employee awareness survey during
the period of the Medium-Term Business Plan

Maximum of 5% of the above long-term
incentives added

On leaving role as director

On leaving role as director(no change)

Time of payment

Fixed remuneration
Share-based remuneration

Annual consolidated operating income

Time of payment

Kyushu Railway Company

2 Key points of changes(Remuneration linked to business performance)● In regard to remuneration linked to business performance,

we have added monetary remuneration linked to businessperformance as a short-term incentive, and set total
remuneration so that remuneration linked to businessperformance (monetary and share-based remuneration)
does not exceed roughly 20% of the total remuneration
under normal circumstances.

(TSR)● We changed the TSR evaluation index from the rate of

TOPIX growth to the TSR of other companies in the same
industry.

(Non-financial index)

New system (from July 1, 2022)

Basic remuneration : remuneration linked tobusiness performance (monetary remuneration+ share-based remuneration)=8:2

term vision. As such, we have included it in our evaluationof directors to incentivize them and give them a sense of
responsibility for this.

● W e set the level of improvement in overall satisfaction

identified in the employee awareness survey as a nonfinancial KPI.
● As a medium to long term goal, we will add points equal to a
maximum of 5% of the long-term incentive part of the sharebased remuneration if improvement is seen over the periodof the Medium-Term Business Plan (three fiscal years).
Points will not be added or subtracted if no improvement is
made.

Basic policy concerning the determinationof remuneration and the Company’s view on
remuneration level
Basic regular remuneration for directors is set at a levelappropriate for each director's role and responsibilities, while
remuneration linked to business performance (monetary
remuneration and share-based remuneration) is provided
to incentivize improvements in the company's results andcorporate value. Appropriate amounts are set by a specialist
external institute based on factors such as a survey of othercompanies.

─Integrated Report 2022

66

GovernanceSound Corporate Management ── Corporate Governance

Composition of remuneration● Directors (excluding outside directors and directors who

are Audit and Supervisory Committee members)
Remuneration for directors comprises basic remuneration
at the fixed amount and performance-linked remuneration.
Performance-linked remuneration consists of monetary
remuneration that fluctuates according to corporate
performance, etc. and share-based remuneration.
Performance-linked remuneration functions as a short-termand long-term incentive for improving business performanceand corporate value.
（i）	P e r f o r m a n c e - l i n k e d r e m u n e r a t i o n ( m o n e t a r yremuneration)
Consolidated operating income for each fiscal year shallbe set as a key performance indicator (KPI) for steadily
improving results toward the goal of achieving targets set foreach fiscal year.
（ii）	Performance-linked remuneration (share-based remuneration)
Consolidated operating income for each fiscal year shallbe set as a KPI for performance-linked remuneration (sharebased) in the short term. In the medium to long term,
an index based on a rank shall be set for share-based
remuneration, comparing the Company’s total shareholder
return (TSR) with TSR of competitors in the period of theMedium-Term Business Plan (three fiscal years).
By further clarifying the way in which remuneration forcorporate directors is linked to business performance andthe value of Company shares, the objective is to ensure thatboth the benefits of higher share prices and the risks of fallingshare prices are shared with shareholders, thereby further
strengthening the motivation for directors to contribute toimprovements in business performance and corporate value
over the medium to long term.
Furthermore, incentives adopting employee awarenesssurvey findings as evaluation items shall be set toquantitatively assess the degree of personnel strategy
realization.
Basic remuneration and performance-linked remuneration(monetary remuneration) are paid monthly during a director’s
term of office. Performance-linked remuneration (share-based
remuneration) is paid when a director retires.

Kyushu Railway Company● O utside directors and directors who are Audit andSupervisory Committee Members
In consideration of their responsibilities, these directors’
remuneration consists only of basic remuneration.

Methods of calculating performance-linked
remuneration● Method of calculating performance-linked remuneration(monetary remuneration) provided to directors
Remuneration shall be provided with 10% of basic
remuneration at the fixed amount as the upper limit by varying
the amount of remuneration by the index of 0.0 to 2.0 (1.0
set as a standard) according to the degree of consolidated
operating income achievement in each fiscal year.
● Method of calculating performance-linked remuneration(share-based remuneration)
Short-term incentives in share-based remuneration arecalculated with the use of a coefficient ranging from 0.0 to
2.0 (1.0 set as a standard) that corresponds to the degree
to which the consolidated operating income target for eachfiscal year is achieved. Long-term incentives are calculatedwith the use of an index ranging from 0.0 to 2.0 (1.0 set as astandard) that corresponds to a rank obtained by comparing
the Company’s TSR with TSR of competitors in the period of
the Medium-Term Business Plan (three fiscal years).
Points up to 5% of the long-term incentives explained
above are added, taking into consideration improvementsin employee awareness survey findings in three fiscal years
from April 2022 to March 2025 (linked to the period of theMedium-Term Business Plan). Points are not subtracted incases where no improvement is made.
The number of Company shares to be provided to eachdirector is calculated by multiplying the number of points
granted to a director by 1.0.

Limits on officers' remuneration
The amount of remuneration for directors (excluding
directors who are Audit and Supervisory Committee members)
was approved to be up to ¥420 million annually (of which up to¥60 million is for outside directors) at the 32nd Annual General
Meeting of Shareholders held on June 21, 2019. As of the endof the 32nd Annual General Meeting of Shareholders held on
June 21, 2019, the number of directors will be 11 (including
five outside directors). It was resolved at the 31st Annual
General Meeting of Shareholders held on June 22, 2018 thatthe amount of remuneration for directors who are Audit andSupervisory Committee members be up to ¥120 million. As ofthe end of the 31st Annual General Meeting of Shareholders
held on June 22, 2018, the number of directors who are Audit
and Supervisory Committee Members is four (including threeoutside directors).
In addition, with regard to performance-linked share-based
remuneration plan "Board Benefit Trust," it was resolved at the35th Annual General Meeting of Shareholders held on
June 23, 2022 that the Company contribute funds to the trust
up to ¥600 million (¥390 million of which is for directors), apartfrom the above amount of remuneration, over three fiscal years
as funds for the acquisition of shares to be provided in the
future.
The Company shall grant directors (excluding outside
directors and directors who are Audit and Supervisory
Committee members) a specified number points determined
upon having given consideration to factors relating torespective fiscal years such as their positions based on theRules on Provision of Shares to Officers, and the extent
to which business performance has achieved the targets
stipulated by the Medium-term Business Plan. Each point
granted to the directors, shall be converted into one commonshare of the Company at the time of the provision of theCompany’s Shares, etc. (in cases where the Company’s shares
become the subject of a share split, allotment of shares without
contribution, or consolidation of shares, etc., the maximum
number of points, accumulated number of points granted or
the conversion rate shall be adjusted in a reasonable mannerin proportion to the relevant ratio, etc.). The total number ofpoints granted to directors in each fiscal year shall be up to
43,000.

Procedure for determining remuneration
When determining remuneration for directors (excluding
directors who are Audit and Supervisory Committee members),
the Nomination and Compensation Advisory Committee,

Integrated Report 2022

67

GovernanceSound Corporate Management ── Corporate Governancewhose members consist of outside directors and the president,
submits its findings to the Board of Directors, with thepresident delegated by the Board of Directors then determining
remuneration within the total value limits imposed by the
resolution of the General Meeting of Shareholders. Authority isdelegated to the President because the President is deemed themost suitable for evaluating each Director while taking a broad
overview of the Company’s business performance as a whole.
Remuneration for Directors who are Audit and Supervisory
Committee members is determined through discussion among
directors who are Audit and Supervisory Committee members,
within the total value limits imposed by the resolution of theGeneral Meeting of Shareholders.
The Nomination and Compensation Advisory Committee ischaired by an Outside Director, and at least half of its members
are Outside Directors. The Committee engages in discussions
with respect to policies on determining the specifics ofremuneration for Directors, etc., and the remuneration specifics
for individual Directors, etc., and accordingly plays a role inenhancing fairness and objectivity with respect to remuneration.
Total remuneration for directors in each category, total
amount of remuneration by type, and number of directors
receiving remuneration amount (FY2022/3)
Category

Total amount of remuneration, etc., by type
Total amount of(millions of yen)
Number of
remuneration
persons paid
Share-based(millions of yen) Basic remuneration
remuneration

Directors (excluding Audit
and Supervisory Committee
members and outside directors)

264

239

24

6

Directors (Audit and Supervisory
Committee members) (excluding
outside directors)

32

32

─

1

Outside directors

82

82

─

10

Total

379

354

24

17

Notes 1. D irector compensation amounts do not include the employee portion ofcompensation for directors who double as employees.
2. The above amounts include compensation paid during the term of office of two
directors who resigned at the conclusion of the 34th Annual General Meeting of
Shareholders held on June 23, 2021.
3. "Share-based remuneration" indicated above includes provision for stock benefits
based on the performance-based share-based remuneration plan.

Kyushu Railway Company

Effectiveness of the Board of Directors
Recognizing that securing the effectiveness of the Boardof Directors leads to the medium to long term improvementof corporate value, the Company conducts hearings with thedirectors and gives questionnaires to them for the purpose ofadvancing analysis and evaluation related to said efficiency
and then discloses an overview of the results in the Corporate
Governance Report.
Between December 2021 and February 2022, we conducteda survey consisting of a questionnaire for all directors
to complete. Thereafter, we analyzed and evaluated theeffectiveness of the Board of Directors at a meeting of the Boardof Directors. Below is an overview of the evaluation results.

Overview of results(1) Conclusion
The overall evaluation was that the Board of Directors isfunctioning effectively.

(2) Evaluation process(i) Persons evaluated: All directors(ii) 	E valuation method: The survey was conducted byadministering an anonymous questionnaire.
(iii) 	Evaluation items: The major categories of the questionnaire
were as follows.
Ⅰ Composition and management of the Board of Directors
Ⅱ Management and business strategies
Ⅲ Corporate ethics and risk management
Ⅳ Evaluation and remuneration of management
Ⅴ Dialog with shareholders, etc.

Evaluation results for the fiscal year ended March 2022
①Progress in relation to issues recognized in the
FY2021/3 effectiveness evaluation● In the FY2021/3 effectiveness evaluation, issues were raised,

including further improving training opportunities to enhancebusiness understanding among outside directors, and evenmore enhancement of discussion related to the medium- tolong-term strategies by the Board of Directors.
●I n terms of further improving training opportunities toenhance business understanding among outside directors,
through ascertaining the desires of outside directors,
we carried out measures that contributed to improving
understanding of the Group’s business by providing businessbriefings and onsite tours.
●On the matter of even more enhancement of discussion
about medium- to longterm strategies by the Board of
Directors, we worked to further enhance discussion by
ensuring ample time was provided to raise matters of
discussion on multiple occasions at the Board of Directors
meetings regarding the formulation of the new Medium-TermBusiness Plan.

②P rincipal issues recognized in the FY2022/3
effectiveness evaluation●We

recognize that there is a suitable compositionof members to ensure the knowledge, capabilities,
experience and also diversity required to fulfill the roles andresponsibilities of the Board of Directors, and that the Boardof Directors is operated efficiently under an environment that
promotes forthright and open-minded discussion.
●
We recognize that the Audit and Supervisory Committee isprovided with necessary information and that the Audit andSupervisory Committee has built an effective system forsupervision and monitoring.
●W e recognize that a system has been appropriately
structured to promote constructive dialog with shareholders,
and that appropriate and effective feedback and sharing isprovided to the Board of Directors regarding opinions, etc.
that have been ascertained through dialog with shareholders.
●
As a new issue, we recognize the confirmation of efforts toimprove corporate value through DX.

Integrated Report 2022

68

GovernanceSound Corporate Management ── Corporate GovernanceFuture initiatives
Based on this effectiveness evaluation of the Company’s
Board of Directors, the Company will seek to make further
improvements, focusing on the following items, and enhance
the functionality of the Board of Directors.
● The Company will continue to conduct sustainable business
operations centered in the Kyushu region and appoint adiverse range of director candidates with varying expertiseand experience, while considering the notion of striking abalance in the Board of Directors overall, and accordingly
aim to develop an optimal workforce capable of effectively
and efficiently carrying out such functions.
●
T he Company recognizes that the promotion of DX willcontribute to further improvements in corporate value
and will report to the Board of Directors in a timely andappropriate manner.

Auditing
Auditing by the Audit and Supervisory Committee
Our Audit and Supervisory Committee has four members,
three of whom are outside directors. In addition to memberswith legal expertise, we appoint members with sufficientexpertise on finance and accounting. Below are details on
the attendance of each member of the Audit and Supervisory
Committee in the fiscal year ended March 2022.
Name

Full-timemember
Parttime
memberAttendance rate (attendance/
total number of meetings)

Eiichi Kuga (outside)

14/14 (100%)

Masaya Hirokawa

14/14 (100%)

Kazuhide Ide (outside)

4/4 (100%)

Yasunori Eto (outside)

14/14 (100%)

Hiromi Fujita (outside)

10/10 (100%)* Eiichi Kuga and Masaya Hirokawa resigned upon the conclusion of the35th Annual General Meeting of Shareholders held on June 23, 2022.
Because Kazuhide Ide resigned upon the conclusion of the 34th Annual
General Meeting of Shareholders held on June 23, 2021 and Hiromi
Fujita was appointed at the 34th Annual General Meeting of Shareholders
held on June 23, 2021, their total number of meetings differs from otherdirectors who are Audit and Supervisory Committee members.

Kyushu Railway Company

Our Audit and Supervisory Committee meetings are used
for purposes such as formulating audit plans, creating audit
reports, inquiring about the progress of directors’ work, andfacilitating discussion with the President and outside directors.
The key elements of the audit for the fiscal year ended March2022 were the Company's initiatives for the fiscal year ended
March 2022 business policy, its safety measures, and its Work
System Reform.
Each member audits our directors’ work by attending key
meetings such as those of the Board of Directors, reviewing
documentation about matters such as key decisions, andvisiting head office, branch offices, operations facilities, andgroup companies to assess the current state of operations andfinances.
Our outside members are particularly instrumental in this,using their specialist knowledge and background to provide
necessary advice and suggestions during discussions ofproposals among the Audit and Supervisory Committee. Our
full-time members gather information from our corporate
department and work together with our internal auditing
department to ensure the effectiveness of the auditing andsupervision by the committee. We continued to take measures
such as holding online meetings to prevent the spread of
COVID-19. The key assessment matters (KAM) for our audits
were discussed with our account auditors, who reported on
the status of the audits and provided explanations where
necessary.
The committee works from our Audit and Supervisory
Committee Office. Four staff members carry out administrative
work necessary for the running of the committee, such as
calling committee meetings and creating minutes.

Internal auditing
JR Kyushu has established an Auditing Department at its
head office to serve as an institution for conducting internal
audits. The department consists of 14 members. Internal
audits are carried out for the purpose of gaining an accurate
understanding of the management activities of JR Kyushu
and its group companies as well as for improving operational
efficiency through appropriate advice and recommendations
and contributing to sound business development. Specifically,

the Auditing Department carries out audits of the head office,branch offices, on-site operations, and group companies
based on auditing plans for each fiscal year. The department
reports the results of these audits to the president.
Three meetings were held between the Audit andSupervisory Committee, internal auditors, and account auditors
in the fiscal year ended March 2022 to facilitate a strong
working relationship between the three parties and share
information on audit plans, methods, and results. Additional
communication also takes place as necessary between the
Audit and Supervisory Committee and the accounting auditor
and between the Audit and Supervisory Committee and theinternal auditing department to share the necessary informationand discuss various matters, enabling more in-depth auditingby all parties involved.

Status of shareholdingStandards and principles for classification of
investment shares
Investment shares held for the purpose of pure investment
are those held in order to receive gains from fluctuations in
the value of the shares and dividends associated with theshares. Other shares are classified as investment shares held
for purposes other than pure investment (cross-shareholdings
policy). These are held according to the following shareholding
policy.

Investment shares held for purposes other thanpure investment (listed shares only)
Given its long-term vision of taking on challenges involving
new mobility services (MaaS), the Company believes that thenotion of achieving sustainable growth of the Group, beginningwith the railway business, requires partner companies withwhich it is possible to maintain cooperative relationships in thelong run without being susceptible to factors such as shortterm economic developments. Based on this approach, incases where it is judged that they contribute to increases
in corporate value over the medium to long term fromsuch perspectives as ongoing business operations, or the
expansion of earnings through the strengthening of businessalliances and relationships, the Company engages in cross-Integrated Report 2022

69

GovernanceSound Corporate Management ── Corporate Governanceshareholdings, but works to reduce cross-shareholdings forwhich the rationale for holding is no longer sufficient.
On an annual basis, the Board of Directors assesses
whether or not to hold individual cross-shareholdings,
examining factors such as whether the purpose of maintaining
the holdings is appropriate in terms of achieving the long-term
vision, and also whether gains associated with the holdings
cover the Company’s cost of capital, or otherwise whether
there are prospects for future improvement. As a result,transferee selection and specific consultation, etc. to prepare
for sale will take place with regards to unnecessary cross-heldshares.
Furthermore, in the fiscal year ended March 2022, at a
meeting held in September 2021, the Board of Directors
conducted assessments of whether to hold individual crossshareholdings based on the above policy and decided toengage in initiatives to reduce those for which the rationale forcontinued holding is no longer sufficient.
With respect to exercising voting rights of its crossshareholdings, the Company casts opposing votes when there
are concerns regarding corporate governance, and otherwise
exercises its voting rights upon giving consideration as towhether or not a proposal will contribute to enabling growthof the entity concerned, improving its corporate value, orotherwise.
Where a partner company holding the Company’s shares as
cross-shareholdings expresses a desire to sell those shares,
the Company will not allow prevention of the sale of thoseshares, such as by implying that it will reduce trading with thepartner company.

Investment shares held for purposes other than pure investment
Number of issues

Total amounts in balance
sheet (millions of yen)

Unlisted shares

30

2,030

Shares other than unlisted
shares13

20,623

Number of shares per specified investment stock issue,
total amounts in balance sheet, etc.

Issue

(Reference) Percentage of net assets: 5.82%

Issues for which the number of shares increased in FY2022/3
Number ofissuesUnlisted
sharesShares otherthan unlisted
shares─

Total acquisition
cost related to theincrease in thenumber of shares(millions of yen)

Reasons for the increase in thenumber of shares──Central Japan Railway Company
East Japan Railway Company
West Japan Railway Company
KYUDENKO CORPORATION

─

─

─

Nishi-Nippon Railroad Co., Ltd.
ANA HOLDINGS INC.

Issues for which the number of shares decreased in FY2022/3
Number of issues

Total sale value related to thedecrease in the number ofshares (millions of yen)

Kyushu Electric Power Company,
Incorporated

Unlisted shares

2

３

SAIBU GAS HOLDINGS CO., LTD.

Shares other than unlisted
shares──

T&D Holdings, Inc.
Fukuoka Financial Group, Inc.
Mizuho Financial Group, Inc.
Dai-ichi Life Holdings, Inc.
Nishi-Nippon Financial Holdings, Inc.

Kyushu Railway Company

Fiscal year ended
March 2022

Fiscal year ended
March 2021

Number of shares

Number of shares

Total amounts inbalance sheet(millions of yen)

Total amounts inbalance sheet(millions of yen)

338,200

338,200

5,399

5,597

707,800

707,800

5,032

5,548

810,400

810,400

4,125

4,971

887,800

887,800

2,544

3,755

813,300

813,300

2,182

2,404

246,600

246,600

632

634

418,700

418,700

342

457

72,40072,400144

229

59,95059,950100

85

23,65023,65056

49

21,20021,200

33

33

9,700

9,700

24

18

8,493

8,493

6

6

Integrated Report 2022

70

GovernanceSound Corporate Management── Risk Management and ComplianceE

Realization of a de-carbonized society
Safety and service, the foundation for all of our businesses

S

Sustainable city-building
Development of human resources, the source of value creation

G

Information security

Initiatives to improve information security

Building of an information security framework

There has been a rapid global increase in unauthorizedaccess via ransomware. Because systems are often infectedby ransomware via ❶ e-mail, ❷ VPN (Virtual Private Network)
devices, or ❸ sites disclosed to the public, we strive toimprove our level of security and educate our employees sothat unauthorized access can be prevented before it occurs.
❶ E -mail We conduct targeted e-mail training for all
employees of the JR Kyushu Group to cultivate employee
awareness on security so that employees do not open
suspicious e-mails.
❷ VPN devices We conduct vulnerability diagnostics andimplement countermeasures for any issues that are found.

To strengthen security measures throughout the JR
Kyushu Group, we set up a CSIRT in March 2019 to carryout systematic pre-emptive initiatives for information security
incidents. Information is gathered and shared and training is
conducted during normal operations so that our employees
can respond quickly in the event of an incident.

Overview of CSIRTSound corporate management

Furthermore, our CSIRT collects vulnerabilities on a regularbasis and enhances our operation in terms of vulnerability
response by applying security patches upon conducting arisk evaluation.
❸ S ites disclosed to the public We also periodicallyconduct vulnerability analyses on sites disclosed to the
public and formulate guidelines for building public sites,
which clarify the required security measures and ensure thatthe approval process is followed when publishing the sites.
We will further enhance our security measures to enable
the early detection of risks and rapid response to incidents,
so that we can respond to the threat of more sophisticatedcyberattacks.

CSIRT (Computer Security Incident Response Team)Name

JR Kyushu CSIRT (JRQ-CSIRT)Scope

JR Kyushu and other companies in the JR Kyushu Group● Clear communication about incident report desk to ensure early notification of incidentsRole● Rapid response and support in the event of an incident● Information gathering, timely warnings, and security training during normal operations

CSIRT Map

Highest information security manager President and CEO
Supervisor of IT Strategic Planning

JR Kyushu CSIRT
Submembers

Core members

Areas relevant to JR Kyushu

JR Kyushu IT Strategic Planning Department

Companies in the JR Kyushu Group

JR Kyushu System Solutions Inc.

Kyushu Railway Company

External institutions
Reports on completion ofvulnerability diagnostics

Media and customers

Integrated Report 2022

71

GovernanceSound Corporate Management ── Risk Management and ComplianceCorporate ethics Initiatives
JR Kyushu Group Corporate Ethics Committee

Corporate Ethics Framework Map
JR Kyushu Audit andSupervisory Committee

Auditing

JR Kyushu Board of Directors
Reporting as necessary

President and CEO

JR Kyushu Group Corporate Ethics Committee

Executive Committee

President and CEO
Reporting as necessary Chairperson:
Sub-Chairperson: 	Corporate Officer in charge of Administration Dept
Committee Members: 	Directors who are also Audit andSupervisory Committee members (full-time)
Corporate Officer in charge of Corporate
Planning Headquarters
Corporate Officer in charge of Auditing
Department
Observer :Outside Director
Outside Members: Attorney at law
Reporting
Auditing

JR Kyushu
Departments andbranches

Reporting

JR Kyushu Group Corporate Ethics Committee Control Office

JR Kyushu Group Corporate Ethics Hotline
Legal Affairs Office, Administration Department
Miura Okuda Sugihara Law Office

andinstruction

Reporting
Auditing

Group companies

Whistleblowing

JR Kyushu
employees, etc.

Whistleblowing

Kyushu Railway Company

Focal point 1

Ensure that the group training requires attendees to think forthemselves to improve their thinking skills for the goal of building
awareness on the current efforts regarding corporate ethics.

Focal point 2

Appropriately respond to and create systems for revised
laws (Act on the Protection of Personal Information andWhistleblower Protection Act).

Instructions

Head of Control Office:	General Manager of Administration
Assessment
Department
andinstruction Control Office:	Legal Affairs Office, Administration
Department

ReportingGroup Companies
Corporate Ethics Committee
Corporate Ethics Manager Assessment

The JR Kyushu Group Corporate Ethics Committee, chairedby the President of JR Kyushu, was formed to establish thecorporate ethics of the JR Kyushu Group and adjudicate on
matters necessary to ensure full compliance with laws andregulations. Since the fiscal year ended March 2022, we have
had outside directors with a high level of knowledge on corporate ethics participate as observers. Matters reported to the JR
Kyushu Group Corporate Ethics Hotline are reported to the JR
Kyushu Group Corporate Ethics Committee.
The JR Kyushu Group Corporate Ethics Committee has set
the following as focal points for corporate ethics in the fiscal
year ending March 2023.

Whistleblowing

Employees,
etc. in JR
Kyushu Group
companies

Whistleblowing

Employees, etc.
at business
partners of JR
KyushuNumber of reports through the hotline by year
Fiscal year

'19/3

'20/3

'21/3

'22/3

Number of reports

39

56

65

73

Results of corporate ethics awareness survey
The results of the awareness survey given to JR Kyushu
employees in the fiscal year ended March 2022 showed that
98% of all JR Kyushu employees were aware of the JR Kyushu
Group Corporate Ethics Hotline. We will continue disseminationin order to maintain the high level of awareness regarding the
JR Kyushu Group Corporate Ethics Hotline.
Ratio of employees who said that they knew about the JR
Kyushu Group Corporate Ethics Hotline
100

95%

97%

98%

’20/3

’21/3

’22/3

90
80

Internal Whistleblowing System

70

A JR Kyushu Group Corporate Ethics Hotline is available inboth JR Kyushu and an external law office to handle feedback
and inquiries about matters such as corporate ethics and law.
The hotline can be used by anyone in the JR Kyushu Group or
its business partners to report any concerns about business
operations or an individual’s actions from a corporate ethics orlegal perspective. Information provided by whistleblowers will
be kept in strict confidence. Whistleblowers will not be treatedunfairly on the basis of requesting a consultation.
Consultations have increased in recent years. These arehandled appropriately by the consultation desk. Many consultations tend to be about harassment and labor issues.

60
50

Integrated Report 2022

72

GovernanceSound Corporate Management ── Risk Management and Compliance

Education and training on corporate ethics
JR Kyushu Group Corporate Ethics Handbook

Employee training

All employees, including those in group companies, receive a
copy of the JR Kyushu Group Corporate Ethics Handbook. The
handbook incorporates specific examples of corporate ethics
initiatives, such as creating a workplace with ethical measures
such as harassment prevention and running a fair businessthat prevents corruption and other ethical issues. Furthermore,in order to respond to the diversification of personnel in the
JR Kyushu Group (elderly and foreign workers), we provide a
simplified version of the Corporate Ethics Handbook and its
English version as a simpler educational tool.

Employees receive annual training on corporate ethics
through methods such as e-learning based on the JR Kyushu
Group Code of Ethics to ensure legal compliance by every
employee. In the fiscal year ended March 2022, we conductedtraining based on the themes of corporate ethics and theprevention of harassment.

Seminars by guest
speakers

Holding Seminars

Presentations byconsulting attorney

JR Kyushu Group Corporate Ethics Handbook

Japanese version

English version

A month for strengthening corporate ethics
Since the fiscal year ended March 2019, the JR Kyushu
Group has designated October as a month for strengthening
corporate ethics. As part of these efforts, every two years wehold the JR Kyushu Group Corporate Ethics Seminar and aseminar on compliance for directors, including those at JR
Kyushu group companies, and in the fiscal year ended March
2022, we invited an external lecturer to conduct the JR Kyushu
Group Seminar on Compliance for Directors.

Kyushu Railway Company

In addition to e-learning for all employees, we also conduct
training for specific individuals and themes.
(1) Harassment prevention seminar
We invited the attorney who advises JR Kyushu to train
managers such as site managers and the heads of eachbranch on sexual harassment and abuse of power using
specific examples, in response to recent factors such as arevision in the Act on the Comprehensive Promotion of Labour
Policies and the recent increase in inquiries about thesematters to the JR Kyushu Group Corporate Ethics Hotline.

Training and seminars held in the fiscal year ended March 2022
● Seminar on the Companies Act for directors● Seminar for new directors● JR Kyushu Group Seminar on Compliance for

Directors● Training for hotline workers● Workshop on prevention of harassment● Seminar on the revised Act on the Protectionof Personal Information● Corporate ethics training during training by

Off-site corporate
ethics presentations byLegal Affairs Officeposition● Corporate ethics training for group companies● Corporate ethics training for branches,

Transportation Department, etc.

(2) Seminar on the revised Act on the Protection of Personal
Information
We conducted a seminar regarding the revised Act on theProtection of Personal Information enacted in April 2022 for thepeople in charge at JR Kyushu and its group companies. The
attorney who advises JR Kyushu gave a talk to provide easy-tounderstand explanations of key revisions to the law and otherinformation the workers needed to know.
(3) T heme-based training on the mechanisms that cause
scandals to occur
We invited an external lecturer that specializes in corporate
ethics and risk management to talk to the managers at JR
Kyushu Group companies. Managers were able to deepen
their understanding by studying specific examples of scandals
before the day of the training and discussing those scandals
on the day of the training via group work.

The JR Kyushu Group Seminar on compliance for directors

Integrated Report 202273

GovernanceSound Corporate ManagementE── Enhancing Communication with Stakeholders

Realization of a de-carbonized society
Safety and service, the foundation for all of our businesses

S

Sustainable city-building
Development of human resources, the source of value creation

GSound corporate management

Discussions with customers

Dialog with business partners

We hold discussions with customers to find out their thoughts on the JR Kyushu Group. We
hold two local meetings in eight regions around Kyushu, where customer advocates who areappointed for a year at a time share a variety of opinions. We also hold one central Discussion with
Customers, where representatives from each region talk with our management. These activities
allow us to gather valuable feedback that we can use to improve the JR Kyushu Group’s services
and products, as well as allowing us to give customers a more in-depth understanding of the JR
Kyushu Group.
For the fiscal year ended March, 2022, in consideration of the impact of COVID-19, we decided
to hold one or two local meetings for each district and the central meeting, which was held via web
conferencing for the previous fiscal year, washeld in person with measures for preventing
infection implemented. Despite the concerns
about the impact of COVID-19, we were able toreceive valuable opinions from our customers.

Our basic policies on procurement are disclosed by means such as our website to ensure that
our trading partners understand and cooperate with our policies. While factors such as COVID-19
and the semiconductor shortage impacted parts of our supply chain in the fiscal year ended March
2022, we were able to obtain steady supplies ofmaterials with the help of our trading partners.
Despite COVID-19 making it difficult for us todirectly visit our trading partners, we are actively
pursuing communication via measures such as
written hearings and ESG questionnaires.

Number of discussions with customers

14

Exchanges of opinions between executives and employees
JR Kyushu holds regular opinion exchange meetings between management and employees
to promote a transparent organizational culture. Our management visits workplaces throughout
Kyushu, where they provide updates on thecompany and its policies and encourage
employees to share their impressions of
their daily work along with questions andsuggestions. At that meeting, there is a lively
exchange of ideas.
Number of feedback sessions

Kyushu Railway Company

23

Answers to the ESG questionnaire

321

Dialog with shareholders and investors
JR Kyushu actively creates opportunities for dialog with shareholders and investors throughvenues such as the General Meeting of Shareholders, presentations of financial results, individual
meetings between management and institutional investors, facility tours, and presentations forindividual investors.
Presentations of financial results and presentations for individual investors took the form of online
meetings in the fiscal year ended March 2022 due to COVID-19, but we were able to facilitate
mutual communication by answering questions from shareholders and investors. These activities
allow us to provide information on the JR Kyushu Group’s businesses and growth strategies andhear various feedback. The feedback we receive
is shared at meetings of our management teamand Board of Directors and used to improve ourmanagement.
Number of discussions between
management and institutional investors

Number of discussions between
management and individual investors

87
2

Integrated Report 2022

74

Data Section

Data Section
── Financial highlights
── Non-financial information
── Financial information
Investor Information
Consolidated Subsidiary Information

Data Section

Financial highlights
Operating Income (Loss)Net Income (Loss) Attributable to Owners of the Parent(billions of yen)(billions of yen)

80
60

Total assets (billions of yen)

60

63.9

49.4

49.2
800

40

40

31.4

20

13.2

3.9
0

-22.8

’18/3

’19/3

’20/3

’21/3

-18.9

-20

’22/3

Capital Investment Amounts

’18/3

’19/3

’20/3

Capital investment (billions of yen)

100

90.5

’21/3

100.8

95.2

80

72.0

80

65.1

60

’18/3

40.8

43.8

80.8
51.1

47.2

’20/3

Dividend amount (left axis/yen)
100

75.4

’19/3

’21/3

’22/3

Dividends per Share/Consolidated Dividend Payout Ratio

Depreciation costs (billions of yen)

60

68.7

49.9

0

’22/3

Capital Investment Amounts/Depreciation Costs (Non-Consolidated)(billions of yen)

51.8

50.3

400
200

-20
-40

828.5

801.4

749.3

951.9

891.3

600

20

0

Equity ratio (%)

1,000

50.4

63.8

Total Assets/Equity Ratio

80

93.0

Consolidated dividend payout ratio (right axis/%)

93.0

93.0

83.0

93.0
110.3

120
100

60

80

40

60

40
40
20

20

9.6

0

11.8

15.4

17.5

15.9

0

’18/3

’19/3

’20/3

’21/3

’22/3

46.9

20

26.3
0

’18/3

’19/3

’20/3

’21/3

’22/3

’18/3

40

30.2

’19/3

20

’20/3

’21/3

’22/3

*In FY ’20/3, shares in JR Kyushu (total of 2,698,400 shares witha total value of ¥9.9 billion) were acquired and canceled.

Kyushu Railway Company

Integrated Report 2022

76

Data Section

Non-financial highlights*Other non-financial information is disclosed in our ESG Data Book.
▶ ESG Data Book
https://www.jrkyushu.co.jp/company/ir_eng/esg/

CO2 Emissions(thousand t-CO₂)500
400

Employee Retention Rate
Scope 1

Scope 2

（%）

Total

100

482
422

282

258
209

200
100

98.9

249
208

260

（%）

Female

99.0

98.8

98.8
95.6

95

338
300

Male

Ratio of Independent Outside Directors

91.9

93.2

93.7

60

97.5

53.3

94.4

53.3

53.3
46.7

46.2
40

90

216

20
85

59

55

49

41

43

0

’14/3

’19/3

’20/3

’21/3

0

80

’18/3

’22/3

’19/3

’20/3

’21/3

’22/3

’18/3

’19/3

’20/3

’21/3

*Scope: Kyushu Railway Company alone*Scope: Kyushu Railway Company alone*Employee retention rate = 1 - (employee turnover rate)*Scope: Kyushu Railway Company alone*As of the end of June in the following fiscal year

Unit Energy Consumption

Ratio of Female Managers

Ratio of Female Directors

（%）

（%）

8

20

0.0006500

0.0006389
0.0006400

6.6
0.0006330

60.0006300

6.2

6.3

6.5
15

5.3

’22/3

20.0

20.0

’21/3

’22/3

15.4
13.3

0.0006238

0.0006283
0.0006200

4

10

2

5

0

0

0.0006157

0.0006100

0.0006100

6.7

0.0006000

’12/3

’18/3

’19/3

’20/3

’21/3

’22/3

*Scope: Kyushu Railway Company alone*Unit energy consumption = energy consumption (electricity, fuel, etc.)/car-kilometers

Kyushu Railway Company

’18/3

’19/3

’20/3

*Scope: Kyushu Railway Company alone*As of April 1st in the following fiscal year

’21/3

’22/3

’18/3

’19/3

’20/3

*Scope: Kyushu Railway Company alone*As of the end of June in the following fiscal year

Integrated Report 2022

77

Data Section

Financial Information(billions of yen)

CONSOLIDATED SUMMARY

Former Segments

Current Segments

FY2019/3

FY2020/3

FY2021/3

FY2022/3

FY2022/3

OPERATING REVENUES
Transportation Segment
Real Estate and Hotels Segment
Retail and Restaurant Segment
Construction Segment
Business Services Segment

440.3
181.8
90.0
104.0
93.8
72.6

432.6
173.7
90.7
104.6
99.3
72.1

293.9
95.2
80.1
51.4
96.5
63.6

329.5
108.9
110.5
43.6
95.7
60.0

329.5
104.2
113.7
43.6
92.9
69.5

OPERATING INCOME (LOSS)
Transportation Segment
Real Estate and Hotels Segment
Retail and Restaurant Segment
Construction Segment
Business Services Segment

63.8
27.4
25.4
3.4
6.2
2.2

49.4
19.8
19.1
2.8
6.5
2.2

(22.8)(37.6)
9.9
(2.5)
6.9
1.7

3.9
(22.2)
17.9
(1.2)
7.0
2.8

3.9
(22.7)
18.0
(1.2)
7.0
3.3

EBITDA
Transportation Segment
Real Estate and Hotels Segment
Retail and Restaurant Segment
Construction Segment
Business Services Segment

85.4
34.3
35.6
5.0
7.2
4.1

75.0
29.5
30.5
4.4
7.6
4.3

4.6
(26.5)
22.2
(1.1)
8.0
3.7

30.7
(13.6)
31.8
0
8.0
5.2

30.7
(14.1)
31.9
0
8.0
5.7

NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE PARENT
CAPITAL INVESTMENT AMOUNTS (NON-CONSOLIDATED)DEPRECIATION COSTS (NON-CONSOLIDATED)NET CASH PROVIDED BY OPERATING ACTIVITIESNET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIESNET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIESTOTAL ASSETSTOTAL LIABILITIESTOTAL EQUITY

49.2
72.0
11.8
41.4
(74.6)
5.6
801.4
380.7
420.7

31.4
75.4
15.4
60.4
(76.9)
3.3
828.5
410.2
418.2

(18.9)
51.1
17.5(10.3)(53.9)
105.8
891.3
495.9
395.4

13.2
80.8
15.9
56.4
(95.7)
52.5
951.9
562.9
389.0

307.752,592.83
93.00

198.162,630.51
93.00(120.83)
2,483.43
93.00

84.34
2,471.60
93.00

FINANCIAL RATIO (%)
Equity Ratio
Operating Income to Operating Revenues
Payout Ratio

51.8
14.5
30.2

49.9
11.4
46.9

43.8
(7.8)
─

40.8
1.2
110.3

OTHERS
Number of Passengers (Million)
Number of Employees
Number of Shares Outstanding (Thousand)

338
17,765160,000

337
17,450157,301251
15,661
157,301267
14,872
157,301

PER SHARE FIGURES (YEN)
Net Income (Loss)
Net Assets
Dividends

Kyushu Railway Company

*1

*2

*3

*4

*5

Operating revenues, operating income or losses, and
EBITDA for each segment are before cancellation oftransactions between segments.
EBITDA for each segment consists of operating income
plus depreciation costs (prior to elimination of intersegment transactions, excluding depreciation costs
associated with assets leased for the purpose ofsubleasing).
Our Board Benefit Trust (BBT) was introduced from thefiscal year ended March 2020. When calculating the
net assets per share from the fiscal year ended March
2020, common shares in JR Kyushu that were heldin trust and recorded as treasury stock are includedin the treasury stock deducted from the total issued
shares at the end of the fiscal year. When calculating
the net income or loss per share from the fiscal year
ended March 2020, common shares in JR Kyushu
that were held in trust and recorded as treasury stock
are included in the treasury stock deducted from theaverage number of shares throughout the fiscal year.
A dividend payout ratio is not indicated for the fiscal
year ended March 2021, as there was a net loss thatyear.
Standards such as our Accounting Standards for
Revenue Recognition (Company Accounting Standard
29, March 31, 2020) were enacted from the beginningof the fiscal year ended March 2022. These accounting
standards have been applied to key management
indexes for the fiscal year ended March 2022.

* Our segments have been reclassified from the fiscal year ending March 2023 to strengthen the business portfolio of theentire JR Kyushu Group.
As a result, our segments have been reclassified from Transportation, Construction, Real Estate and Hotels, Retail andRestaurants, and Other to Transportation, Real Estate andHotels, Retail and Restaurants, Construction, and Business
Services.

Integrated Report 2022

78

Data Section

Financial Information

Analysis of results of operations

Ordinary income (loss)

Operating revenue

The JR Kyushu Group had an ordinary income of ¥9.237
billion (in the previous consolidated fiscal year, we achieved
ordinary loss of ¥19.323 billion).

Operating revenue increased 12.1% from the previous fiscal
year to ¥329.527 billion, an increase for the first time in three
years. This is due to factors such as a moderate recovery inrevenue from railway transportation and proceeds from salesof company assets to the private REIT.

Operating expenses
Operating expenses increased 2.8% from the previous fiscal
year to ¥325.583 billion.
Transportation, other services, and operating expenses
increased 3.3% from the previous fiscal year to ¥232.566
billion. This was due to factors such as proceeds from theselling of assets to the private REIT and increased costs due tothe opening of station buildings.
Selling, general, and administrative expenses increased 1.4%
from the previous fiscal year to ¥93.016 billion. This was due tofactors such as increased costs due to the opening of stationbuildings.

Operating income (loss)
The JR Kyushu Group had an operating income of ¥3.944
billion (in the previous fiscal year, we had an operating loss of¥22.873 billion).

Non-operating income and expenses
Non-operating income increased 23.3% from the previous
fiscal year to ¥7.6 billion. This is due to factors such as theinfection prevention cooperation money we received.
Non-operating expenses decreased 11.7% from theprevious fiscal year to ¥2.307 billion. This is due to factors
such as a decrease in interest expenses.

Kyushu Railway Company

Extraordinary gains and losses
Extraordinary gains decreased 68.3% from the previous
fiscal year to ¥9.581 billion. This is due to factors such as adecrease in proceeds from construction grants received.
Extraordinary losses decreased 63.3% from the previous
fiscal year to ¥12.186 billion. This is due to factors such as adecrease in losses from provision for cost reduction of fixed
assets.

Net income (loss) attributable to owners of theparentThe JR Kyushu Group had a net income attributable toowners of the parent of ¥13.250 billion (in the previous fiscal
year, net loss attributable to owners of the parent company
was ¥18.984 billion).

Segment overview (operating revenue)
Transportation segment
Operating revenue in the transportation segment increased
14.3% from the previous fiscal year to ¥108.918 billion. Thisis due to factors such as a moderate recovery in revenue fromrailway transportation on Shinkansen and conventional lines,
which rose 17.1% to ¥89.374 billion from the previous fiscal
year, despite the impact of the COVID-19 pandemic.
Passenger-kilometers on Shinkansen trains rose 15.5% yearon-year to 1,002 million. Commuter pass revenue increased
0.4% from the previous fiscal year to ¥2.474 billion and noncommuter pass revenue increased 24.8% to ¥24.986 billion.
Overall revenue rose 22.1% to ¥27.461 billion.

Passenger-kilometers on conventional lines rose 9.2% yearon-year to 5.130 billion. Commuter pass revenue increased
6.8% from the previous fiscal year to ¥25.433 billion and noncommuter pass revenue increased 21.5% to ¥36.475 billion.
Overall revenue rose 15.0% to ¥61.908 billion.

Real estate and hotels segment
Operating revenue in the real estate and hotels segment
increased 38.0% from the previous fiscal year to ¥110.580
billion. This is due to factors such as an increase in rental
revenue and proceeds from sales of assets to the private REIT.

Retail and restaurant segment
Operating revenue in the retail and restaurant segment
decreased 15.2% from the previous fiscal year to ¥43.644
billion. This was due to factors such as the transfer of someof our stock in JR KYUSHU DRUG ELEVEN CO., LTD. (nowDRUG ELEVEN CO., LTD.).

Construction segment
Operating revenue in the construction segment decreased
0.8% from the previous fiscal year to ¥95.704 billion. This isdue to a decrease in construction.

Other segment
Operating revenue in other segment decreased 5.6% fromthe previous fiscal year to ¥60.072 billion. This is due to factors
such as a decrease in sales of construction materials.

Integrated Report 2022

79

Data Section

Financial Information

Financial status analysis

Dividend policy

Total assets as of the end of the fiscal year ended March2022 increased 6.8% compared to the previous fiscal yearend, to ¥951,980 million. Due to an increase in cash andtime deposits and other factors, current assets were up 2.9%
to ¥206,722 million. Non-current assets increased 7.9% to¥745,257 million, due to the acquisition of property, plants,
and equipment and other factors.
Meanwhile, total liabilities increased 13.5% compared tothe previous fiscal year-end, to ¥562,955 million. Due to theissuance of commercial papers, etc., current liabilities were up
25.8% to ¥182,074 million. Non-current liabilities were up 8.4%
to ¥380,881 million as a result of the issuance of bonds andother factors.
Furthermore, total net assets decreased 1.6% compared tothe previous fiscal year-end, to ¥389,024 million. This was due
to factors such as a decline in retained earnings as a result ofdividend payments and other expenses.

We consider the return of profits to shareholders to be
an important component of our business, and we place
importance on the provision of stable shareholder returns
over the long term. Over the period to the fiscal year ending
March 2025, we are aiming for a consolidated dividend payout
ratio of 35%, with a minimum dividend per share of ¥93.0. In
addition, we are implementing treasury stock repurchases as
the situation requires in order to increase capital efficiency.
While COVID-19 severely impacted our results in this fiscal
year, this policy has enabled us to deliver end-of-year dividendsof ¥93.0 per share.
In addition, the Articles of Incorporation state that JR Kyushu
may, by resolution of the Board of Directors, distribute interim
dividends with a record date of September 30 of each year.
The decision-making bodies for the payment of dividends fromretained earnings is the Board of Directors for interim dividends
and the General Meeting of Shareholders for year-end
dividends. For this fiscal year we chose to pay one dividendat the end of the fiscal year instead of including an interim
dividend, so that we could fully ascertain how our results were
impacted by COVID-19.

Cash flows
Cash and cash equivalents at the end of the fiscal year
ended March 2022 increased ¥13.690 billion year-on-year to¥78.709 billion.
Net cash provided in operating activities was ¥56.460 billion
due to factors such as the increase of income before income
taxes (compared with ¥10.361 billion in net cash used inoperating activities in the previous fiscal year).
Net cash used in investment activities was ¥95.729 billion,up ¥41.816 billion year-on-year, due to an increase in spending
on fixed assets and other factors.
Net cash provided by financing activities came to ¥52.539
billion, down ¥53.330 billion year-on-year as a result of factors
such as a reduction in fund-raising.

Kyushu Railway Company

Risk factors
Our railway network connects Kyushu’s major cities throughservices such as the Kyushu Shinkansen. In addition to therailway business, we are developing businesses centeredaround Kyushu in fields that are highly compatible with therailway business, including our real estate (station building
commercial facilities, condominiums, hotels, etc.), retail andrestaurant, and construction businesses.

Of the items included in our annual securities report relating
to factors such as the current business and financial situation,
those that may have a significant impact on the judgment ofinvestors are indicated in this section.
However, it should be noted that this is not a comprehensive
list of all risks related to JR Kyushu Group and its contents are
based on the assessment of the JR Kyushu Group as of theend of the fiscal year ended March 2022.

Risk Factors
1 Risks related to infectious diseases
2	Risks related to population trends such as declining
birthrate and aging population
3 Risks related to natural disasters
4 Risks related to economic trends and international affairs
5 Risks related to the Medium-Term Business Plan
6 Risks related to information technology (IT)
7 Risks related to protection of personal data
8 Risks related to competition
9 Risks related to the value of the group’s assets
10	Risks related to third-party service providers and business
partners
11 Risks related to corporate acquisitions, etc.
12	Risks related to environmental regulations and climatechange13 Risks related to the Transportation Group
14 Risks related to the Real Estate and Hotels Group
Refer to our Risk Factors for details:
https://www.jrkyushu.co.jp/company/ir_eng/library/integrated_
report/Integrated Report 2022

80

Data Section

Financial Information

CONSOLIDATED BALANCE SHEETS
Kyushu Railway Company and Consolidated Subsidiaries(millions of yen)

FY2021/3
ASSETS
Current assets
Cash and time deposits
Notes and accounts receivable–trade
Notes and accounts receivable–trade, and contract assets
Fares receivable
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and fixtures (net)
Machinery, rolling stock and vehicles (net)Land
Leased assets (net)
Construction in progress
Other (net)Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Net defined benefit assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

Kyushu Railway Company

22,92750,857(millions of yen)

FY2022/3

39,709─
1,059
42,096
13,583
20,4298,352
41,646(47)
200,906

─
45,5362,224
39,027
19,757
19,6308,058
32,821(42)
206,722284,255
38,047
153,553
19,66428,4988,002
532,0213,940

312,746
44,001
147,142
19,66844,0407,708
575,308
5,735

45,16255,252873
54,062(840)
154,510
690,472
891,379

45,08662,996
1,007
56,191(1,067)
164,214745,257
951,980

LIABILITIES AND NET ASSETS
Current liabilities
Notes and accounts payable trade
Short-term loans
Commercial papers
Current portion of long-term debt
PayablesAccrued income taxes
Fare deposits received with regard to railway connecting services
Railway fares received in advanceAccrued bonuses
Other
Total current liabilities
Non-current liabilities
Bonds
Long-term debt
Lease obligations
Allowance for safety and environmental measures
Provision for loss on disaster
Liability for retirement benefits
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Retained earnings (deficit)
Treasury stock
Total common stock
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
TOTAL LIABILITIES AND NET ASSETS

FY2021/3

FY2022/3

31,942
6,885
─
4,674
47,952
2,749
3,060
4,737
5,814
36,864
144,681

28,9086,070
35,0008,780
46,564
1,693
1,705
4,818
7,066
41,466
182,074

80,000159,383
11,522
1,412
3,773
50,507
1,462
43,227351,290495,971

120,000
153,336
11,584854
2,115
48,8901,448
42,649380,881562,955

16,000224,021150,017(594)
389,445

16,000225,847
147,941(591)
389,198

7,079
(186)
(6,148)743
5,218
395,408
891,379

4,781
(441)
(5,206)(866)
692
389,024
951,980

Integrated Report 2022

81

Data Section

Financial Information

CONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

Kyushu Railway Company and Consolidated Subsidiaries(millions of yen)

FY2021/3
293,914

FY2022/3
329,527

225,037
91,750232,566
93,016

Total operating expenses

316,788

325,583

OPERATING INCOME (LOSS)(22,873)

3,944

79
613
1,715
2,151
386
1,217

96
578
2,033
1,921
1,100
1,869

Total non-operating income

6,163

7,600

NON-OPERATING EXPENSES
Interest expense
Other

1,727
885

1,515
791

OPERATING REVENUESOPERATING EXPENSES
Transportation, other services and cost of sales
Selling, general and administrative expenses

NON-OPERATING INCOME
Interest income
Dividend income
Gain on assets held in trust
Subsidies for employment adjustment
Infection prevention cooperation money
Other

Total non-operating expenses

2,612

2,307

ORDINARY INCOME (LOSS)(19,323)9,237

EXTRAORDINARY GAINS
Construction grants received
Disaster recovery expense subsidy
Gain on sales of shares of subsidiaries and associates
Other

19,599
0
9,144
1,521

6,216
1,106
─
2,258

30,265

9,581

19,339
6,580
3,491
1,879
1,917

6,006
3,196
408
329
2,246

Total extraordinary gains
EXTRAORDINARY LOSSES
Losses from provision for cost reduction of fixed assets
Impairment loss
Provision for loss on disaster
Disaster-damage losses
Other

33,20812,186

INCOME (LOSS) BEFORE INCOME TAXES(22,265)

6,633

INCOME TAXES Current
RefundDeferred

3,386
(908)
(5,982)2,045
─
(8,299)TOTAL INCOME TAXES(3,503)(6,253)NET INCOME (LOSS)(18,761)

12,886

Total extraordinary losses

NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS

222

(364)

NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE PARENT(18,984)

13,250Kyushu Railway Company(millions of yen)

NET INCOME (LOSS)OTHER COMPREHENSIVE INCOME
Unrealized gain on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Defined retirement benefit plans

FY2021/3

FY2022/3(18,761)

12,886

2,646
(15)
(193)
900

(2,301)
─
(254)
913

3,338

(1,641)COMPREHENSIVE INCOME(15,423)

11,244TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Non-controlling interests(15,609)186

11,640(395)

Total other comprehensive income

Integrated Report 2022

82

Data Section

Financial Information

CONSOLIDATED STATEMENTS OF CASH FLOWS
Kyushu Railway Company and Consolidated Subsidiaries(millions of yen)(millions of yen)

FY2021/3

FY2022/3(22,265)
29,37919,339
6,580
3,491
1,879
(17)
(1,937)

6,633
29,027
6,006
3,196
408
329
221
(466)

(196)

(557)

(692)
1,727
(19,599)(0)(9,144)(10,622)
4,523
7,446
(1,715)(2,151)(386)(11,015)

(675)
1,515
(6,216)(1,106)
─
4,157
20,179(4,308)(2,033)(1,921)(1,100)3,793

Subtotal(5,378)57,080Interest and dividends income received
Interest expense paid
Gain on assets held in trust received
Loss on disaster paid
Income taxes paid
Amount received as subsidies for employment adjustment
Amount received as infection prevention cooperation money
Amount received as disaster recovery expense subsidy

668(1,624)
1,713(3,479)(4,226)
1,663
301
─

638
(1,419)2,021(3,151)(1,884)
2,128
1,045
0

EFFECT OF EXCHANGE RATE CHANGE ON CASH AND
CASH EQUIVALENTS

Net cash provided by operating activities(10,361)

56,460CASH AND CASH EQUIVALENTS, END OF YEAR

CASH FLOWS FROM OPERATING ACTIVITIESIncome (loss) before income taxes
Depreciation costs
Losses from provision for cost reduction of fixed assets
Impairment loss
Increase in provision for loss on disaster
Loss on disaster
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in liability for retirement benefitsIncrease (decrease) in allowance for safety and environmental
measuresInterest and dividends income
Interest expense
Construction grants received
Disaster recovery expense subsidy
Gain on sales of shares of subsidiaries and associates(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables
Gains on assets held in trust
Subsidies for employment adjustment
Infection prevention cooperation money
Other

Kyushu Railway Company

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment, and intangible assets
Purchases of investment securities
Proceeds from construction grants
Collection of short-term loans receivable
Proceeds from sales of shares of subsidiaries resulting inchange in scope of consolidation
Other
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIESNet increase (decrease) in short-term loans payable
Net increase (decrease) in commercial papers
Proceeds from long-term loans payable
Repayment of long-term loans payable
Payments for long-term accounts payable
Proceeds from issuance of bonds
Proceeds from lease and guarantee deposits received
Repayments of lease and guarantee deposits received
Cash dividends paid
Cash dividends paid to non-controlling shareholders
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Other

FY2021/3

FY2022/3(95,205)(2,687)
24,797
4,220(101,475)(4,108)
8,498
343

12,311

─

2,650

1,013

(53,912)(95,729)(3,146)
─
103,636(30,111)(259)
40,0005,752(1,621)(7,314)(7)(798)
35,0002,751(4,673)(262)
40,0001,712(1,366)(14,629)(7)

─(2,296)(1,057)(2,889)105,870

52,539(198)

419

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS

41,397

13,690CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

23,81765,019DECREASE IN CASH AND CASH EQUIVALENTSRESULTING FROM EXCLUSION OF SUBSIDIARIES FROMCONSOLIDATION

(196)

─

65,01978,709Net cash used in financing activities

Integrated Report 2022

83

Data Section

Investor Information
Stock Exchange
Listings

Tokyo Stock Exchange, First Section*
Fukuoka Stock Exchange

Securities code

9142

Business year

April 1 to March 31 of the following year

Record Date for Voting Every March 31
RightsOrdinary General Meetingof Shareholders

Meeting held every June

Record Date for
Dividends

Year-end: Every March 31
Interim: Every September 30

Distribution of Share Ownership by Type of
Shareholder (as of March 31, 2022)
Japanese individuals
and others
30.01%

Number of
Shareholders:Japanesefinancial
institutions
35.06%

153,725(Record date in case of dividend payment)

Share Unit Number

100 shares

Total Number ofAuthorized Shares

640,000,000 shares

Total Number of Issued
Shares157,301,600 shares

Japanese
securities firms
3.76%

Foreign institutions

18.26%

Other Japanese
corporations
12.88%

Major Shareholders (as of March 31, 2022)% Voting rights

The Master Trust Bank of Japan, Ltd. (Trust Account)

15.38

RAILWAY HOLDINGS, L.L.C.

4.55

Custody Bank of Japan, Ltd. (Trust Account)

4.11

TAIYO LIFE INSURANCE COMPANY

2.03

Nippon Life Insurance Company

1.99

Meiji Yasuda Life Insurance Company

1.54

Central Japan Railway Company

1.32

JP MORGAN CHASE BANK 385781

1.29

East Japan Railway Company

1.25West Japan Railway Company

1.25*Transitioned to prime market on April 4, 2022

(as of March 31, 2022)

Consolidated Subsidiary Information
Transportation Group

JR Kagoshima City Inc.

Oyama Yumekobo, Inc.

Manbou Corp.

Business Services Group

JR Kyushu Bus Company

JR Miyazaki City Co., Ltd.

Nurubon Inc.

Caterpillar Kyushu Ltd.

JR Kyushu Jet Ferry Inc.

JR Kyushu Building Management Co., Ltd.

JR Kyushu Business Development (Thailand) Co., Ltd.

DRUG ELEVEN CO., LTD.*2

JR Kyushu Trading Co., Ltd.

Holding Company for Houhi Main Line*1

JR Kyushu Housing Company
JR Kyushu-Rent-A-Car & Parking Co., Ltd.

AHJ Ekkamai Company Limited*2
AJ Charoen Nakhon Company Limited*2

JR Kyushu Service Support Co., Ltd.
Construction Group

JR Kyushu Agency Co., Ltd.

KYUTETSU CORPORATION

JR Kyushu System Solutions Inc.

Real Estate and Hotels Group

JR Kyushu Senior Life Support, Inc.

JR Kyushu Ekibiru Holdings Inc.

JR Kyushu Resort Development Co., Ltd.

Retail and Restaurant Group

JR Kyushu Engineering, Ltd.

JR Kyushu Secom Inc.*2

JR Hakata City Co., Ltd.

JR Kyushu Asset Management Co.,Ltd

JR Kyushu Retail, Inc.

Sanki Construction Co., Ltd.

JR Kyushu Linen Co., Ltd.

JR Kokura City Inc.

JR Kyushu Fast Foods Inc.

JR Kyushu Electric System Company

JR Kyushu Business Partners Company

JR Nagasaki City Inc.

JR Kyushu Capital Management (Thailand)Co., Ltd.*1

JR Kyushu Food Service Inc.

JR Kyushu Consultants Company

JR Kyushu Life Service Co., Ltd.

JR Oita City, Inc.

JR Kyushu Hotels Inc.

Inc Train D’or

JR Kumamoto City Co., Ltd.

JR Kyushu Huis Ten Bosch Hotel Co., Ltd.

JR Kyushu Farm Co., Ltd.*1

JR Kyushu Corporate Investment LLC

JR Kyushu Station Hotel Kokura Inc.
*1 While we own less than 50% of the voting rights, this is still considered a consolidated subsidiary as we control the company to all intents and purposes.
*2 Company accounted for using the equity method(as of April 1, 2022)

Kyushu Railway Company

Integrated Report 2022

84For More Information
Strategy Management Department
Corporate Planning Headquarters (IR)E-mail: ir.info@jrkyushu.co.jp
https://www.jrkyushu.co.jp/company/ir_eng/
Published August 31, 2022