Enlighten Our Future

01

Table of Contents
Editorial Policy ���������������������������������������������������������������������������������������� 02

Chapter 1. Overview of the Kyuden Group
Business Snapshot of the Kyuden Group �������������������������������������������������� 04
Promotion of Sustainability Management�������������������������������������������������� 06
Management Vision 2030 ������������������������������������������������������������������������ 08
Carbon Neutral Vision 2050 ��������������������������������������������������������������������� 08
Materiality ���������������������������������������������������������������������������������������������� 09

Kyuden Group’s Mission

Enlighten Our Future
Towards a comfortable and environment-friendly lifestyle today
and for generations to come�This is the mission of the Kyuden Group�

We continue to take on the following four challenges in order to achieve
this mission:

1. Steady and reliable, environment-friendly energy
2. Services that truly satisfy
3. As one with Kyushu, Asia, and the world
4. Discovering solutions, and putting them into practice

Affordable Energy ������������������������������������������������������������������������������� 61
Solutions Based Around Energy Services ���������������������������������������������� 61[Co-creating a Smart and Vibrant Society]
Realizing a Smart Society �������������������������������������������������������������������� 62
Creating Safe, Secure and Comfortable Spaces to Live ������������������������� 62
Regional Vitalization ���������������������������������������������������������������������������� 63

Chapter 2. Value Creation Story

Chapter 5. Foundation for Creating Value

Message from the President �������������������������������������������������������������������� 11
History of the Kyuden Group �������������������������������������������������������������������� 17

Toward Sustainable Enhancement of Corporate Value
Further Strengthening Human Capital Management ���������������������������������� 67

Value Creation Process���������������������������������������������������������������������������� 18
Strengths and Related Capital ����������������������������������������������������������������� 19[Promoting Growth, Success, and Diversity of Human Capital]
Promotion of Value Co-Creation and Innovation������������������������������������� 68

Chapter 3. Strategy and PerformanceGroup Philosophy[Implementing Continuous Improvements in Energy Services]
Stable Supply of Energy ���������������������������������������������������������������������� 59

Working to Achieve Our Management Vision 2030 ������������������������������������ 21
Progress toward Our Financial Objectives and Management Targets(Environmental Targets) ��������������������������������������������������������������������������� 22
Medium-term Management Plan �������������������������������������������������������������� 23
Toward Sustainable Enhancement of Corporate Value ������������������������������� 24
Strategies by Business
Domestic Electricity Business
Power Generation & Sales ��������������������������������������������������������������� 27
Transmission & Distribution ������������������������������������������������������������� 29
Growth Businesses
Renewable Energy Business ������������������������������������������������������������ 31
Overseas Business �������������������������������������������������������������������������� 33
ICT Service Business ����������������������������������������������������������������������� 35
Urban Development Business����������������������������������������������������������� 37

Securing and Developing Human Capital ���������������������������������������������� 70
Promotion of (DX) Digital Transformation ���������������������������������������������� 71
Promotion of Diversity and Inclusion ���������������������������������������������������� 72
Respect for Human Rights ������������������������������������������������������������������� 74
Prioritization of Health and Safety �������������������������������������������������������� 75[Strengthening Governance]
Improving Effectiveness of Corporate Governance ��������������������������������� 77
Overview of Dialogue between External Directors and Investors ������������ 80
Members of the Board of Directors ������������������������������������������������������ 81
Ensuring Compliance �������������������������������������������������������������������������� 83
Strengthening Risk Management System ��������������������������������������������� 86
Strengthening Supply Chain Management �������������������������������������������� 87
Ensuring Information Security �������������������������������������������������������������� 88
Enhancing Stakeholder Engagement ���������������������������������������������������� 89

Chapter 6. Data Section

Chapter 4. Creating Value through Business

Consolidated Eleven-year Financial Summary������������������������������������������� 91
Non-financial Data ���������������������������������������������������������������������������������� 93

Toward Sustainable Enhancement of Corporate Value
Growth through Achieving Carbon Neutrality ��������������������������������������������� 42

Financial and Non-financial Highlights ����������������������������������������������������� 94
Consolidated Financial Statements ���������������������������������������������������������� 96[Leading the Way toward a Decarbonized Society]

SASB INDEX�������������������������������������������������������������������������������������������131
Frequently Asked Questions (IR FAQ) �������������������������������������������������������135

Lowering the Carbon Intensity of and Decarbonizing Energy Sources ����� 43
Promotion of Electrification������������������������������������������������������������������ 47
Promotion of Energy Conservation ������������������������������������������������������� 48
Energy Policy Recommendations and Involvement �������������������������������� 48
Reduction of Environmental Impact ������������������������������������������������������ 49
Disclosure Based on the TNFD Recommendations (Beta Version) ����������� 50
Initiatives Based on the TCFD Recommendations ���������������������������������� 55

External Assessments and Participation in Initiatives, etc� ������������������������136
Corporate Data ��������������������������������������������������������������������������������������137
On the Publication of the Kyuden Group Integrated Report 2023 ���������������139

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

02

Editorial Policy
This report is published with the aim of introducing a uniform, integrated account of the Kyuden Group’s mid- to long-term vision and strategies, as well as major policies�
Readers’ opinions regarding this report will be used as a reference to create easily understandable reports in the future�■ Issue Date

■ Guidelines Consulted

October 2023
(Next report: October 2024 (planned))■ Scope of Reporting
Kyushu Electric Power Company, Incorporated
and Group Companies■ Reporting Period
April 1, 2022 to March 31, 2023
(However, the report also contains some data from outside thisperiod in the interest of providing timely information�)■ Information Disclosure System∙ International Integrated Reporting Framework∙ Guidance for Integrated Corporate Disclosure and Company-Investor
Dialogues for Collaborative Value Creation∙ Task Force on Climate-related Financial Disclosures (TCFD)
Recommendations∙ Taskforce on Nature-related Financial Disclosures (TNFD) Recommendations∙ Sustainability Accounting Standards Board (SASB)

Integrated Report
Consolidates financial and non-financial information,and communicates the Kyuden Group’s plans
for mid- to long-term value creation■ Website Information〈IR Information (Shareholders and investors)〉
https://www�kyuden�co�jp/english_ir_index�html
Please refer to our website for more detailed information�

The report concerns companies within the Kyuden Group� The companies Kyushu Electric Power Co�, Inc�,and Kyushu Transmission & Distribution Co�, Inc�, are abbreviated as Kyushu EP and Kyushu T&D, respectively�

Investor information

ESG information

Information for
the general public

Financial Data Book

ESG Data Book

Communication Book

Annual Securities Report

Corporate Governance
ReportKyushu EP Website（*In FY2021, we reorganized the Annual Report, Sustainability Report, and Environmental Report, which we had issued
until FY2020, into our Integrated Report and ESG Data Book

Responding to the SDGs

The Kyuden Group will contribute to
the achievement of the SDGs.
Sustainable Development Goals (SDGs)
The Sustainable Development Goals for international society as a whole,adopted in 2015 at a United Nations summit, comprise 17 goals
to be realized by 2030.

Note Regarding
Forward-looking
Statements

Statements made in this report regarding the Kyuden Group’s strategies and forecasts and other statements that are not historical facts are forward-looking statements based on management’s assumptions and beliefs in light of information currently
available, and should not be interpreted as promises or guarantees� Owing to various uncertainties, actual results may differ materially from these statements� Shareholders and investors are hereby cautioned against making investment decisions solely
on the basis of forward-looking statements contained herein�）KYUDEN
GROUP REPORTINTEGRATEDKYUDEN GROUPINTEGRATED
2023 REPORT 2023

Chapter

1

Overview of the Kyuden GroupCONTENTS
Business Snapshot of the Kyuden Group ............................. 04
Promotion of Sustainability Management ............................. 06
Management Vision 2030 .................................................. 08
Carbon Neutral Vision 2050 ............................................... 08
Materiality ....................................................................... 09

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

04

Business Snapshot of the Kyuden Group

Business Snapshot of the Kyuden Group(Data for which no date is specified are actual results for FY2022)

Operatingrevenues (Total)
trillion yen

Power generation& sales
1,299.7

Operating revenues by business(billions of yen)

2.2

Renewable energy

29

Includes elimination of inter-segment
transactions of -207.8 billion yen

Overseas

6.2

Power generation& sales
120

ICT

119.4

Urban development

25

Other

254.9

Investments by business(billions of yen)

Investments (Total)billion yen

333

Includes elimination of inter-segment
transactions of -6 billion yen

Transmission &distribution
121

Renewable energy

36

Overseas

2

ICT

31

Urban development

17

Other

11

Note: FY2022 results. In addition, the breakdowns and totals may not match due to rounding

Power Generation & Sales

Transmission & Distribution

P27

P29

Deliver a stable supply of energy generated at power plants to ourcustomers. Work to reduce power outage incidents and improve thequality of our electricity through efficient facility formation and proper
maintenance, as well as expanding the adoption of renewable energy.

Work on achieving the optimal energy mix from the viewpoint of S + 3E.
Accelerate efforts to position renewable energy as a main power source
and use nuclear power to its full potential toward achieving carbon
negativity as soon as possible, along with offering rate plans based on
customer needs.

Transmission lines: 11,223 km
Distribution lines: 144,198 km
Interconnected renewable energy: 15,820 MW
Substations: 653 locations
Power outages frequency: 0.15 times/household
Power outages duration: 115 mins/household(when excluding typhoons and other disasters
frequency is 0.04 times and duration is 3 mins per household)

Elec. generated and received: 100.8 billion kWh
Electric power sales: 96.0 billion kWh
Number of customers: 7.84 million
Generation capacity: 15,980 MW
Power generation facilities: 153 locations

Renewable Energy Business

Growth Businesses (excl. domestic electricity business)

Transmission &distribution
708.9

Domestic Electricity BusinessIn addition to the Domestic Electricity Business, the Kyuden Group has been promoting growthbusinesses as a united Group, including the renewable energy, overseas, ICT service, andurban development businesses.

Overseas Business

P31

P33

Expand our capacity to provide a one-stop solution for the development,
management, and sale of five sources of renewable energy with Kyuden
Mirai Energy at the center. Promote the development of renewable energy
both domestically and overseas, including geothermal and hydro, which
are our strengths, and offshore wind power, which has great future
potential.

Expand our energy-related businesses globally by leveraging knowledge
and expertise accumulated through our Domestic Electricity Business.
With Kyuden International at the center, promote the further expansion ofareas and business domains with an eye on future market expansion.

Renewable energy developed: 2,610 MW
Installed capacity geothermal: 220 MW(approx. 40% of the entire country)

Overseas equity output: 2,840 MW
Overseas development areas: 15 countries/regions
Refer to P05

ICT Service Business

Urban Development Business

P35

P37

Offer ICT services by making use of technologies accumulated throughoperating and maintaining highly reliable telecommunications networks
and information communication systems to support a stable power
supply. Promote initiatives to support the increase in demand associety digitalizes increasingly.

Expand the urban development, real estate, and social infrastructurebusinesses by leveraging knowledge and expertise accumulated throughour business activities to date, including in the energy, real estatedevelopment, PFI, and ICT sectors. Promote initiatives while leveraging
synergy with the electricity business.

Optical internet service (BBIQ): 476,000 lines
・Awarded 1st place for 7 consecutive years by
J.D. Power customer satisfaction survey(Kyushu area)
・14% share in Kyushu
Optical fiber cables: 131,562 km
Data center rack capacity: 2,500 racks

Main projects
・Shopping Park LaLaport Fukuoka opened in April 2022
・Kumamoto Airport privatization: new passenger terminalbuilding opened for public use in March 2023
・Development of ESG-friendly rental housing in the U.S.
(joined in May 2022)
・Logistics distribution facility project in Kasuya, Fukuoka(operations scheduled to begin in August 2024)

Other
Expand businesses that contribute to the stable supply of power, including the design, construction, maintenance, repair, and operation of various plants,
along with businesses that respond to various energy-related needs, such as gas and LNG sales businesses. Moreover, work on businesses that support
the lifestyles and economic activities of customers, including paid elderly nursing homes, outsourced administrative services, and temporary staffing
businesses.

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

05

Business Snapshot of the Kyuden Group

With our aim of “Kyuden Group: Creating the future, starting from Kyushu,” we are continually taking on the challenge of developing our business areas across Kyushu, Japan, and the world.
Power supply facilities in Japan (Kyushu area)(As of March 31, 2023)

Overseas development areas

Power generation facilities
Tsushima

Kyushumain island 139 locations

Hydroelectric power■ Sasuna 5,100

6 locations

3,589 MW4 MW
8,035 MW214 MW

28 locations

363 MW

2 locations
1 location

4,140 MW
0.3 MW(including pumped storage) Surrounding 5 locations
To The Chugoku
islands
Shin-Kokura Electric Power Co., Inc. Thermal power
6 locations

Toyotama ■50,000Ashibe 15,000

1,200,000

Geothermal power(including binary)■■ Oronoshima 330
Iki ■Shin-Iki 24,000

Genkai NPS
2,360,000
Matsuura
1,700,000

Karita 360,000
Buzen 500,000
Yanagimata
63,800
Takigami 27,500

Internal combustion(including gas turbines)

Nuclear power
Wind power( Kyushu T&D )Total Kyushu EP and

187 locations 16,345 MW

BahrainUzbekistan

TaiwanU.S.

U.S.

Syrdarya (gas)Total output: Approx. 1,600 MW
Equity output: Approx. 230 MW

Hsin Tao (gas)Total output: 600 MW
Equity output: 199 MW

Westmoreland (gas)Total output: 940 MW
Equity output: 118 MW

Kleen Energy (gas)Total output: 620 MW
Equity output: 126 MW

Cape Verde

China

Introduction of a hybrid
power system

Inner Mongolia (wind)
Total output: 50 MW
Equity output: 15 MW

Otake▲14,500
Shin-Oita
2,875,000
Matsubara ▲50,600 Hatchoubaru 110,000
Hatchoubaru Binary 2,000■

Shin-Arikawa
60,000Iwayado52,000Reihoku
1,400,000

Ohira 500,000

U.S.
South Field Energy (gas)Total output: 1,182 MW
Equity output: 214 MWPowerSource Group
Microgrid project

Philippines

Kamishiiba
93,200Omarugawa 1,200,000▲ Ogiri 30,000

Philippines

Tsukabaru 67,050
Morotsuka 50,000

PetroGreen Energy
Corporation
Total output: 80 MW
Equity output: 20 MW

China

Uzbekistan

Hitotsuse 180,000
Koshikishima 250
Koshikijima Daiichi ■13,250Sendai NPS
1,780,000

Consulting (last 1-2 years)

Al Dur 1 (gas)Total output: Approx. 1,234 MW
Equity output: Approx. 244 MW▲

Tenzan600,000

IPPs investment projects (as of the end of FY2022)

Egypt

Oyodogawa Daini
71,300Marshall Islands

UAE
Bahrain

Oyodogawa Daiichi 55,500

Kuchinoshima 220■

Tairajima ■190

Support for constructing
solar power systems

Thailand Vietnam

Cape Verde■ Nakanoshima 300

Singapore
Indonesia

Kenya■ Suwanosejima 220

U.S.

Phillippines

Cuba
MexicoMarshall Islands▲ Yamagawa 30,000

Kuroshima 320■

Legend■Akusekijima 190

Takeshima 190■■ Kuchierabujima

300
Hydroelectric power
station (over 50,000 kW)
Yakushima
Pumped-storage power
station
Thermal power station

16,500
Tanegashima

24,000

Geothermal power station■

Internal combustion power
stationWind power station
Major substations andswitching stations
500 kV transmission lines
220 kV transmission lines

UAE■

Takarajima ■300
Tatsugo 60,000■
Naze 21,000 ■Subsea direct current
transmission
Kikaijima■ Shin-Kikai 11,700

Amamioshima

Kyushu T&D(Listed in blue)■ Shin-Tokunoshima 21,000■ Kametsu 7,500
Tokunoshima
Okinoerabujima
Amami Islands
Shin-China 22,500 ■Other companies’ facilities
Notes: 1. Numerical values indicate output in kW
2. Includes Kyushu T&D facilities

VietnamTokara Islands

Kodakarajima 150■ Shin-Tanegashima

Nuclear power station▲■■ Tanegashima Daiichi

Ioujima 300

Yorontou
Shin-Yoron 6,700 ■■ Yoron 2,210

Phu My III (gas)Total output: 744 MW
Equity output: 199 MW

Egypt

UAE

Thailand・Upgrades to thermal power
plant equipment
・Support for constructing solar
power systems

Taweelah B (gas)Total output: 2,000 MW
Equity output: 120 MW

EGCO
Total output: 6,200 MW
Equity output: 380 MW

Kenya
・Study on introducing IoT technology at geothermal
power plants
・Strengthening of geothermal power plant
operation and maintenance capacities
・Strengthening of power grid technology capacities

Cuba

U.S.

・Power supply improvement plan・Electricity master plan・Battery storage training

Birdsboro (gas)Total output: 488 MW
Equity output: 41 MW

Indonesia

Singapore

MexicoSarulla (geothermal)
Total output: 330 MW
Equity output: 83 MW

Senoko Energy (gas)Total output: 2,382 MW
Equity output: 357 MW

Tuxpan II & V (gas)Total output: 495 MW × 2
Equity output: 248 MW × 2

U.S.
Persistent Energy Capital LLC

・First business participation in Africa・Contributing to supplying power to regions
without electricity

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

06

6 Data Section

Promotion of Sustainability Management

Promotion of Sustainability Management
Based on the Kyuden Group’s Mission, which is the Group’s philosophy, and the Kyuden Group Sustainability Policy, we have established the “Management Vision 2030” and “Carbon Neutral Vision 2050” as our medium tolong-term goals and are promoting efforts to simultaneously create “social value” and “economic value�”Furthermore, we have identified key management issues (materiality) to realize these goals, and have incorporated efforts to resolve these issues into a specific action plan as a medium-term ESG promotion plan toensure the steady implementation of efforts�

Reflect changes in social conditions

Philosophy, Policies, etc.

Kyuden Group
Corporate Conduct CodeAction Plan to Achieve Carbon Neutrality(Achieving “carbon negativity” as early as possible before 2050)
Carbon Reduction/
Decarbonization in Power Sources

Promotion of Electrification

Kyuden GroupManagement Vision 2030
Strategy I

P08

Developing the Energy Service BusinessLeading the Way
toward a Decarbonized Society
Implementing Continuous
Improvements
in Energy Services
Co-creating a Smart
and Vibrant Society

Strategy II

Building a Sustainable Community Together

Promoting Growth, Success,and Diversity of Human Capital

Strategy III

Strengthening Our Business Foundation

Strengthening Governance
P40
P65

Business Activities

Kyuden Group
Sustainability
P07
PolicyP08

P09(Medium-term ESG Promotion Plan)

Enlighten Our Future

Kyuden Group
Carbon Neutral Vision 2050

Materiality(key management issues)

Medium-term Management Plan

Kyuden Group’s
Mission P01

Vision (Long-term Goals and Strategy)

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

07

Promotion of Sustainability Management■ Sustainability Policy■ Promotion System

The Kyuden Group has been promoting various initiatives to realize a sustainable society under the Kyuden
Group’s Mission of “Enlighten Our Future,” which serves as our brand message�
In December 2021, we established the Kyuden Group Sustainability Policy to further clarify our stanceof creating both “social value” and “economic value” through our businesses, contributing to a sustainable
society, and enhancing the corporate value of the Kyuden Group�
Under this policy, we will contribute to solving social and regional issues through our businesses,
thereby realizing the Kyuden Group’s Mission and developing together with local communities�

The Kyuden Group has established the Sustainability Promotion Committee to actively promote carbon
neutrality and other environmental, social, and governance (ESG) initiatives� The Committee is chaired by
the President, and its members include external directors and executive directors of relevant divisions�In addition to establishing strategies and policies concerning all aspects of sustainability, the Committee
deliberates on and supervises the progress of implementing strategies and measures concerning key
sustainability issues, such as climate change and human capital�
The Committee meets at least twice yearly, and the results of their discussions are reported without
delay to the Board of Directors, which supervises all sustainability-related activities�

Kyuden Group Sustainability Policy (Established in December 2021)
As a corporate group that creates the future from Kyushu, we will contribute toa sustainable society and enhance our corporate value, by creating both “social
value” and “economic value” through our businesses�∙ We remain unwavering in our mission to support people’s lives and theeconomy by providing energy and we will continue to work together with local
communities to resolve social issues through our business activities�∙ We will cultivate strong relationships of trust with our stakeholders throughresponsible engagement�∙ We will take on the challenge of solving global social issues and contribute to
the achievement of the SDGs�

Stakeholders

Kyuden Group
Board of Directors
Supervise

Customers
Communities
Shareholders
and investors
Business partners
Employees

Identification and
Evaluation of Issues
Dialogue withstakeholders, etc.

1) Maximize short-term opportunities (increase profit)
2) Expand medium to long-term opportunities (increase growth rate (future growth expectations))
3) Reduce risk (lower the cost of capital)

Submit/ReportSustainability Promotion Committee
Chairperson: President
Vice-chairperson: Chief ESG Officer
Members: External Directors, Executive Directors of
relevant divisions, etc.

Disclosure ofInformation

Liaise· Formulation of strategies and basic
policies on sustainability· Monitoring of policy progress, etc.

Integrated Report, etc.

Indicate policies
Manage plan progress

Management
meetings(management
plans, etc.)

Coordinate/
Instruct

Formulate departmental plans
Report on plan progress

Divisions and Group companies

Model for Enhancing Corporate Value through Sustainability Management
In order to sustainably enhance corporate value (economic value), it is extremely important to identify key management issues(materiality) based on risks and opportunities for future growth and strengthen efforts focused on these issues, with an eye onchanges in social conditions and the business environment not only in the short term, but also in the medium to long term�
To this end, the Kyuden Group has broken down the elements that lead to corporate value (economic value) into the following
three categories, and promotes efforts to resolve materiality from the perspective of each category� (Refer to P27-38 forefforts aimed at improving the corporate value of each business)

Submit/Report

1) Maximize short-term opportunities
IncomeCorporatevalue(economic value)=

Cost ofCapital−Efforts to addressmateriality
GrowthRate2) Expand medium to longterm opportunities
3) Reduce risk

Submit/ReportKYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

08

Management Vision 2030
Carbon Neutral Vision 2050

Management Vision 2030

Carbon Neutral Vision 2050

To continue contributing to the sustainable development of Kyushu, being our foundation, and to create a brighter
future together with the region and society through our business activities, we formulated our management
direction based on a long-term perspective in the Kyuden Group Management Vision 2030, which was publishedin June 2019�
We have established our ideal image for 2030, and to realize this vision, we have set three strategies, alongwith management targets� (Refer to P21 for details on management targets)
In line with this vision, the Group will work as one to promote a wide range of activities aimed at achieving
sustainable growth together with the region and society, while at the same time delivering value to our stakeholders�

In April 2021, the Kyuden Group formulated the Kyuden Group Carbon Neutral Vision 2050, declaring its
commitment to take on the challenge of achieving carbon neutrality and strive to become a corporate group that
leads the way in Japan’s decarbonization from Kyushu as an industry leader in low-carbon and carbon-free efforts�
Furthermore, we have established policies for lowering the carbon intensity of and decarbonizing energy
sources, alongside promoting electrification, in our action plan, which aims to realize these policies� The action
plan shows the path to achieving carbon neutrality, including setting 2030 management targets (environmental
targets), key performance indicators (KPIs), and the like�
We will take on the challenge of achieving net zero greenhouse gas (GHG) emissions in our supply chains by
2050 and make significant contributions to reducing GHG emissions across society by contributing to improving
Kyushu’s rate of electrification� In doing so, we aim to achieve carbon negativity in all of the Group’s businessactivities as early as possible before 2050�

■ Our 2030 Vision
Kyuden Group:

Creating the future, starting from Kyushu■ The Kyuden Group’s Vision to Achieve Carbon Neutrality in Society

Providing more prosperous,
comfortable living to become our customers’ No.1 choice
FY

2013

■ Three Strategies for Achieving Our Vision

Reduction of supply chain GHG emissions

Contribution to reduction of GHG emissions in society

Promotion of renewable energy development in Kyushu,
maximization of the use of nuclear power generation, carbon
reduction/ decarbonization of thermal power generation, etc.

Contribution to the electrification of Kyushu, promotion ofrenewable energy development outside Kyushu and overseas,
CO2 absorption through adequate forest management, etc.

62 million tons
61 million tons (domestic)

60% reduction

2030

Emissionsamount–S t ra t e g y I
Developing the energy service business
Domestic
electricity
business

Energy-related
business

Overseasbusiness

Taking on the challenge of realizing a sustainable,
low-carbon society and providing more
prosperous, comfortable lifestyles.

As a local company with operations in all of Kyushu’s
prefectures, we will grow together with Kyushu’s
local communities and society through the creationof markets for new businesses and services.

oge

ther

Deve
lop
i

ing

S t rat eg y I I

S t ra t e g y I I

renning O

gth

e nin

yt

ur B u sin e s s F

S t rat eg y I I Iog O ur B u sin e s s F

da
oun

tio

n

S t ra t e g y I I IStrengthening our business foundations
We will work to strengthen our businessfoundations, coming together as a single corporategroup to take on challenges and achieve continual
growth.

Amount ofemissions＝ contribution
reduction

Carbonnegativity[Management Target (Environmental Target)] 60%* reduction in supply chain GHG emissions (compared to FY2013)
Positioning renewable energy as a main power source

KPI

Decarbonization of thermal power*: 65% reduction fordomestic business

Renewable energy developed: 5,000 MW (Japan and overseas)
Achieve the benchmark index for the Energy Conservation Act
Establish technology toward co-firing of 1% hydrogen / 20% ammonia[Management Target (Environmental Target)] Contribution to improving Kyushu’s rate of electrification (household : 70%; commercial : 60%)

DemandStaPrimary
industrysu
relatednit businessesstau
in a b le c o m mTourismS t Infrastructure
relatednren services Business Living businesses
tio
gth
da
supportsupport
n
u
e

Urban
development
and cityplanning

7 million tons

■ 2030 Management Targets (Environmental Targets) & KPIs (See P58 for progress)

Building a sustainable community together

Taking on
challenges
in all areas

22 million tons

Net zero

2050

SupplyB u il d

ICTservices

Synergy

s
ines

s
bu

energy service
theng S t rat eg y I

26 million tons

65% reduction

KPI

HouseholdIncremental electricity: 1,500 GWh (2021-2030 total)

Commercial

Incremental electricity: 1,600 GWh (2021-2030 total)

Transportation

Conversion of company cars to 100% EVs (excluding special-purpose vehicles)
For details on the Carbon Neutral Vision 2050 (including action plan), please visit the following page:https://www�kyuden�co�jp/english_index�html Home > For investors > Information on our Sustainability initiatives > Carbon Neutral Vision 2050

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

09

Materiality

Materiality
In April 2022, the Kyuden Group identified key management issues for realizing sustainability managementthat simultaneously creates “social value” and “economic value” through its businesses as materiality�
We are continually revising materiality in light of changes in social conditions and the businessenvironment� In April 2023, we partially revised our ideal state and key issues pertaining to materiality�

For details on the process of identifying materiality, please visit the following page:

Revisions to ideal state and key issues (April 2023)· Reorganized ideal state and related key issues of the Group’s human capital strategy after multiple deliberations by senior
management· Set key issues pertaining to DX as part of materiality for “Creating Value through Business” and “A Foundation for Creating
Value” in light of the increasing importance of DX from both perspectives of transformation in society and manufacturing,and transformation of business composition and work processes(Specific revisions are listed in blue in the below table)

https://www�kyuden�co�jp/english_index�html Home > For investors > Information on our Sustainability initiatives > Materiality

Materiality

Ideal StateKey Issues■ Lowering the Carbon Intensity of and Decarbonizing

Materiality and key issues

Leading the Way towarda Decarbonized Society

Achieving Carbon Negativity
by 2050

Implementing Continuous
Improvements in Energy
Services

Contributing to a Sustainable
and Comfortable Future for
Our Customers

Co-creating a Smart andVibrant Society

Promoting Transformation inSociety and Manufacturing
Together with the Kyushu
RegionPromoting Growth, Success,and Diversity of Human
CapitalFostering an organizational
culture that enables growthfor each person and theorganization, thereby creating
future value

For the Environment
Creating Value through BusinessLeading the Way towarda Decarbonized Society
Achieving Carbon Negativity
by 2050For Our
Customers

Implementing
Continuous Improvements
in Energy Services

Co-creating a Smart
and Vibrant Society

A Sustainable and Comfortable
Future for Our Customers

Promoting Transformation inSociety and Manufacturing Together
with the Kyushu Region

For Communities

Energy Sources (development of renewable energy asa primary power source, safe and stable nuclear power
operation, overseas business, etc�)■ Promotion of Electrification■ Promotion of Energy Conservation■ Reduction of Environmental Impact■ Energy Policy Recommendations and Involvement■ Stable Supply of Energy■ Affordable Energy■ Solutions Based Around Energy Services■ Realizing a Smart Society■ Regional Vitalization■ Creating Safe, Secure and Comfortable Spaces to Live■ Respect for Human Rights■ Promotion of Value Co-Creation and Innovation■ Promotion of Diversity and Inclusion■ Prioritization of Health and Safety■ Securing and Developing Human Capital■ Promotion of (DX) Digital Transformation(business framework and process transformation, etc�)Foundation for
Creating Value

Promoting Growth, Success, and Diversity of Human Capital
Fostering an organizational culture that enables growth for each person
and the organization, thereby creating future value

Strengthening Governance
Establishing Good Governance Practices to Support Our Growth■ Improving Effectiveness of Corporate Governance

For Our
Employees andPartners■ Strengthening Risk Management System

Strengthening Governance

Establishing Good Governance
Practices to Support Our
Growth■ Ensuring Compliance■ Strengthening Supply Chain Management■ Ensuring Information Security■ Enhancing Stakeholder Engagement(building trust with stakeholders, etc�)■ Improving and Strengthening our Financial Structure

KYUDEN
GROUP REPORTINTEGRATEDKYUDEN GROUPINTEGRATED
2023 REPORT 2023

Chapter2

Value Creation Story

CONTENTS
Message from the President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
History of the Kyuden Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Value Creation Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Strengths and Related Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

Message from the President

Message from the President

Having all preparations for growth in place,
we will make great strides toward achieving
sustainable improvements to our corporate value
as an industry leader in decarbonization.

Kazuhiro Ikebe
Member of the Board of Directors
President & Chief Executive Officer

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

11

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

12

Message from the President

Where are we heading?
The Kyuden Group’s top priority right now is achieving carbon neutrality.

promoted under Japan’s renewable energy feed-in tariff (FIT) scheme.

in all sectors of Japan. This transition is not only happening in theGoing forward, we will continue to proactively utilize power sources thattransportation sector, where we see a shift to electric vehicles, but also

do not emit CO 2.

in the industrial, commercial, and household sectors.

All of the Group’s strategies are focused on becoming carbon neutral,and by executing these strategies, we will enhance our corporate value
in financial and non-financial terms.

Given this push for electrification and other factors, it is certain that
■ Kyushu EP’s Ratio of Zero-Emission or FIT Energy Sources*1 (FY2019*2)

current level, which is now at around 25%. Regarding Japan’s overall

Other 2%
*1:

The Kyuden Group aims to achieve carbon neutrality by 2050 and plans

LNG
11%

to achieve “carbon negativity” as early as possible before 2050. The
latter is realized by both reducing greenhouse gas (GHG) emissions frombusiness activities across the entire supply chain to net zero, as well as
by undertaking activities that help reduce GHG emissions across society,such as promoting electrification and other measures. P08

This year

Coal
29%

Ratio includes energy produced andpurchased by Kyushu EP and represents
the value before Non-Fossil Certificate

Nuclearpower
35%

trading*2:

During this period all four nuclear
reactors were operating (82.0%
utilization rate)

Note: For amounts for which Non-Fossil

FIT Renewableelectricity energy
14%
23%

Certificates were not used, there isno value for renewable energy or
zero-CO 2-emission energy sources, andso these are counted as national average

we became the first major energy company in Japan to be certified
under the Science Based Targets initiative (SBTi) for our GHG emission

the share of electricity in the final energy consumption will grow from its

58% (incl. FIT electricity)

CO 2 emissions for electricity production,
including that generated from fossil fuels

reduction targets, which were set based on the level of our environmental

electric power demand, I personally believe that by 2050, it will be about
double the current level, and in fact may well exceed it. Furthermore,as digitalization gains speed and the amount of electricity required toprocess this data grows exponentially, there may even be concerns
about a shortage in the electricity supply. This is particularly relevant
in Kyushu, as in the prefecture Kumamoto there will be a concentrationof semiconductor fabrication plants along with business facilities andin the area of Kitakyushu one of Kyushu’s largest data centers will be
constructed. If demand for electricity outgrows supply, it is not as if
power plants and power lines can be built overnight. The construction

We intend to continue to lead Japan and theOn the other hand, thermal power generation is essential to compensate

of a new power plant can take anywhere from several years to several

industry as a whole as an industry leader in low-carbon and carbon-free

for fluctuations in output from renewable energy sources such as solar

decades. Yet another key factor in ensuring a stable supply of electricity

efforts.

power, which cannot be generated at night and is affected by weather

is creating an attractive business environment for new entrants in theconditions. At our company we are continuously working to maintain andpower generation sector. For this reason, I believe that it is critical for thethe two pillars of carbon reduction / decarbonization in power

improve overall thermal efficiency from the perspective of reducing CO 2

government to present a vision for the next 20 years or so, based on how

sources, i.e., producing electricity with technology that does not emit

emissions and fuel consumption. In addition, we are exploring measures

it plans to encourage Japan’s future electrification through policy means.

CO 2, and promotion of electrification, i.e., using energy in the form ofsuch as co-firing of hydrogen/ammonia and biomass, as well as carbon

I am confident that this path to carbon neutrality not only have a directelectricity.

capture and storage (CCS) technologies. P44

targets for FY2030. P42

In order to achieve carbon neutrality, we will do our utmost to advance

To promote power generation that does not emit CO 2, we must firstIn order to increase the use of electricity and advance electrification,

expand renewable energy and work steadily to ensure the safe and stable

Japan needs to push ahead with policies to promote electrification

operation of nuclear power plants. Doing so will enable us to cover about

nationwide, and such policies are just beginning to take effect. Thanks

60% of our energy mix with power sources that do not emit CO 2, such as

to government subsidies, tax incentives for heat pumps and all-nuclear power and hydro, geothermal, solar, and wind, including thoseelectric homes, and other measures, electrification is advancing rapidly

impact on the expansion of electricity demand but also lead to enhanced
corporate value for the Kyuden Group, considering our extensive
experience and expertise in the power supply sector.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

13

Message from the President

Toward Sustainable Enhancement ofCorporate Value

ROIC-Based Management
Last year we introduced ROIC as a new management indicator. In April
2023, we announced the Group-wide ROIC targets of 2.5% or higher for

We will continue to make management efforts by outlining our corporate

FY2025 and 3.0% or higher for FY2030 (consolidated basis). P25

value through sustainable growth and improvement of capital efficiency,

As we work towards achieving our target of ¥150 billion inwhile taking into Tokyo Stock Exchange’s request for companies to takeconsolidated ordinary income by 2030 (as outlined in our Management“action to implement management that is conscious of cost of capital

Vision 2030), we are investing in expanding our Growth Businesses.

and stock price” by analyzing their cost of capital and market valuation,

However, reducing interest-bearing debt to restore and strengthen ourand to disclose their targets and plans for improvement. Although thedamaged financial foundation is also a challenge. By implementing

Kyuden Group’s price-to-book ratio (PBR) is currently close to 1, we

ROIC, we aim to enhance corporate value through capital-efficientbelieve there is room for improvement.

management, meet the expectations of the capital market, and achieve

PBR can be broken down into return on equity (ROE) and priceearnings ratio (PER). We believe that improving ROE, an indicatorof capital efficiency, and PER, an indicator of confidence in oura balance between expanding our Growth Businesses and strengthening
our financial foundation.
In the short term, we are focusing on improving capital efficiency byManagement Vision 2030 and Growth Businesses

performance and growth potential, is essential for our shareholders andensuring that employees are aware of its importance and can incorporate

investors to evaluate the Group’s corporate value, and for us to achieve

it into their specific tasks. Each business department has created andIn terms of progress towards the realization of the Management Vision

sustainable improvements to our corporate value (a PBR above 1) overanalyzed ROIC trees, and investment decisions are made with a focus on

2030 and the steady expansion of our Growth Businesses, we havethe medium to long term. P24

ROIC for each project. I noticed that ROIC-based practices are starting to

set an interim target for FY2025 of achieving a consolidated ordinary

be implemented on the ground level.

income of ¥125 billion or more (Domestic Electricity Business: ¥75

First, with respect to improving capital efficiency, we will achievea return on capital higher than the cost of capital by promoting

From a medium to long term perspective, ROIC also serves as abillion; Growth Businesses: ¥50 billion). P21

Regarding the Domestic

management that is conscious of return on invested capital (ROIC). Withdecision criteria for making changes to our business portfolio. One ofElectricity Business, we have completed installation work of Specificrespect to improving confidence in our performance and growth potential,

our management targets in our vision is to earn half of the ¥150 billion

Safety Facilities (SSFs) at nuclear power plants, and can expect towe will use the current turnaround in business performance to improvein consolidated ordinary income from Growth Businesses. We cangenerate income from high utilization of nuclear power plants in thefinancial stability and thoroughly return the profit to our shareholders.

focus on the more profitable business areas by promoting ROIC-based

future. As for our Growth Businesses, we expect to achieve our targets

At the same time, we will communicate to our investors that we as amanagement. We would also like to explore building a business portfolio

through income from investment projects that we have already initiatedcorporate group will do our utmost toward decarbonization while creatingthat goes beyond the framework of electricity, so that everyone will bein our Overseas Business and Renewable Energy Business. Therefore,

further growth over the long term. Making improvements in each ofable to recognize that our company is engaged in more than just the

I believe that it is very likely that we will achieve our financial objectives

these areas will enable us to achieve sustainable improvements to ourelectricity business.

for FY2025, and then our management targets for FY2030, in terms ofcorporate value (a higher PBR).

income.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

14

Message from the President

billion of Class B preferred shares in August 2023, and are currently

Our people are also the driving force that will lead the way in an

steady progress toward reaching our target of developing 5,000 MW

in the process of building up capital. I believe we are within reach ofera characterized by a drastically changing business environment thatby FY2030. If we include projects we have already invested in, we haveachieving a 20% equity ratio, one of our financial objectives, as longcalls for disruptive innovation. A company in which each employee

achieved close to 80% of our interim target (4,000 MW by FY2025).

as we maintain a high level of profit under our four nuclear power

enthusiastically takes initiative to act autonomously in which the

Furthermore, by integrating hydro and geothermal power generation

units and use our resources efficiently to reduce interest-bearing debt

organization harnesses employees’ energy to enhance productivity andinto Kyuden Mirai Energy, the Group’s renewable business arm, andthrough ROIC-based management. Once we are on a clear path togenerate innovation. I am determined to transform the Kyuden Group

strengthening our business operation structure, we aim to accelerate ourreaching an equity ratio of around 20%, we intend to enhance returns to

into such a company. To achieve this, under the strong leadership of ourefforts to make renewable energy our main source of power generation,

shareholders, including promptly resuming dividends of ¥50 per share.

senior management, we are building an organization in which diverse

More specifically, in our Renewable Energy Business, we are making

as the only operator in Japan that owns all five renewable energy
sources (solar, wind, hydro, geothermal, and biomass), and one of thetalent can thrive and innovate continuously.

Enhancing Our Human Capital

top operators in terms of capacity owned domestically.

Organizational flexibility and flexible thinking, as well as the innovationthat springs from it, will be key as we tackle carbon neutrality and other

The key players in achieving sustainable improvements to our corporate

future challenging issues. The Kyuden Group has launched the KYUDEN

MW by FY2025) has already been secured, and we are moving forward

value is talent. In order to keep growing sustainably despite constanti-PROJECT, a project led directly by the president, to provide employeeswith projects with the aim of reaching 5,000 MW in equity output bychanges in the business environment, it is essential to maximize thewith opportunities to consider new businesses and services inspired by

FY2030. We are actively working to lower the carbon intensity of andpotential of our talent and to improve our productivity and capabilities as

flexible ideas that go beyond the framework of our existing organization

decarbonize the energy sources in the areas in which we operate throughan organization. P67

and operations. P69

In our Overseas Business, more than 70% of our interim target (4,000

In other words, part of the significance of thissubsea transmission projects and collaboration with other renewableenergy developers.
As for our ICT Service Business, in the rapid digitalization of society,we will reinforce services such as digital transformation (DX) proposals
for enterprises and municipalities in addition to our core services in fiber
optic broadband internet and data centers.
As for our Urban Development Business, in addition to reinforcing ouroverseas operations, we will grow our earnings by developing high valueadded urban development projects that leverage the Group’s collective
capabilities in decarbonization and digital technology. At the same time,
we will help to sustainably develop local communities and society bycreating vibrant communities and to increase their pull factor.
Meanwhile, with regard to our financial foundation, we issued ¥200

Our rugby team Kyuden
Voltex was promoted
to Division 2 in theJapan Rugby League One

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

15

Message from the President

project is nurturing flexible mindsets. I believe that the employees who

companies, and then return to our company once again with additional

recovery from the previous year’s losses due to delayed gains from theparticipated in this project will be able to apply what they learned throughexperience. I believe this is the best scenario.

fuel price adjustment system. I consider FY2022 to have been a year in

the project at their respective workplaces, leading to greater innovation
throughout the organization. We are already seeing the results.
As competition for talent intensifies, we must manage our businesses

We need to actively recruit experienced personnel and acquire

which we have been setting the foundation for recovery, making all theoutside perspectives and knowledge. I think we should flip the term

preparations necessary to make the jump toward exponential growth in“human resources” into “resourceful humans”. My vision of human

FY2023 and beyond.

with the assumption that there will be increased upward pressure on

resources development is to nurture specialists with talents and abilities

Japan’s per-capita labor costs, which have been lagging behind otherin their respective fields in order to boost the competitiveness of theOn the other hand, Kyushu EP and Kyuden Mirai Energy received

countries. It will therefore be essential to promote DX and leverageorganization as a whole.

cease and desist orders and a surcharge payment order based on thegenerative AI to fundamentally change the way we work and alter ourbusiness processes to achieve greater productivity.
The Kyuden Group has been working to develop frameworks to

Antimonopoly Act from the Japan Fair Trade Commission (Kyuden Mirai

Review of the Past Fiscal Year andManagement Vision 2030

promote DX. In FY2022, we established the DX Promotion Division

Energy received only a cease and desist order). After carefully reviewing
and confirming the details of each order, we concluded that “there wasno agreement regarding the cartel activities,” and filed a lawsuit seeking

and announced the Kyuden Group DX Vision, with the aim of bringing

FY2022 was a year marked by significant impacts from the external

the revocation of the order. We will explain our position in the revocation

about corporate transformation. Looking ahead, we will accelerate theenvironment, such as rising fuel prices and the rapid depreciation of thelawsuit and seek a fair judgment from the court going forward.

development of digital talent and implement measures to improve laboryen. As there is a three-month lag between the increase in fuel prices

Nevertheless, we take these orders very seriously. We are steadily

productivity and value added per employee. P71

and its reflection in electricity charges through the fuel cost adjustment

implementing measures to ensure compliance with the Antimonopoly Act

It is true that in order to ensure a stable supply of electricity, somesystem, we experienced a negative turn in profits for the fiscal year. In

so that we will never again invite such allegations in the future.

departments require technology and skills that have been acquired over aaddition, external factors, such as an increase in the price of electricity

long period of time. However, on the flip side, an organization that lacks

purchased from other companies due to higher wholesale electricity

customer information. We regard this incident as a serious problem thatdiversity and fluidity becomes stagnant and will reach a dead end due tomarket prices, have impacted us significantly. Another factor that

could undermine fair competition, which is the basis of the liberalization

its rigid way of thinking. While we often refer to employees as “humancontributed to the deterioration of our finances was the increase in fuelof the electricity market. The fundamental cause was the lack of

capital,” I believe that rather than confining talent within a company andcosts as we could not fully utilize nuclear power due to the installation

awareness on the part of senior management at the time of the spin-off,making them fixed “capital,” a better approach would be to increase thework of SSFs at Genkai Nuclear Power Plant. For the first time in eightas they decided on business operations that had the potential to cause

mobility of talent throughout society and allowing individuals with diverse

fiscal years, the company posted a net loss.

problems. In addition to establishing systems to prevent recurrence, it

experiences to circulate.

The installation of SSFs at Unit 4 of Genkai was completed in

There was also an incident involving the improper handling ofis critical that we create a workplace culture that refuses to overlook

February 2023, marking the end of installation work at all of our nuclear

inappropriate behavior and enables whistleblowing. Senior managementcompany is gratifying, and it is equally wonderful to have talented people

power plants. Looking ahead, we expect stable operation of all four

will take the lead in ensuring compliance with laws, regulations, and

who were trained at other companies join us and play an active role.

reactors, which allows us to secure profits on an ongoing basis. In

rules, and will work to create a workplace with an atmosphere ofMoreover, people who we have trained at our company are hired by otheraddition, FY2023 will see a significant improvement and a V-shaped

openness and trust. P83-85

The fact that other companies want to hire people trained at ourKYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

16

Message from the President

Factors such as Russia-Ukraine conflict and the effects of a weak yen

for the Kyuden Group for the future. Since our work is originally in theworking together with local communities to solve social issues, while

have caused fuel and wholesale electricity market prices to soar. This

infrastructure business, we have strong networks and relationships

maintaining a mutually beneficial relationship with our business partners

has had a significant impact on our income and expenditures, andof trust that we have fostered by supporting the lives and economies

through our Partnership Declaration.

the possibility of a power crunch has made securing a stable supplyof local communities and developing together with them. For thisIn order to achieve our management vision and carbon neutrality,of energy a major priority for the entire country. Precisely because ofreason, I believe that we are well positioned to work together with

we will continue to meet the expectations of all of our stakeholders bythese circumstances, we are reaffirming the Kyuden Group’s Mission

communities to solve local issues. For example, we are participating inpromoting various initiatives together with our employees, the Group’s

to Enlighten Our Future. We have long been committed to the electricity

airport management projects to increase the number of visitors, andimportant and closest stakeholders.

business as a social infrastructure company that supports people’s lives

we have concluded partnership agreements with local governments

and contributes to the local community by ensuring a stable supply of

to cooperate in local carbon neutral initiatives. In this way, we hope toelectricity. After WWII, we were the first company in Japan to achieve

think together with the local community and contribute to solving social

a stable demand-supply balance, and we have cultivated our strengths

issues. I have always said, “Without the development of Kyushu, thereby helping to solve social issues while maintaining a stable supply.

can be no development of the Kyuden Group”. Co-creation with the local

With these strengths at our core, I am confident that we can transform

community is at the heart of realizing our management vision.

unprecedented changes in the business environment into opportunities
that will lead to future growth. P17-19

To Our Stakeholders

Having said that, I would like to reiterate that we have been able to set

I would like to remind our shareholders and investors that although weforth a solid strategy that draws on our strengths our Management Vision

recorded an ordinary loss for FY2022, our efforts to date have left us2030, providing a direction for our efforts toward growth. P08

well prepared for growth in FY2023 and beyond. Regarding dividends,

Strategy I in this management vision is Developing the Energy

we will continue to strive to resume dividend payments of ¥50 as soon

Service Business, and there is no doubt that energy services will be aas possible within the financial objective period (ends in FY2025).

major driver of growth within the overall picture. Based on the strengths

Our senior management will also take the lead in actively engaging in

we have cultivated through our energy service business centered indialogue with the market regarding our efforts to sustainably improve our

Kyushu, namely stable supply technology and a high ratio of zero-

corporate value, as outlined in this message. Through such dialogue, weemission energy sources, we are now making steady progress toward

hope you will come to appreciate how the Kyuden Group is transforming

achieving the challenging goal of carbon negativity as soon as possible.

into a new format by expanding beyond the Domestic Electricity Business

Strategy II, Building a Sustainable Community Together, is about
working to resolve local community issues together with everyone in thecommunity. I think that Strategy II will be the most important strategy

to include Growth Businesses such as renewable energy, overseas
business, ICT services, and urban development.
We will contribute to the development of Kyushu and other regions by

We look forward to your ongoing support as we move forward.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

17

History of the Kyuden Group

History of the Kyuden Group
Becoming a corporate group that develops alongside and leads Japan’s decarbonization from Kyushu, based on our unchanging mission to “provide a stable supply of low-cost, high-quality energy”

1950s–1960s

1970s–1980s

1990s–2000s

2010s onward

A period of Japan’s rapid economic growth

Oil Crises to the end of the Bubble Economy

Gradual deregulation for electric power

From the Great East Japan Earthquake to today, and the future

The challenge of a stable supply

The challenge of energy upheavals

Responding to deregulation

Leading Japan’s decarbonization from Kyushu

Kyushu EP was founded in 1951. As the country took a big
step forward from post-war chaos to rapid growth, we stabilized the supply and demand of electricity in Kyushu aheadof the rest of the country, working hard to develop powersources such as Japan’s first arch dam and state-of-the-art,high-capacity thermal power plants. In the latter half of the
1960s, we began to place more emphasis on the environment,
and as well as moving from coal-fired thermal generation
to oil-fired, we focused on nuclear power as a priority as asemi-domestic energy source. In these ways, we advanced
the diversification of our energy sources.

After the 1973 Oil Crisis, in a bid to move away from oil andto stabilize earnings, we proactively pushed diversification forenergy sources. In 1975, we started operations at Unit 1 ofGenkai Nuclear Power Plant. During the 1980s, we catered to
the greater complexity and diversification of society’s needs
by expanding our services and by tackling new business areas, such as telecommunications. To aid in the fight against
global warming, we actively strove to develop and introduce new types of energy, including wind power generation
demonstration tests.

In the 1990s, gradual amendments of the Electricity Business
Act were made to address the gap between domestic andoverseas electricity prices. In the midst of increasing liberalization since 2000, the company strengthened its sales force
by offering a range of new tariffs and promoting all-electricenergy usage. After considering what we should do to be
a company that customers continue to choose, we came up
with the slogan “Enlighten Our Future,” which encapsulates
the promise we made to contribute to a stable energy supply
and a more sustainable society for years to come.

Due to the damage caused by the Great East Japan Earthquake in 2011, all nuclear
operations in Japan were suspended. In September 2015, Unit 1 of Sendai Nuclear
Power Plant met the strict regulatory standards and became the first in Japan toreturn to normal operation. Not only are we providing safe, stable nuclear power,by actively developing and introducing renewable energy, we have achieved anindustryleading ratio of zero-emission and FIT energy sources. We will continue towork together as a group to achieve carbon neutrality.

1991

Operations begin at Unit 1 (690 MW) of Shin-Oita
Power Plant, Kyushu EP’s first combined-cycle gas
turbine power plant.
Operations begin at Unit 1 (700 MW) of Reihoku
Power Plant, a high-capacity power plant that uses
imported coal as fuel.

2016

Operations begin at Unit 3 (1.18 GW) of Genkai Nuclear
Power Plant.
Operations begin at Unit 4 (1.18 GW) of Genkai Nuclear
Power Plant.
Operations begin at Miyazaki Biomass Recycle Power Plant(11.4 MW).
Operations begin at Hatchoubaru Binary Power Plant (2MW), Japan’s first geothermal binary power plant.
Operations begin at Nagashima Wind Power Plant (50.4 MW)of Nagashima Wind Hill.

2010
2014

The implementation of automatic meter inspections
for major customers begins.
The liberalization of parts of the retail electricity
sector begins.
Our gas supply business begins.

2016
2016

Action1956–
1959

Achieve a stable supply of electricity and the best energy mix

Operations begin at Units 1 to 3 (total output: 387
MW) of Karita Power Plant, a state-of-the-art, highcapacity thermal power plant.

1977
1980
1986

Action
1955
1967
1968

1975
1977
1981
1984
1985

1960

1995

2019
2022

Operations begin at Unit No. 3 x 4 of Shin-Oita Power Plant, a highly
efficient combined-cycle gas turbine power plant.
Operations begin at Unit 2 (1 GW) of Matsuura Power Plant, which uses
ultra-supercritical (USC) technology.
With the completion of the Hyuga trunk line, the 500 kV system becomes alooped trunk transmission power system.

Operations begin at Unit 1 (559 MW) of Genkai
Nuclear Power Plant.
Operations begin at Unit 1 (23 MW) of Hatchoubaru
Power Plant, which would later become Japan’slargest geothermal power plant.
Operations begin at Unit 2 (559 MW) of Genkai
Nuclear Power Plant.
Operations begin at Unit 1 (890 MW) of Sendai
Nuclear Power Plant.
Operations begin at Unit 2 (890 MW) of Sendai
Nuclear Power Plant.

1994
1997
2005
2006
2008

2015
2017
2018
2020
2022
2023

Operations begin at Omuta Mega Solar Power Plant (3 MW).
The renewable energy businesses of Group companies are reorganized, and Kyuden
Mirai Energy Co., Inc. is established.
Operations restart at Units 1 and 2 of Sendai Nuclear Power Plant.
Operations begin at the first unit of the Sarulla Geothermal IPP Project in Indonesia.
Operations restart at Units 3 and 4 of Genkai Nuclear Power Plant.
Operations begin at Specific Safety Facilities for Units 1 and 2 of Sendai Nuclear Power
Plant.
Operations begin at Specific Safety Facilities for Unit 3 of Genkai Nuclear Power Plant.
The integration of the Group’s renewable energy businesses into Kyuden Mirai Energy isdecided.
Operations begin at Specific Safety Facilities for Unit 4 of Genkai Nuclear Power Plant.

Stable Supply
Technologies

High Ratio
of Zero-Emission
Power Sources

Contribute to society and co-create with the local community

A service center is established inside Tenjin Buildingin the city of Fukuoka to improve services.
(Established at every branch thereafter)

ActionUnits 1 and 2 of Shin-Kokura Power Plant are modified
to burn only LNG to further move away from oil.
500 kV substations in the central and western Kyushu
are constructed, and the voltage for the Saga trunk line
is increased to 500 kV.
Japan’s first automatic control system for power
distribution lines is fully implemented (Fukuoka Sales
Office).

Expand environmentally friendly business activities

Operations begin at Kamishiiba Power Plant (90 MW),Japan’s first arch dam.
Operations begin at Otake Power Plant (11 MW),Japan’s first commercial geothermal power
plant.
The construction of Genkai Nuclear Power Plant
is proposed to Saga Prefecture and Genkai Town.

ActionAcquiredStrengths

1978
1987

Because of optical fiber cables, power-over-fiber
becomes practical for the first time in Japan.
Kyushu Telecommunication Network (QTnet) andtwo other telecommunications companies are
established.

1996
2000
2002

2017
2020

The entire retail electricity sector undergoes liberalization.
With the help of business partners, we tackle early reconstruction to fix
large-scale damage caused by the Kumamoto Earthquakes.
The KYUDEN i-PROJECT, an initiative to create new businesses and services
to promote innovation, begins.
The Transmission & Distribution Division spins off into a separate company.

Develop human capital to support the above

1965 The company directive “Our Mindset*” is established.
*: Let’s do our utmost for society with integrity, build
a bright workplace through trust and cooperation,and strive for the development of our abilities forthe future.

1988

The corporate philosophy and the Kyuden Group’s
Corporate Code of Conduct are established.

1996
2001
2007
2007

Our human resources training philosophy isestablished.
The Job Challenge Program, is implemented.
A new corporate philosophy, “Kyushu ElectricPower’s Mission,” is established.
Advancement Opportunities for Women Group isestablished.

2011
2016
2023

Strong Local
Network“Our Vision of the Human Resources We Strive to Be” is established.
“Management Leader Training” is implemented to train business
management candidates.
The QX Project, which fosters a corporate culture in which people and theorganization grow together through the promotion of activities, begins.

Human Capital

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

18

6 Data Section

Value Creation Process

Group philosophy

Value Creation Process

Carbon Neutral Vision 2050 P08

Enlighten Our FutureManagement Vision 2030

P08

P01

External Environment(Societal Issues and Changes to the Business Environment)●●

Climate change
Economy and government policies●●

Technology
Exhaustion of resources●●

Collaborative Value Creation with Stakeholders

Demographic changes
Geopolitical risks

Domestic
Electricity Business

Materiality at the
Kyuden Group

INPUT
Qualitative

P09

Quantitative

Business
activities

Power Generation & Sales

Renewable
Energy Business●

Power generation facilities*
Total output: 17.45 GW
No. of facilities: 229● Length of transmission lines: 11,223 km
Length of distribution lines:
144,198 km (Kyushu T&D)
● Telecommunications facilities
Length of communication cables(optical fiber and metal cables):
20,234 km (Kyushu T&D)

Management Vision 2030 (Strategy I):

P43-58

Employees: 21,096 (consolidated)
Percentage of personnel from technicaldivisions: 68%(Kyushu EP and Kyushu T&D)●●

Accomplishments and expertise related
to the development and safe, stable
operation of zero-emission power sources(nuclear, renewable energy, etc.)● Knowledge and expertise in a wide rangeof other specialist fields● R&D system●

Implementing
Continuous
Improvements in
Energy Services

P59-61Intellectual Capital
No. of participants in the KYUDEN iPROJECT (total): Approx. 1,200(Kyuden Group)● Patents held: 168 in Japan and 70 overseas(Kyushu EP and Kyushu T&D)
● No. of individuals who have acquired
advanced* qualifications: 1,101(Kyushu EP and Kyushu T&D)

Management Vision 2030 (Strategy II):

Urban
Development
Business

ICT
Service Business●

Brand power in Kyushu
Relationships of trust with the community
Collaborative relationships with business
partners, affiliated companies, etc.

No. of customers: 7.84 million(Kyushu EP)
No. of local governments with which wehave comprehensive partnershipagreements: 47 (Kyushu EP)● Registered business partners (material
procurement) (as of the end of July 2023):
Approx. 3,070 (Kyushu EP and Kyushu T&D)

Co-creating a
Smart and VibrantSociety

CapitalCash
Interest-bearing debt
● Ability to procure capital

●

●

●

●

●

Capital: ¥237.3 billion (consolidated)
Cash: ¥295.4 billion (consolidated)
Interest-bearing debt: ¥3.9915 trillion(consolidated) (of which ¥1.6600 trillion
is corporate bonds [including ¥200.0
billion in hybrid bonds])

Natural Capital
Non-fossil fuels (nuclear power) and fossil
fuels (thermal power)● Renewable energy● Water (for power generation and office use)
● Woodland●(FY2022)

Fossil fuel consumption (oil equivalent):
Approx. 8.22 million kl (Kyushu EP andKyushu T&D)
● Electricity from renewable and FIT energy
sources*: 18.0 billion kWh (Kyushu EP)● Water used in power generation: 6.09 Mt(Kyushu EP and Kyushu T&D)
● Company-owned forests (end of FY2022):
4,447 ha (Kyushu EP)●* Figures based on the amount of electricity
generated and received by Kyushu EP

Note: Data for which no date is specified is taken from the results from the end of FY2022.

Promoting Growth,
Success, andDiversity of Human
CapitalP68-76

Strengthening
Governance

P77-89Customers
Total electric power sales (retail,wholesale, overseas): Approx. 110 TWh(Kyuden Group)● Ratio of zero-emission or FIT energy
sources*1: 43% (Kyushu EP)● Stable supply of electricity● Frequency of outages (perhousehold)*2: 0.15 (0.04) times
Average outage time (perhousehold)*2: 115 (3) minutes(Kyushu T&D)
● Percentage of new-build homes using
all-electric energy: 35.7% (Kyushu EP)● Percentage of customers that trust
Kyuden Group in the customer survey:
74.8%●

Local Community
Nominal gross regional product: Approx.
48 trillion yen (FY2021)● Communication activities with around
30,000 local residents (Kyushu EP andKyushu T&D)
● No. of employees who participated inlocal activities: 34,000 (Kyuden Group)● Urban development and city planning
projects in the Kyushu area participatedin: 6 (Kyuden Group)●

Reduced impact on society and theenvironment(through responding to greenhousegases and regulations, andzero-emission activities for waste)● Steady progress of initiatives aimed at
becoming carbon neutral● Interaction and dialogue with the region● Cyber-security countermeasures

Strengths

Shareholders and Investors

Stable Supply
Technologies

●

●

●

Social and Environmental Impact

P62-63●Financial Capital

Financial Results
Operating revenues
Ordinary income● Equity ratio● Free cash flow
● ROE
● Fair return to shareholders●●

Social and Relational Capital●

Ratio of non-fossil fuel power sources● Renewable energy development andadoption● Reasonable electricity prices (reduced costof power generation)● Stable supply of electricity● Energy services that cater to customers’
needs● Businesses and services that contributeto solving local and social issues (ICT
services, urban development and city
planning, etc.)

P37

P35

●

* Hard-to-acquire public qualifications that are
indispensable to the running of a power business(e.g., first-class chief electrical engineer, chief
reactor engineer, etc.)●

Using new insights gained in
Kyushu to further develop ourenergy service business

Building a sustainable community together

Human Capital
Abundant human capital involved inenergy services (engineers)● Strong sense of mission to support
Kyushu’s infrastructure● Group management framework●

Synergy basedon our strengths

Solving local issues and creating
new value with networks andtechnologies built throughthe energy service business

OUTCOME

Products/Services●

Developing the energy service businessLeading the Way
toward a
DecarbonizedSociety

OUTPUT

Overseas
Business
P33●* Amount produced at power generation facilities belonging
to Kyuden Group (equity investment projects are recorded
as development capacity, not equity interest)

P27
P29

P31

Manufacturing Capital
Energy mix that contributes to S+3E
Power transmission facilities● Telecommunications facilities●

Transmission &Distribution

High Ratio of
Zero-Emission
Power Sources

Strong Local Human Capital
Network

Management Vision 2030 (Strategy III):Strengthening our business foundations
Pursuit of safety, peace of mind, anda fulfilling workplace

ComplianceCorporate governanceStrong sense of mission and public interest*1 Ratio includes energy produced by
Kyushu EP and procured from othercompanies and represents the value
before Non-Fossil Certificate trading.
The portion of the above for which
Non-Fossil Certificates were not used
has no value as renewable energy or
zero-CO2-emission energy sources,
and so it is treated as electricity withnational average CO2 emissions,
including that from thermal power
generation.
*2 Figures in parentheses exclude
typhoons and other disasters*3 No. of accidents per million workinghours*4 (No. of workers leaving for personalreasons ÷ total employees at start ofperiod) x 100*5 Percentage of employees satisfied
indicated in employee satisfaction
survey (conducted in FY2022)*6 Supply chain GHG (Scopes 1 to 3,compared to FY2013) Calculated for
Kyushu EP and its consolidated
subsidiaries (excl. those withnegligible emissions).

Dividends paid (total): ¥10.5 billion(consolidated)● Interest charges (paid to creditors):¥27.9 billion (consolidated)●

Employees
Frequency rate of workplace accidents*3:
0.06 (Kyushu EP and Kyushu T&D)
● Employee turnover rate*4: 0.93%(Kyushu EP and Kyushu T&D)
● No. of new female managers: 16 (Kyushu
EP and Kyushu T&D)
● Employee satisfaction*5: 80.4% (Kyushu
EP and Kyushu T&D)●

Global Environment
GHG emission reduction rate*6: 26%(Kyuden Group)● Industrial waste recycling rates: Approx.
100% (Kyushu EP and Kyushu T&D)●

Note: Data for which no date is specified is taken from the results for FY2022.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

19

Strengths and Related CapitalStrengths and Related CapitalWe, the Kyuden Group, have been investing various capitals cultivated since our foundation to ensure future growth based on our four strengths: “Stable Supply Technologies,” “Strong Local Infrastructure,” “High Ratio
of Zero-Emission Power Sources,” and “Human Capital.” In doing so, we aim to achieve the Kyuden Group’s Mission, “Enlighten Our Future.”Strength - 01

Strength - 02

Strength - 03

Stable Supply
Technologies

Strong Local
Network

High Ratio of Zero-Emission
Power Sources

In response to the rapidly changing energy situation and current social
issues, we continue to consider the optimal energy mix from a medium
to long-term perspective and continue to strive towards its realization.
Even amidst a drastically changing business environment, we willcontinue to support our customers’ lifestyles and economic activities
into the future through our work by developing new technologies basedon our unchanging mission to provide a stable supply of power.

As we grow together with Kyushu through our Kyushu-based businessactivities, we are building a strong network with customers and business
partners, as well as local authorities, companies, organizations, and otherparties.
Based on the relationships of trust cultivated, we are working together
with the local community to solve the challenges faced by the regionand society, aiming to co-create sustainable communities together.

In addition to our proactive efforts in the development and introductionof renewable energy over many years, we have achieved anindustry-leading ratio of zero-emission sources by, among other things,
restarting nuclear power operations ahead of other companies, as
nuclear power had been halted after the Great East Japan Earthquake.
From now on, in addition to maximizing the use of nuclear power, we
will continue to promote the positioning of renewable energy as a main
power source and continue to lead as a front-runner in low or net-zerocarbon emissions.

Related Capital

Related Capital

Related Capital

Manufacturing
CapitalIntellectual
Capital・Energy mix that contributes to S+3E
・Power generation and transmission facilities
・Telecommunications facilities
・Accomplishments and expertise related to the development
and safe, stable operation of power sources
・Expertise on the operation of power transmission facilities

Manufacturing
Capital・Power generation and transmission facilities
・Telecommunications facilities

Manufacturing
Capital・Relationships of trust with the community
・Cooperative relationships with business
partners, related companies, etc.

Social and Relational
Capital・Power generation facilities(renewables and nuclear energy)Intellectual
Capital・Expertise related to the development and operationof zero-emission power sources(renewables and nuclear energy)

Natural Capital・Climate and topography rich in natural resources,
including geothermal and hydroelectric power

Supports

Strength - 04
Each and every one of our employees is striving to take prompt action to seize opportunities by proactively viewing
changes in the business environment as an opportunity for growth.
To meet the expectations of the local community and customers, they also never forget to keep on learning andcontinue to polish up their knowledge and skills through applying them on the job.

RelatedCapitalHuman
CapitalHuman Capital

Strong sense of mission to support
Kyushu’s infrastructure
Abundant human capital involved inenergy services (engineers, etc.)

KYUDEN
GROUP REPORTINTEGRATEDKYUDEN GROUPINTEGRATED
2023 REPORT 2023

Chapter3

Strategy and Performance

CONTENTS
Working to Achieve Our Management Vision 2030 ........... 21
Progress toward Our Financial Objectives andManagement Targets (Environmental Targets) ................. 22
Medium-term Management Plan ................................... 23
Toward Sustainable Enhancement of Corporate Value ...... 24

Strategies by Business
Domestic Electricity Business
Power Generation & Sales .................................... 27
Transmission & Distribution .................................. 29
Growth Businesses
Renewable Energy Business ................................. 31
Overseas Business .............................................. 33
ICT Service Business ........................................... 35
Urban Development Business ............................... 37

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

Working to Achieve
Our Management Vision 2030

Working to Achieve Our Management Vision 2030
The Kyuden Group has set financial objectives for FY2025 and compiled a concrete action plan in the form of an annual rolling Medium-term Management Plan to help us achieve the Management Vision 2030 as well as
the Carbon Neutral Vision 2050. We are moving forward with steadfast efforts based on this plan.
Carbon Neutral Vision 2050
Management Vision 2030
Medium-term Management Plan (Annual 5-year rolling plan)
Financial Objectives (FY2025)

Management Targets (FY2030)

Management Targets to Achieve Our 2030 Vision

Financial Objectives to Achieve Our Management Vision 2030
We have set interim financial
objectives for FY2025 to guide us
as we work toward achieving ourmanagement vision from thefollowing perspectives:◆ Secure and expand income in
the Domestic Electricity
Business and growthbusinesses◆ Prioritize balance between
improving our financial
position, enhancing
shareholder returns, andinvesting for growth

Perspective

Financial Objectives (FY2025)

Profitability

Consolidated ordinary income:Over ¥125 billion∙ Domestic Electricity Business: ¥75 billion∙ Growth businesses: ¥50 billion

Financialsoundness

Equity ratio: approx. 20%

Perspective
Profitability

Growthpotential

We have set the following management targets to guide us in steadily promoting strategies to achieve our 2030 management
vision of “Creating the future, starting from Kyushu. Providing more prosperous, comfortable living to become our customers’
No. 1 choice”

Management Targets
Consolidated
ordinary income¥73 billion

Domestic
Electricity
Business

Growth investments: ¥500 billion*2∙ Renewable energy (restated): ¥250 billion*2
FCF: ¥70 billion (Secure five-year cumulative profitability)

50%

Consolidated 3.0% or more

As of 20182030

Permanent pursuit of a reasonable
price for electricity

50%

Reduce supply chain GHG emissions by 60%(compared to FY2013)
Reduce by 65% for domestic business(compared to FY2013)

Note: ROIC＝Ordinary income (earnings before interest after taxes (EBIAT)) / Invested capital (interest-bearing debt + shareholders’ equity)(Million t)

62
61(Domesticbusiness)

2013

60%
26

65%
22

2030

DemandElectrification rate
for Kyushu

Consolidated 2.5% or more

FY2030)GHG emissions

FY2025billion kWh

kWh

Energy-related
business
Overseas
Business

2030

120

Management Targets (Environmental Targets)
SupplyTarget120 billion kWh

90 billion

2016-2018 average∙ Renewable energy developed: 4,000 MW∙ Overseas equity output: 4,000 MW

FY(retail, wholesale, overseas)

Building a sustainablecommunity together

billion

ROE: approx. 8%
Total electric power sales: 105 billion kWh

ROIC Targets Aimed at Further Enhancing Corporate Value of the Kyuden Group (Refer to P25

Total electric power sales

Target¥150*1: Give a sense of where certain indicators prioritized by management will be when
our financial objectives are achieved *2: FY2021-FY2025 cumulative

From the viewpoint of aiming to further enhance
corporate value through improving capital efficiency,
we have introduced return on invested capital (ROIC)
as a new management indicator and have set ROIC
targets for FY2025 and FY2030¥150 billion(50% from Domestic Electricity Business,
50% from other businesses)

TargetReference Indices*1 (FY2025)

Power output

Achieve Carbon Negativity as Early as Possible Before 2050

Contribute to the electrification of Kyushu(Household: 70%; Commercial: 60%)

Household
58%

70%
60%

Promotion ofCommercial Electrification
48%

2013

2030

21

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

22

Progress toward
Our Objectives

Progress toward Our Financial Objectives and Management Targets (Environmental Targets)
Perspective

Indicator
Consolidated ordinary
income*1

Target(FY2025)★ Reference Indices*2
Over ¥125 billion

Excluding delayed effects

FY2021

FY2022¥55.1 billion¥32.3 billion-¥86.6 billion[¥46.1 billion][¥101.3 billion][-¥25.6 billion]¥30 billion¥2.6 billion-¥133.4 billion[¥21 billion][¥71.5 billion][-¥72.4 billion]¥75 billion

Growth businesses¥50 billion¥27 billion¥33.3 billion¥47.4 billion

Total electric power sales

105 billion kWh★

95 billion kWh

110 billion kWh

110 billion kWhProfitability

Domestic Electricity
Business

Progress & Future Issues
The consolidated ordinary loss of ¥86.6 billion was due to not only external factors, such as higher fuel prices and the rapid depreciation of the yen, but also a decline in the
nuclear power plant utilization rate as operation of the Genkai Nuclear Power Plant was suspended for an extended period in order to install SSFs*4. Four nuclear power plants
are expected to begin operation starting in FY2023, which will make it possible to ensure stable income (FY2023 earnings forecast (as of August): ¥120 billion)
Despite a transitory decline in FY2022, profitability is expected to dramatically improve starting in FY2023, when four nuclear power plants are on line
Strong progress was made toward the FY2025 ordinary income target of ¥50 billion. We will work to identify quality projects, including projects that are already underway, tofurther bolster our profits

Financial
Soundness

Financial Objectives

We maintained strong sales in FY2022 through Group-wide efforts to expand sales

ROE

Approx. 8%★

5.0%

1.1%

-9.2%

Significant improvement expected from FY2023 onward due to more stable nuclear power operations and increased returns in growth businesses. Promoting ROE-conscious
management as we work to improve our balance sheet

Equity ratio

Approx. 20%

14.7%*3

14.0%*3

12.2%*3

In the face of challenges such as fuel price increases and suspension of nuclear power generation, which led to a decline in earnings, along with investments aimed atmaintaining and expanding non-fossil fuel sources (led to an increased interest-bearing debt) have resulted in a period of sluggish performance. However, starting fromthe fiscal year 2023, we anticipate securing high profits through the operation of four nuclear power units and accelerating capital expansion. Moreover, through efficientmanagement of business resources utilizing Return on Invested Capital (ROIC), we will work towards reducing interest-bearing debt, and by doing so, further striving toachieve our goals.

¥500 billion★

¥74 billion¥79 billion¥86 billion¥34 billion¥30 billion¥36 billion(Secure five-year cumulative
profitability)-¥77.1 billion-¥63 billion-¥29.8 billion

4,000 MW★

2,300 MW2,550 MW

2,610 MW4,000 MW★

2,430 MW2,910 MW2,840 MW

Growth investments

Growth Potential

Renewable energy(included above)(FY2021-FY2025 cumulative)¥250 billion★
¥70 billion★

FCF
Power output
Renewable energy
Developed
overseas equity output

Profitability

ROIC Target

Perspective

SupplyDemandEnvironmental Targets

Perspective

Performance
FY2020Indicator

Target(FY2025) Over 2.5%

ROIC

Performance
FY2020

FY2021

FY2022

1.5%

1.0%

-0.9%

(FY2030) Over 3.0%

Indicator
Supply chain
GHG emissions(Scopes 1, 2, and 3)(Reference)
CO2 emissions fromelectricity sales*6

Electrification rate for
KyushuTarget(FY2030)
Globally: 60% reduction
Domestically: 65% reduction(compared to FY2013 levels)(FY2019–FY2021 average of 1.3%)
Performance
FY2020

FY2021

FY202231% reduction
32% reduction

35% reduction
37% reduction

26% reduction
28% reduction

Making decisions that are based on a proper assessment of business profitability and risks with an eye toward achieving our income target while steadily promoting growthinvestments going forward through the use of project finance to limit interest-bearing debt
Despite a recent negative cash flow due to capital expenditure for nuclear power SSFs*4 at the Genkai Nuclear Power Plant, we will generate cash flows in the medium andlong term through not only high utilization of nuclear power plants and greater return from growth investments starting in FY2023, but also allocation of business resourcesthat take into consideration capital efficiency[Renewable Energy] As of the end of FY2022, the total amount of renewable energy has become more than 3, 000 MW, including projects that we have already invested in orwill start operation in the future.
[Overseas] We have started new projects, and we will continue to promote group-wide development centered on the renewable energy business.

Future Issues
For the Domestic Electricity Business, ensuring at least a stable 2%–3% overall while balancing such considerations as efficiency, stable supply of electricity, and efforts toachieve carbon neutrality, including lowering the carbon intensity of and decarbonizing energy sources. For growth businesses, aiming for a ROIC that ranges from 5%- 9%
overall by selecting and concentrating businesses and investments and using benchmarks of other companies in the same industry

Progress & Assessment

Steadily reducing GHG emissions across our supply chain through the active development of renewable energy projects and the continued safe and stable operation of ournuclear power stations—(compared to FY2013 levels)

51% reduction

57% reduction

43% reduction(provisional value)

Household: 70%
Commercial: 60%

61%*5
48%*5

—*5

—*5

Steadily implementing initiatives to promote electrification, including all-electric homes*1: After elimination of inter-segment transactions *2: Reference indices: Give a sense of where certain indicators prioritized by management will be when our financial objectives are achieved *3: Includes amount (approx. 2%) recognized as capital from hybrid corporate bonds (issued October 2020)*4: Specific Safety Facilities *5: For FY2020, calculations are based on the energy consumption statistics by prefecture (provisional values) reported by the Agency for Natural Resources and Energy. For FY2021 and FY2022, the statistical figures that the various items are based on are not finalized figures.
*6: CO2 emissions (baseline emissions) from Kyushu EP’s domestic retail sales as defined in the Act on Promotion of Global Warming Countermeasures

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

23

Medium-termManagement Plan

Medium-term Management Plan
The Medium-term Management Plan is a summarized every year as a five-year rolling action plan toachieve the Kyuden Group Management Vision 2030, Financial Objectives (FY2025) as interim objectives of
the Vision, and the Carbon Neutral Vision 2050.

Strategy II Building a Sustainable Community Together

Co-creating a Smart and Vibrant Society∙ Contribute to solving social issues and sustainable development in the Kyushu region

In FY2023, despite harsh changes in the electricity business such as higher energy prices, we compiled
measures to allow the Kyuden Group to continue expanding and appropriately respond to key management
issues (materiality), such as carbon neutrality, into concrete plans, and the Group has now united to achieve
those objectives.

∙ Solve issues and expand Group-wide earnings through Kyuden Group products and services∙ Develop our ICT services to provide customers with optimal solutions∙ Expand the Urban Development Business, which provides high added value that only the Kyuden Group canoffer, by making use of energy and digital technology∙ Create new businesses and services that meet the needs of the region and society by leveraging the
Kyuden Group’s strengths

Main relevant materiality

Strategy I Developing the Energy Service BusinessLeading the Way Towarda Decarbonized Society

Implementing Continuous
Improvements in Energy Services

Strategy III Strengthening our Business Foundations

Promoting Growth, Success, andDiversity of Human CapitalStrengthening GovernanceContinue to deliver environmentally friendly and stable energy at a low cost

Create a corporate culture that prioritizes safety, health, and diversity∙ Promote lower carbon intensity and decarbonized sources of power alongside electrification to achievecarbon negativity as early as possible before 2050
∙ Develop technologies to achieve carbon neutrality, including those related to carbon recycling andbattery storage∙ Continue efforts related to nuclear power plants, such as safe, stable operation, higher utilization rate,
and greater efficiency∙ Improve maintenance efficiency and other objectives with an eye toward even lower power generationcosts∙ Develop a next-generation transmission and distribution network based on national energy policy andother factors∙ Continue to examine and make use of green bonds and transition bonds and loans∙ Promote health and productivity management based on the Kyushu Electric Power Health and Productivity
Management Policy as well as safety through Group-wide efforts

Develop our energy services by anticipating changes in the market environment, including
the shifting energy landscape and diversifying customer needs∙ Maximize income in a harsh business environment and respond to the risk of earnings volatility∙ Ensure the ability to provide a competitive supply through such efforts as shifting to low carbon intensity
or decarbonized power sources and replacing old thermal power plants∙ Make efforts to achieve both stable supply and cost reductions in the power transmission anddistribution business, and to develop a next-generation transmission and distribution network∙ Realigning the direction of initiatives for each business area in Overseas Business and clarifying priorities∙ Transform the corporate culture into one in which individuals and the organization grow together andcreate value, and secure and develop the human capital necessary for our business strategies

Endlessly pursue a rewarding workplace∙ Implement digital transformation (DX) to improve productivity and reform businesses∙ Achieve a highly productive and flexible work style that is not bound by time or place∙ Raise motivation related to growth and challenges and offer treatment for personnel appropriate fordiverse ways of self realization

Work continuously to improve stakeholder trust∙ Strengthen sustainability management that simultaneously pursues social and economic value andreinforce efforts to reflect market opinions in management and implement strategic engagement∙ Promote efforts that contribute to greater awareness of the environment among the next generation∙ Strengthen information security measures across the entire Kyuden Group∙ Thoroughly implement not only an appropriate response to Japan Fair Trade Commission investigation
results and the incident involving the improper access of customer information of other retail electricity
providers, but also measures to prevent such incidents occurring again∙ Promote efforts to improve management efficiency (run through PDCA-cycle based on ROIC targets)Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

24

Toward Sustainable Enhancementof Corporate Value

Toward Sustainable Enhancement of Corporate Value■ Analysis of Current Situation and Future Direction

Increase PER

As for the Kyuden Group’s corporate value, we conducted an analysis after breaking down price-tobook ratio (PBR) into capital profitability (return on equity (ROE)) and future growth expectations (priceearnings ratio (PER)). The analysis revealed that the main factor for our low PBR is that the stock market
expects weak income growth rate on account of “low actual earnings” and “concerns about finances anduncertainty about medium to long-term earnings opportunities.”
In order to achieve sustainable enhancement of corporate value (PBR constantly above 1), it isnecessary to (1) achieve capital profitability that exceeds the cost of capital (increase ROE), and (2) obtain abetter assessment of the recent recovery in earnings and future growth potential (increase PER).

Current PBR, ROE, and PER levels and future direction
FY2023*1

PBR

Approx. 0.9x

=

×

ROE

Approx. 20%*2

ROIC
Approx. 2.5%

Mediumterm level■ Perspective of initiatives and direction of response
Ideal State

Financialleverage(Approx. 2.0%, excluding time lag)(Equity ratio of 10.4%)

2.5% or higher

Approx. 20%

Continue
to aim for1.0x orgreater

PER

Approx. 4.5x

In addition to moving forward with the aforementioned finance-related efforts and steadily generating
income each fiscal year to achieve consolidated ordinary income of at least ¥125 billion as a financial
objective, we want to work to strengthen our financial base, which supports the generation of stable
income, and thus expand shareholder returns. Furthermore, for non-financial efforts, we will work toreach environmental targets, such as achieving carbon neutrality, which will increase medium and longterm growth expectations, reinforce human capital, the driving force for the sustainable enhancement ofcorporate value, and link this to lowering the cost of capital and a greater expected income growth rate.
In order to obtain a positive assessment of our future growth strategy from capital markets, we will also
actively hold dialogues with investors through IR activities.

Approx. 8%–10%

Increase by improving expected
income growth rate

Envision a medium-term
ROE of approx. 8%, which
exceeds the cost of capital,
despite increasing equity
capitalObtain a better assessment of earnings
stability and growth potential by eliminating
concerns about low actual capital efficiency,
finances, and medium and long-term
earnings opportunities*1: Share price: as of August 31, 2023; net income per share based on FY2023 earnings forecasts (as of August); net assets per share: as of end of FY2022 (excluding
preferred shares)*2: FY2023, capital efficiency is expected to exceed the medium-term level because equity capital is recovering as earnings improve

As for the actual orientation of efforts, we are implementing the following.

Increase ROE
Even when working to restore our financial base by increasing equity capital going forward, we want toachieve an ROE of approx. 8%, which exceeds the cost of capital, in the medium term, through the sustainable
and stable generation of income that takes into consideration capital efficiency and by steadily expanding
growth businesses through management based on ROIC, targets for which were announced in April 2023.

Perspective
1)
Achieve capitalprofitability that exceeds
the cost of capital(increase ROE)

Response
Finance-related efforts
Steadily implement
management cycle toachieve ROIC target(announced April 2023)
Generate sustainable,
stable income, strengthen
financial base, and thusincrease shareholder return

Sustainableenhancementof corporate
value(PBR of 1x orgreater)2)
Gain trust through recent
recovery in earnings andshareholder return
Obtain positive
assessment of future
growth potential(Improve PER)
Lower cost of equity
Improve expected
income growth rate

Non-financial efforts
Non-financial initiatives
related to carbon
neutrality, human capital,and other issues, which
increase expectations of
medium and long-term
growthTargets, etc.
FY2025 financial objectives
and management indicators
Consolidated ROIC of
2.5% or higher
Consolidated ROE ofapprox. 8%
Consolidated ordinary incomeof ¥125 billion or more
Equity ratio of approx. 20%
Quickly resume dividend
payments (¥50/share)
FY2030 environmental
objectives
Reduce supply chain GHG
emissions by 60%
Electrification rate for Kyushu
Household: 70%
Commercial: 60%
FY2030 employee engagementof 80%
Increase per employee value
added: 1.5x

Capital market dialogue
Promote understanding of the above efforts through active dialogue

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

25

Toward Sustainable Enhancementof Corporate Value■ Promoting ROIC-Based Management That Takes into Consideration Capital Profitability

Our Cost of Capital
As for our current cost of capital, cost of equity is about 6% and WACC is about 1.2%. However,
we expect that WACC will rise to a certain extent in the medium and long term considering various
factors, including changes in our capital structure as our finances improve in the future, and willkeep this level in mind when making management decisions.

▲

▲

▲

▲

In order to enhance corporate value in the medium and long term through management that is conscious of the cost ofcapital and share price, we introduced ROIC as a new management indicator in FY2022, and announced new Group-wide
ROIC targets for the Group—2.5%
FY2025
FY2030or greater for FY2025 and 3.0%
Consolidated ROIC >(Average for
Medium to long-term
Consolidated
or greater for FY2030, both on a
2019–2021)
2.5% or higher 3.0% or higher
ROIC targets
WACC
1.3%
consolidated basis.
Both increase shareholder
value and strengthen
For the Domestic Electricity
ROE ofShareholder value ROE of approx. 8%
financial baseapprox. 8%–10%
Perspective
Business, we will ensure an ROIC
when setting××
objectives
that equals or exceeds the cost
Equity ratio
Further improvegenerate sustainable
Financial baseof approx. 20%
financesof capital on a stable basis while
corporate valuebalancing efficiency and stable
Ensure a stable ROIC that exceeds
Domestic Electricity
by balancing efficiency and(Reference)
Business
supply. On the other hand, for
Approx. 2.5%
2.5% or higher WACC
stable power supply
Outlook for
ROIC
achievinggrowth businesses, we aim for an
Aim for an ROIC that dramaticallyGrowthApprox.
Approx.
objectives forexceeds WACC in the medium andbusinesses
each business
ROIC that substantially exceeds
long term through selection and
5%–6% 6%–7%ROIC
concentration of projects/investments
the cost of capital.

■ ROE/ROIC and cost of capital

ROE
Cost ofequityApprox. 6%

2.5%

or higher

Approx.

▲

8%

1.3%

▲

2%
2019-2021
Average

2025
Target2019-2021
Average

Future rise forvarious factors
including changes
in capital structure
as finances
improve

WACC
Approx. 1.2%
2025
TargetMain Initiatives

ROIC management cycle

Promote sales strategies based on the business environment
Expand andimprovequality of
sales

ROIC

ROIC
WACC

WACC
(reduce)

Streamline
andoptimize
invested
capitalReducemanagement
risks

Increaseelectricity sales
volumeExpand new
and growthbusinesses

Increase
profits<

In addition to each business division
working independently to make
improvements using ROIC for theindividual business as a management
indicator in order to accomplish theconsolidated ROIC target, the Boardof Directors and Corporate Strategy
Division work to monitor progress andstrive for an appropriate allocationof business resources to achieve
consolidated objectives.
Efforts are also made to promote
understanding throughout theCompany using such items as an “ROICtree” so that employees understandand are aware of the importance ofcapital efficiency and can incorporatethat into their actual work.

ROIC

Create electric power demand (promote electrificationand invigoration of local communities)
Achieve a competitive supply capacity(maximize use of zero emission power sources, etc.)
Improve capabilities to search for and develop new projects
Increase the value of existing projects

Improve
profit margin

Reduce fixed costs
Reduce fuel costs and lower risks

Strengthen
managementfoundation

Promote human capital-based management and increase labor productivity
Strengthen DX and technical foundation

Reduceinvestment

Increase efficiency of material procurement and construction
Ascertain, select, and concentrate investments taking into consideration
profitability, risk, etc.

Streamline
and optimize
investments

Streamline and optimize facilities based on a stable power supply, etc.
Optimize and reduce inventories of fuel, materials, etc.
Construct an asset portfolio that takes into consideration profitability, risks, etc.
Increase investment turnover (quickly recover investments)
Stabilize profitability and financial foundation
Maintain a stable supply of electricity
Reinforce governance (build trust with stakeholders, etc.)■

Initiatives to Increase Expectations of Income Growth in the Medium andLong Term

As for our medium and long-term growth, to obtain a positive assessment from investors, it is necessary
to solidify our recent recovery in earnings and reinforce our financial foundation, generate stable,
sustainable cash flows through those efforts, and thus pay a stable dividend to our shareholders, which
will likely lead to an increase in PER.
Earnings are expected to trace a V-shaped recovery in FY2023 for various reasons, including thehigher utilization of nuclear power. In order to achieve ordinary income of at least ¥125 billion in FY2025,
which is one of our financial objectives, and ordinary income of at least ¥150 billion in FY2030, which isan element of our FY2030 Management Vision, we will generate steady income growth through the stable
operation of nuclear power stations and a greater return from growth businesses that we have invested in.
We expect to record a positive free cash flow starting in FY2023 as cash flows from operating
activities increase due to growth in income and one round of nuclear power safety-related construction
is completed. In addition to using generated cash flows to establish a foundation for even greater cash
flows through investments that take into consideration capital efficiency, we will tie those efforts toquickly resuming dividend payments of ¥50 per share and achieving an equity ratio of 20% as one of our
financial objectives.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

Toward Sustainable Enhancementof Corporate Value■ Cash flows image for FY2025

Message from the Executive Director of the Corporate
Strategy Division

Curb electricity business investments(Billionsof Yen)Reduce nuclear power safety-related construction, etc.

Electricity
Business
Investments,
etc.
170

Profit growth with capitalefficiency in mind
Domestic Electricity
Business

Achieve a stable ROIC thatexceeds WACC

Growthbusinesses

Aim for an ROIC thatsignificantly exceeds WACC in
the medium and long term

OperatingCF
340

Generate medium
and long-term
cash flows

GrowthInvestments
100

Dividends

FCF
70

Resume payment of dividends (¥50/share)
as soon as possible
within the period of financial objectives

Increase shareholder
returnLimit interest-bearing debt
Aim for an equity ratio of approx. 20%

Increase operating cash flows
Increase income by raising the nuclear power usage rate
Increase return on investment for growth businesses
Reduce fixed expenses through increased efficiency, etc.

Issue class B preferred shares, etc.

Improve financial
stability

Non-financial efforts
In addition to financial efforts, non-financial efforts are also important for the Company to generate growthin the medium and long term. Expanding non-financial capital through investment in human capital andworking toward decarbonization will lead to improved assessment of our future growth potential, which will
also contribute to an increase in PER.
Details regarding initiatives to further strengthen human capital management and growth throughachieving carbon neutrality are provided on P67 and P42 , respectively.

■ Confirming Progress with Future Efforts
As for enhancing corporate value, which includes improving our PBR, directors confirm progress in these
efforts once a year, and if necessary, consider revisions.

The Board of Directors also discussed sustainable enhancement of corporate
value with breaking down PBR into ROE and PER.
Although capital efficiency is expected to significantly improve in FY2023
because of an increase in the nuclear power utilization rate, we believe it isnecessary to achieve further growth. This can be done by both expanding
Hiroto Kido
growth businesses and controlling the balance sheet while achieving a stable,
Executive Director,
not transitory, improvement in capital efficiency. On account of this awarenessCorporate Strategy Divisionof the problem, we introduced ROIC as a new management indicator.
In addition to this being incorporated into the management PDCA cycle, the Board of Directors andother internal bodies are considering the analysis of each business based on ROIC and the direction of
improvements. In particular, for electricity businesses, it is necessary to take into consideration balancing
this with a stable power supply. The Corporate Strategy Division is not only encouraging the operation ofeach business based on an awareness of ROIC but also working to link that to enhancements in corporate
value by optimizing the business portfolio and further improving capital efficiency.
Efforts are being made to spread ROIC management throughout the Group, which includes top
management providing explanations of ROIC when holding dialogues at business offices, and revisingbusiness plans for each office to incorporate an awareness of capital efficiency. Senior management
will continue to communicate the importance of capital efficiency so that objectives and efforts do not
become mere formalities.
As for finances, there was a dramatic deterioration in equity capital as a result of the decline in
FY2022 earnings. I would like to apologize to all shareholders that in light of the state of finances andmedium and long-term profitability, we were not able to pay dividends. Improving our finances is anurgent issue in order to generate sustainable growth going forward and thus provide shareholders withstable returns.
To improve our financial stability, we have issued ¥200 billion in nonconvertible class B preferredshares, a ¥100 billion increase from the traditional class A preferred shares, to raise financial stability tosome extent. We will allocate funds to investments that improve cash flows and take into consideration
ROIC, and steadily work to pay shareholder returns and reduce interest-bearing debt.
If the denominator of ROE increases due to an increase in equity capital, it will be necessary to further
raise PER while improving ROIC to raise PBR. Our actual performance will show that we can generate
stable income, and the whole Group will unite to ensure the enhancement of corporate value so that we
can obtain a positive assessment of our medium to long-term growth potential from capital markets
through shareholder returns (resuming dividend payment of ¥50/share) and non-financial efforts,
including further strengthening human capital management and achieving carbon neutrality.

26

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

27

6 Data Section

Strategies by Business
Domestic Electricity Business
Power Generation & Sales

Strategies by Business
Domestic Electricity Business ~Power Generation & Sales~
Using changes in the businessenvironment as an opportunity
for greater growth throughcarbon neutrality■ Vision for the Future
We aim to achieve our management vision of “providing more prosperous,
comfortable living to become our customers’ No. 1 choice” and ¥75 billion
in ordinary income from the Domestic Electricity Business (50% of the ¥150
billion consolidated ordinary income target for 2030) by providing a stablesupply of environmentally-friendly energy and energy services that meet thediverse needs of our customers.

FY2030 Management Targets· Total electric power sales of 120 billion kWh (incl. overseas)· Permanent pursuit of a reasonable price for electricity· Reduce supply chain GHG emissions by 60%(Reduce by 65% for domestic business (compared to FY2013))· Contribute to the electrification of Kyushu(Household: 70%; Commercial: 60%)
FY2025 Forecast· Total electric power sales of 105 billion kWh (incl. overseas)

Masaru Nishiyama
Executive Director,
Energy Service Headquarters■ FY2022 Assessment and Progress
The Kyuden Group is robustly moving forward with efforts centered on Carbon
reduction/decarbonization in power sources and Promotion of electrification
as movements toward achieving carbon neutrality accelerate both in Japan andoverseas.
In March 2023, we were the first major Japanese energy company to obtain
Science Based Targets (SBT) certification, confirming that our initiatives are in linewith the standards of the Paris Agreement.
Regarding Carbon reduction/decarbonization in power sources we will makethe greatest use of nuclear power as a price competitive base load power source,which includes positioning renewable energy as a primary power source, withsafety as our highest priority and the understanding of local communities as aprerequisite.
In addition, since thermal power is an adjustable power source and necessary forthe maximum introduction of renewable energy, we will work to not only reduce
CO2 emissions through high-efficiency operations but also move forward withintroducing carbon-free fuels, such as hydrogen and ammonia.
Turning to Promotion of electrification, we will expand sales by providing energy
services that meet customers’ needs and changes in the social environment,
including promoting all-electric homes, encouraging the use of EVs, and actively
attracting companies using the strengths of our power mix.
We will also take on the challenge of achieving carbon neutrality. As a corporategroup that leads the way in decarbonization, the Kyuden Group will not only
achieve its 2030 earnings targets but also generate even greater growth throughopportunities provided by changes in the business environment.

· Despite posting an ordinary loss for FY2022 for several reasons, including theimpact of a time lag from fuel cost adjustment due to an increase in the cost offuel and a reduction in the utilization of nuclear power plants, we expect to see
a dramatic improvement in profitability for FY2023 due to an increase in nuclear
power station utilization and a favorable change in the impact of the time lagfrom fuel cost adjustment system· Ensured maximum supply capacity through the coordinated operation of
our nuclear, thermal, pumped-storage and other power generation facilities,
achieving a stable supply of electricity throughout the year, including thesummer and winter months when supply and demand is tightOrdinary Income(Entire Domestic Electricity Business)
71.5*(Billions of Yen)
75

75

2025

2030

2.6
2021

2022

(FY)

(72.4)*(133.4)*Excluding the delayed effects of fuel cost adjustments■ Strengths
Power Generation· Top-level ratio of non-fossil fuel power sources among major Japanese power companies (obtained SBT initiative* certification, the first for amajor Japanese energy company)· Both a cost competitive and stable supplier thanks to stable nuclear power operations and a well-balanced energy mix
Retail· Offering rate plans and services that use non-fossil fuel source certificate· A customer base built on close ties to the local community with 50 sales offices throughout Kyushu
Energy Trading & Supply-Demand Coordination· Optimized procurement and sales operations in both fuel and electricity markets based on trends in demand for retail and wholesale electricity*: (SBT: Science Based Targets)International joint initiative to verify and certify that greenhouse gas emission reduction targets set by companies are based on science in order to achieve Paris Agreement targets

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

28

Strategies by Business
Domestic Electricity Business
Power Generation & Sales■ Business Environment■ Business Strategies

Opportunities

By promoting the stable supply ofelectricity and the low-carbon or
decarbonization of power sources,
we aim to maximize the value ofelectricity itself and to promoteelectrification, ultimately working
towards achieving our profit
targets.

· Increasing expectations from society
regarding the importance of stable
power supply· Advancement of electrification· Growing customer needs for low
carbon intensity or decarbonizedelectricity due to accelerating global
efforts to become carbon neutral· Increasingly large factories, such as
in the semiconductor sector and otherfields are locating in the Kyushu region

Risks· Volatility in the fuel, wholesale
electricity, and foreign exchange
markets· Increased investment expendituresand costs related to lower carbon
intensity and decarbonized powersources· Decrease in opportunities for thermal
power generation due to expanded
adoption of renewable energy· Unplanned power supply outages· Changes in regulations related toelectric utilities· Stable power supply
Our Domestic Electricity Business has been providing a stable supply of electricity. However, considering recent fuel price hikes and the increasing prices in
the wholesale electricity market, the importance of stable supply is further emphasized. We will do our utmost to ensure a stable power supply by taking an
agile approach to procuring fuel in response to market movements, maximizing our use of nuclear power and its advantages in terms of energy security, andadjusting our thermal power plant maintenance schedule to ensure adequate supply capacity during periods of heavy load.

· Promoting carbon neutrality
In response to society’s need for decarbonized sources of power, we will strive to make renewable energy a primary power source by promoting its
development Group-wide.
Thermal power generation plays an important role as an adjustable power source to maximize the adoption of renewable energy, and as such, we will pushfor greater efficiency and the use of carbon-free fuels. Alongside these efforts to provide lower carbon intensity and decarbonized sources of power, we will also
trade the nonfossil value generated by our non-fossil power sources, promote electrification across all parts of society, engage in face-to-face sales to make themost of our direct contact with customers, and develop proposals for renewable energy rate plans based on the growing need for decarbonized electricity.

■ Efforts to Create Corporate Value

Related pages P43

P44

P46

P47

P59

P61

Main relevant materiality

1) Maximize short-term
opportunities(Increase profit)

2) Expand medium tolong-term opportunities(Increase growth rate (future
growth expectations))

3) Reduce risk
(Lower the cost of capital)· Optimize fuel and electricity procurement and sales operations based on market trends· Maintain safe and stable thermal and nuclear power station operations by consistently carrying out daily inspections
and periodic self-inspections· Develop renewable energy Group-wide to make renewable energy a primary power source· Provide rate plans and services that meet the growing needs for decarbonized electricity· Promote electrification through the expansion of points of contact with customers and individual proposals to customers
in all fields· Develop a state-of-the-art low CO2 emission LNG combined-cycle power station(Hibiki Power Station expected to begin operation in FY2025)· Collaborate on the development of hydrogen and ammonia supply chains and establish co-firing technology(consider collaboration with Yara International, the world’s largest ammonia chemical company)· Enter the aggregation business* that leverages distributed energy resources, such as massive battery storage*: Business that provides various services, including those necessary for the effective use of renewable energy, by bundling
distributed energy resources, such as battery storage and EVs· Hedge against the risk of market volatility in fuel prices and exchange rates by trading derivatives· Use transition finance to achieve carbon neutrality, such as through the introduction of LNG-fired thermal power stations· Develop a response to multiple energy mix scenarios, taking into account national energy policies and other factors

Corporate value(economic value)=

IncomeCost of capital

Leading the Way toward a Decarbonized Society
Implementing Continuous Improvements in Energy
Services
Strengthening GovernanceLeading the Way toward a Decarbonized Society
Implementing Continuous Improvements in Energy
Services
Strengthening GovernanceLeading the Way toward a Decarbonized Society
Implementing Continuous Improvements in Energy Services
Strengthening Governance(1) Maximize short-term opportunities− Growth rate

Efforts to address materiality(2) Expand medium to(3) Reduce
long-term opportunities
risk

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

29

6 Data Section

Strategies by Business
Domestic Electricity BusinessTransmission & Distribution

Domestic Electricity Business ~Transmission & Distribution~
Toward a rapid and radicalorganizational transformation
through technologicalcapabilities and DX

Takeshi Hirowatari
President and Chief Executive Officer,
Kyushu Electric Power Transmission andDistribution Co., Inc.

■ Vision for the Future
Kyushu Electric Power Transmission and Distribution Management Philosophy
Purpose

We will deliver power to Kyushu and revitalizing societyWith a mission of providing a stable, efficient supply of electricity, we will contribute to customers’ prosperity and solutions to social problems

Value

Trust
Evolution
Co-creation

VisionWe will become Japan’s leading infrastructure company through our technological capabilities
and digital transformation

We place the greatest value on the trust of stakeholders
We anticipate change and autonomously transform the organization
We create greater value by leveraging diversity

Our business environment is undergoing major changes, and thus we must respondto such social problems as achieving carbon neutrality, reinforcing resilience, aging
facilities, and introducing a new wheeling fee scheme (revenue cap system) basedon these considerations, as well as expand our business domains to generate
growth.
At this time of massive changes in the business environment, we newly formulated
a Kyushu Electric Power Transmission and Distribution Management Philosophy in
April 2023 as a foundation for undertaking autonomous and stable management.
This management philosophy incorporates the desire to expand business activities
that emphasize the values of trust, evolution, and co-creation based on the purposeof “delivering power to Kyushu and revitalizing society” while aiming to become“Japan’s leading infrastructure company through our technological capabilities and■ FY2022 Assessment and Progress· The transmission and distribution business accounted for ¥14.1 billion of theDomestic Electricity Business’ ordinary income

Ordinary Income

Ordinary revenue rose 18.5% over the previous year to ¥711 billion on account of growth inwholesale electricity sales accompanying an increase in purchases from renewable energy
sources, growth in imbalance-related revenue, higher unit prices of adjusting subsidies
related to the supply-demand adjustment market, and growth in the final guarantee supply
Ordinary expenses increased 17.6% over the previous year to ¥696.9 billion due to anincrease in imbalance and final guarantee supply-related expenses and an increase inpurchases from renewable energy sources(Entire Domestic Electricity Business)
71.5*(Billions of Yen)
75

75

2025

2030

2.6
2021

2022
(72.4)*· While aiming for carbon neutrality, we actively engage in activities to generatedemand, leveraging all points of contract throughout our work, creating newservices and businesses, as well as participating in overseas businesses, byutilizing technologies and assets cultivated by our company and group companies(133.4)*Excluding the delayed effects of fuel cost adjustments

digital transformation.”
We recognize the need for a quick launch of a fundamental organizationaltransformation to achieve the Vision in our management philosophy, and we will
promote initiatives that combine our core technological capabilities (disasterrecovery capabilities, technical capabilities for network infrastructure construction
and maintenance, and technical capabilities related to supply/demand and system
operation for greater use of renewable energy) and digital transformation (DX).

■ Strengths
Reliable Operation of Transmission & Distribution Facilities
Supporting Kyushu’s Power Supply· Transmission lines: 11,223 km, distribution lines: 144,198 km· Substations: 653· Internal combustion power stations: 29· Interconnected renewable energy: 15,820 MW

World-class Electricity Quality· Power outage frequency: 0.15 times/household(0.04 times/household: excl. disasters such as typhoons)· Power outage duration: 115 mins./household(3 mins./household: excl. disasters such as typhoons)(FY)KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

Strategies by Business
Domestic Electricity BusinessTransmission & Distribution■ Business Environment■ Business Strategies

Opportunities

We are making the following efforts to achieve the Vision in the Kyushu Electric Power Transmission and Distribution Management Philosophy.

· Expansion of renewable energy andgeneration of demand to achievecarbon neutrality· Introduction of a new wheelingfee scheme to secure capital forinvestments· Advances in AI, IoT, and other digitaltechnologies· Efforts to prevent another information leak
Recognizing the seriousness of the loss of society’s trust in us as a general transmission and distribution company, we are working to prevent this type of incident from ever occurring again
and to regain the trust of society.

· Achieve a balance between stable power supply and lower costs
We will steadily work to balance the provision of a stable power supply, which is our basic mission, with lower costs.

· Build a next-generation power transmission and distribution network to achieve carbon neutrality
In order to achieve carbon neutrality, we will move forward with creating a next-generation network to maximize Kyushu’s renewable energy potential.

· Generate demand and increase earnings using our technological capabilities and assets
We will take on the challenge of generating demand and expanding business domains using the technologies and other assets accumulated by the transmission and distribution business and Group companies.

· Strengthen our business foundation
We value the trust of our stakeholders above all else, and while autonomously transforming our organization, we will continue to create higher value.

Risks· Information leaks· Gradual decline in demand forwheeling services· Progressive aging of facilities· Increasing severity of natural
disasters■ Efforts to Create Corporate Value

Related pages P45

P46

P60

Main relevant materiality

1) Maximize short-term
opportunities(Increase profit)

2) Expand medium tolong-term opportunities(Increase growth rate (future
growth expectations))

3) Reduce risk
(Lower the cost of capital)· Upgrade and improve the efficiency of maintenance and installation work by utilizing new technologies and promoting DX· Secure a stable power supply through efficient facility formation and maintenance· Build a next-generation power transmission and distribution network to fully utilize the potential of renewable energy· Develop demand generation activities (promoting electrification, attracting companies, etc.) utilizing all points of contact
throughout our business operations to achieve carbon neutrality· Create new businesses and promote the Overseas Business by utilizing our proprietary technologies and assets, and bystrengthening cooperation amongst Group companies· Fundamentally strengthen internal controls to ensure neutrality and reliability· Aim for efficient facility formation through streamlining, etc. in light of slowing growth in demand· Maintain and update supply facilities in an efficient and appropriate manner, including measures to prevent aging· Strengthen internal and external collaboration aimed at quickly restoring power and sharing information after outages

Corporate value(economic value)=

IncomeCost of capital

Leading the Way toward a Decarbonized Society
Implementing Continuous Improvements in
Energy Services

Leading the Way toward a Decarbonized Society
Implementing Continuous Improvements in
Energy Services

Implementing Continuous Improvements in
Energy Services
Strengthening Governance(1) Maximize short-term opportunities− Growth rate

Efforts to address materiality(2) Expand medium to(3) Reduce
long-term opportunities
risk

30

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

31

6 Data Section

Strategies by Business
Growth Businesses
Renewable Energy Business

Growth Businesses ~Renewable Energy Business~
Accelerating efforts to makerenewable energy the main
power source while advocating
the renewable energy 3Cs■ Vision for the Future
We will utilize the technologies and expertise of the Kyuden Group to steadily advance the development of renewable energy in Japan andoverseas and reach our management target of 5,000 MW by FY2030 (4,000 MW by FY2025) while also helping to achieve carbon neutrality.
In addition, we aim to contribute to the FY2030 target of ¥75 billion in ordinary income from growth businesses by expanding revenue throughrenewable energy development.

Main Group company engaged in the Renewable
Energy businessYutaka Mizumachi
President and Chief Executive Officer,
Kyuden Mirai Energy Co., Inc.

We formulated the 2030 Management Vision last year. As our plan is to makerenewable energy a primary power source, we are advocating the renewableenergy 3Cs and are working on various fronts, including developing renewableenergy, while gaining the understanding of local communities.
[Renewable Energy 3Cs]
1) Further expand facilities capacity through proactive efforts to develop new
renewable energy sources (kW) = Creation
2) Continue to make use of facilities by extending the life of or replacing existing
facilities using our maintenance and inspection expertise, etc. (timeline) =Continuation
3) Coordinate supply and demand through such activities as the effective use of
surplus electricity and commercialization of renewable energy value (kWh) =Coordination
Furthermore, in February 2023, it was decided to integrate the Kyuden Mirai’s
Renewable Energy Business and Kyushu EP’s geothermal and hydroelectric power
generation businesses, and that we will play a role in strengthening and expanding
the Group’s Renewable Energy Business. Through these efforts, our renewableenergy output will be one of the greatest in Japan.
This integration offers a good opportunity to further increase the value of renewableenergy, and we will link it to achieving the Group’s 2030 renewable energy
development target of 5,000 MW by working to provide services that meet diverse
customer needs, and reinvesting some of the earned funds into developing otherrenewable energies, such as offshore wind power.

■ FY2022 Assessment and Progress· We are making steady progress in power development towards the main
source of renewable energy. This involves the start of operation of the
Ishikari New Port Biomass (51.5 MW), as well as the commencementof construction for the Tahara Green Biomass (50 MW) and Hibikinada
Offshore Wind Farm (220 MW). On the other hand, recurring profit has
increased to ¥2.4 billion (+¥0.6 billion YoY) due to the increase in electricity
generated· Reached about 80% of the 2025 renewable energy development target of
4,000 MW based on confirmed projects as of the end of FY2022 that havean output of 3,020 MW (including 2,610 MW already in operation)

Renewable Energy Developed
4,000
2,550

2,610

2021

2022

2025

Ordinary Income
Ordinary income from overseas
renewable energy projects is included
in ordinary income for the Overseas
Business
1.8

2.4

2021

2022

5,000

2030

(MW)

(FY)

(Billions of Yen)

13

2025

2030

(FY)

■ Strengths
One-stop Approach for the Development and Operation of the Five Main Renewable Energy Sources· Kyuden Group works as one to promote the five main renewable energy sources (solar, wind, hydro, geothermal, and biomass) across the fullvalue chain, from initial surveying to development and operation based on the technologies and expertise we have accumulated through years ofdevelopment experience as well as the relationships of trust we have built with local communities (Additionally, we are the only one among majordomestic power companies that covers all aspects of geothermal development)
Technical Capabilities Enabling High Capacity and High Efficiency Renewable Energy Operations· Able to achieve high efficiency and high utilization by leveraging the abundant knowledge and expertise we have built up over many years ofdeveloping and operating power source facilities

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

32

Strategies by Business
Growth Businesses
Renewable Energy Business■ Business Environment■ Business Strategies

Opportunities

Kyushu EP and Kyuden Mirai Energy will accelerate
their efforts to make renewable energy a primary
power source while carefully communicating withlocal communities with an eye toward carbon
neutrality by reinforcing the business operation
system through consolidation of their renewableenergy businesses. Furthermore, we will meetcustomers’ and society’s extensive need forrenewable energy and make the Renewable Energy
Business the Kyuden Group’s core business bytaking on the challenge of creating new value in the
Renewable Energy Business.

· Growing customer needs for low
carbon intensity or decarbonizedelectricity as efforts to achievecarbon neutrality accelerate globally· National deregulation of geothermal
power generation and theestablishment of development
processes for offshore wind power
to expand the adoption of renewableenergy· Efforts to make renewable energy a primary power source
We will become not only an integrated company that possesses all five of the main renewable energy sources (solar, wind, biomass, hydro, and geothermal), but also
our renewable energy capacity is among the top in Japan. We will leverage the benefits of integration and our extensive development and operation know-how toactively pursue new development in expected future energy growth areas, accelerate development through the expansion of PPA business and business alliances. We
will also maintain high efficiency and high utilization of existing power sources and increase the amount of electricity produced.
Regarding power source development, we will promote the development of offshore wind, onshore wind, and solar power, which have strong development potential.
Specifically, for offshore wind power, we will actively promote development using the knowledge gained from the offshore wind power project in Hibiki-Nada, whichstarted in March 2023 (output 220 MW, scheduled to start operation in 2025). We will also steadily move ahead with the development of geothermal sources, one of theGroup’s strengths, and hydro and biomass sources, where we have a rich track record in development.

· Taking on the challenge of new value creation for renewable energy
Utilizing the power storage and regulating functions of pumped-storage and batteries, we will deliver renewable electricity during hours that are highly profitable andpursue value enhancement. At the same time, we will challenge “new renewable energy business” such as tidal power generation, demand and supply management
services, and utilizing data accumulated from past development and O&M results.

· Diversifying means of renewableenergy adoption, such as solar PPAs

Risks
· Changes to renewable energy
schemes· Decline in profitability due to fiercer
competition· Greater development expenses andrisks as power generation projects
grow larger■ Efforts to Create Corporate Value

Related pages P42

P43

P46

Main relevant materiality

1) Maximize short-term
opportunities(Increase profit)

2) Expand medium tolong-term opportunities(Increase growth rate (future
growth expectations))

3) Reduce risk
(Lower the cost of capital)· Consolidate renewable energy businesses to strengthen them and improve customer service· Make efforts to establish diverse business models that take advantage of FIP schemes and PPAs
· Promote the development of renewable energy by utilizing subsidy programs as well as idle assets such as the sites of former power plants· Look into how to use energy sources once FITs expire· Maintain high-efficiency and high-availability operations at our renewable energy power plants by leveraging the technical capabilities wehave built up over many years of experience in developing and operating energy resources

Leading the Way toward a Decarbonized Society
Implementing Continuous Improvements in
Energy Services· Steadily promote the development of new geothermal power sites, hydropower projects and replacement facilities, and offshore wind power
projects together with Group and partner companies· Increase the number of renewable energy projects overseas in anticipation of a decline in suitable sites domestically· Take on the challenge of developing an adjustable power supply (battery storage and hydrogen production) business to help make renewableenergy a primary power source

Leading the Way toward a Decarbonized Society
Implementing Continuous Improvements in
Energy Services· Reduce the cost of initial surveying and operating costs by leveraging the technical capabilities we have built up over many years ofexperience in developing and operating energy resources· Diversify against various risks by developing energy sources through joint projects with business partners who have extensive expertise· Financing that uses green financeLeading the Way toward a Decarbonized Society
Implementing Continuous Improvements in Energy
Services
Strengthening GovernanceCorporate value(economic value)=

IncomeCost of capital(1) Maximize short-term opportunities− Growth rate

Efforts to address materiality(2) Expand medium to(3) Reduce
long-term opportunities
riskTable ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

33

6 Data Section

Strategies by Business
Growth Businesses
Overseas Business

Growth Businesses ~Overseas Business~
Sharing the “Kyuden spirit”
globally and expanding into newareas and business domains■ Vision for the Future
We provide energy solutions that meet the needs of various regions outside Japan and the times by making the most of the technologies,
expertise, and networks that the Kyuden Group has accumulated in the Electric Power Business and other businesses in Japan and overseas.
In addition to generating profits as the core of the Kyuden Group’s growth field and contributing to the achievement of ¥75 billion in ordinary
income from growth businesses in FY2030, we aim to expand the Overseas Business while contributing to society and giving consideration to theenvironment.

Ryotaro Yusu

■ FY2022 Assessment and ProgressPresident and Representative Director,
Kyuden International Corporation· Expanded new efforts such as participating in the Group’s first power supply
projects in off-grid areas in Africa and renewable energy development
projects in Southeast Asia (total overseas equity output of approx. 2,840 MW)

Since the late 1990s, we have been pioneering overseas projects with the “Kyuden
spirit” and through sweat and tears, our Overseas Business has grown to the point
where we operate 22 projects in 15 countries and regions as of March 31, 2023.
I would like to express my heartfelt thanks to all the people who have been involvedin this work over the years.
Our corporate slogan is “Let's connect.” We will develop businesses that linkpeople with people through smiles, Kyushu with the world through technology, andthe present and future through sustainable growth. While valuing the “networkof people” that we have built and looking forward to encounters with business
partners with whom we can share our passion, we will expand our energy business,
which can contribute to both the development of a country and the building of asustainable society from an ESG perspective.
In 2023, we opened our third overseas office, which is located in the Middle East, inthe city Dubai. In addition to steadily expanding the areas we operate in, particularly
in Asia, we will also actively take on the challenge of new business fields, suchas innovation. Please look forward with us to the future and the “Kyuden spirit” ofour overseas business, as we aim to create a “connected” business that will gain
support and cooperation from everyone.

· Made steady progress with submarine power transmission project in the
Middle East, which we joined in the previous fiscal year, and the developmentof highly efficient thermal power generation in Central Asia
· Ordinary income of ¥4.4 billion (up ¥2.0 billion YoY)
· Expanded Renewable Energy Business and contributed to reduction ingreenhouse gas (GHG) emissions through efforts to lower the carbon intensityof and decarbonize power sources

Overseas Equity Output
4,000
2,910

2,840

2021

2022

2025

Ordinary Income

5,000

2030

(MW)

(FY)

(Billions of Yen)
7

2.4
2021

4.4

2022

2025

2030

(FY)

■ Strengths
More Than 70 Years of Experience with the Domestic Electricity Business· Technologies and expertise in the power generation as well as transmission and distribution businesses possessed by the Kyuden Group
More Than 20 years of Experience with the Overseas Business (Have Participated in 22 Overseas Electricity Projects)· Have expanded overseas, primarily in Asia, which boasts a market with strong growth potential, but also the USA and Middle East, and holdoffices overseas in Thailand and the USA
Diversified Business Domains· Expanded the thermal and renewable energy power generation business, power transmission and distribution business, and overseas consulting
using the technology and expertise that the Group has accumulated through its various businesses, including the domestic and overseas
electricity businesses
International Contributions through Human Capital Development over More Than Ten Years· In addition to dispatching a total of about 80 engineers overseas, including those from Group companies, for technical instruction, in FY2022,
we accepted about 50 engineers to Japan from several countries, including Kenya and Cuba, and conducted activities such as technical training
using our facilities
Trust of and Positive Assessment from Business Partners and Other Entities· Have built a strong bond of trust with local business partners, governments, and power companies through hands-on activities for businesses

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

Strategies by Business
Growth Businesses
Overseas Business■ Business Environment■ Business Strategies

Opportunities

In the overseas electricity business, business
opportunities related to renewable energy andtransmission and distribution are growing in number
and diversifying, while gas-fired thermal projects withlong-term power purchase agreements (PPAs) decline
as the world moves toward decarbonization. Taking into
account such market conditions and considering theneeds of each region, we will promote decarbonization
investments, primarily in renewable energy andtransmission and distribution businesses, to contributeto the realization of a low-carbon and sustainable
society. We will also promote high-efficiency gas-fired
power generation and distributed energy resource
operation business that contribute to decarbonization.

· Increasing energy demand in Asiaand other emerging countries· Expansion of business opportunities
due to the growing need todecarbonize and decentralize powersources

Risks· Increased global competition interms of investing in renewableenergy projects· Unique country risk and market riskof various countries and regions· Changes in the financing
environment for thermal power plant
construction due to the shift to ESG
investment· Changes to national policies oncarbon neutrality· Continued impacts of the crisis in
Ukraine· Changes in prices, interest rates, andexchange rates· Make efforts to lower carbon intensity
While focusing on solar and wind power, we will also work on geothermal, hydro, and biomass power through such activities as
collaboration with development companies, taking into consideration the market environment of the particular country or region. We
will also expand the power transmission and distribution business, which contributes to lowering carbon intensity, as one revenue
source.

· Expand our business domains
In addition to traditional business domains, we will expand into new domains by investing in startup companies in the domains of
power generation from waste, distributed energy resources, and innovation.

· Expand our development areas
We will move forward with business development primarily in Asia, but also extending to the Americas, Middle East, as well as Europe
and other regions that are leaders in renewable energy.
As for overseas bases, following bases in Thailand and the USA, we opened a new staffed office in Dubai in FY2023.

■ Efforts to Create Corporate Value

Related pages P05

P46

Main relevant materiality

1) Maximize short-term
opportunities(Increase profit)

2) Expand medium tolong-term opportunities(Increase growth rate (future
growth expectations))

3) Reduce risk
(Lower the cost of capital)

Implementing Continuous Improvements
in Energy Services· Maintain and improve the profitability of existing projects in cooperation with investee companies· Maximize income by exchanging assets· Actively participate in power transmission and distribution projects· Expand the Renewable Energy Business through such efforts as collaboration with development companies and strategic
partners· Participate in thermal power generation projects that help lower carbon intensity· Work on business related to CO2 free fuel (hydrogen and ammonia) and promote business with an eye toward a society with
distributed energy resources· Develop geothermal power projects by leveraging the expertise of Group companies (West Japan Engineering Consultants,
Thermochem, etc.)· Build a project management system and quickly ascertain risk through monitoring· Conduct regular risk assessments

Corporate value(economic value)=

IncomeCost of capital

Leading the Way toward a DecarbonizedSociety
Implementing Continuous Improvements
in Energy Services

Strengthening Governance(1) Maximize short-term opportunities− Growth rate

Efforts to address materiality(2) Expand medium to(3) Reduce
long-term opportunities
risk

34

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

35

6 Data Section

Strategies by Business
Growth Businesses
ICT Service Business

Growth Businesses ~ICT Service Business~
Strengthening earnings and leading
the DX of local communities
using changes in the businessenvironment, including the adoptionof digital technology, as a tail wind

■ Vision for the Future
We aim to post ¥75 billion in ordinary income from growthbusinesses in FY2030 and contribute to the sustainable
development of local communities and society through ourbusinesses by expanding earnings from existing services
such as ICT infrastructure, and providing
ICT services targeting new business domains thatmeet the various needs of customers and society

Yoshiharu Senda
Executive Director, Technical Solution
Headquarters

The environment surrounding the ICT Service Business is undergoing majorchanges, including the rapid progress of digitalization brought about by the
COVID-19 pandemic, high expectations for dramatic improvements in productivity
through generative AI, and the promotion of measures such as the Vision for a
Digital Garden City Nation*, and the market size is expected to expand further.
Furthermore, ICT infrastructure, such as fiber optic broadband, 5G networks, anddata centers, is growing more and more important as digital technology becomes
indispensable to solve a growing number of social problems, including energy,
carbon neutrality, a shrinking labor force, and the realization of a diverse society.

Improve the operating margin of existing services(+50% or more over FY2020 in FY2025)
Develop and provide new services· Advertising (digital ad production and planning, etc.)· Finance & medicine (fintech, AI-based medical diagnosis etc.)· Primary industries (IT sensors for agriculture, woodland management using
drones, etc.)· Daily life support (monitoring service, etc.)· Infrastructure (airport ICT, factory production management system, etc.), etc.

■ FY2022 Assessment and Progress· Despite an increase in depreciation expenses in the fiber optic broadband
business, we recorded ordinary income of ¥6.5 billion (up ¥0.4 billion YoY)
for various reasons including an increase in contracts to develop local
government’s information systems· Efforts in new services have made steady progress as can be seen from theincrease in the earnings of the join venture company Machi no Wa Co. Ltd.
that works together with other companies to develop regional information
platforms and the achievement of eliminating cumulative loss with Kyuden
Drone Service.

Ordinary Income(Billions of Yen)
10

6.1

6.5

2021

2022

2025

2030

We along with Group companies will provide high-quality, highly secure ICT
infrastructure and ICT services, leveraging the strengths we have cultivated in theelectric power business. We also view changing customer and societal needs, aswell as rapid digitalization, as significant business opportunities. By combining
digital technologies with innovative thinking, we will create new value and services,increase earnings and take the lead in regional and social DX.
* A broad policy program introduced by the Japanese government and the basic concept of the vision
is to use technology and digital infrastructure to “create a society where anyone can comfortably andconveniently live anywhere in the country.

■ Strengths
Over 70 Years’ Experience and Expertise in Supporting Stable Power Supply
Telecommunications Infrastructure Covering All Areas of Kyushu
One-stop Service from Construction & Installation to Maintenance & Operations· Optical fiber network communication infrastructure throughout Kyushu (household coverage: 60%-70%; corporate: 100%)· Offices throughout Kyushu and provision of full support, from installation to maintenance and operation, 24 hours a day, 365 days a year
· Ability to propose and provide integrated ICT solutions· Broad range of business domains, including new ones (drones, digital advertising, e-sports, etc.)(FY)

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

Strategies by Business
Growth Businesses
ICT Service Business■ Business Environment■ Business Strategies

Opportunities

Rapid technological progress is being made in the ICT field, and on top of this, the convergence of different technologies is resulting in innovation that transcends business domains. We have set
a Group-wide target of at least ¥15 billon in ordinary income by FY2030 for our ICT service business, one of our growth businesses.
As digitalization progresses throughout society, including the spread of remote work due to the COVID-19 pandemic and the growth of video streaming services, data traffic continues toincrease and the importance of telecommunications networks is ever rising. For existing services, such as ICT infrastructure, we will work to further increase earnings by being sure to capture
new demand, such as that related to handling the construction of 5G networks, strengthening DC business as cloud services expand, and the expansion of security services for corporate
customers.
In addition to existing services, we will also step up our efforts in new, higher-layer areas, including applications and content, to reach our targets, and aim to expand our range of services
and thereby increase revenue. On top of expanding our sales channels by leveraging the respective strengths of the ICT Service Business and Group companies, we will work to find new
partners through M&As and open innovation, produce technologies in-house in collaboration with other companies, and create new businesses out of them. Moreover, we will bolster our new
services by delving deep into customer needs from their perspective, such as promoting DX among local governments and engaging in comprehensive industry-academia collaboration.

· Advances in such digital technologies
as AI/IoT (generative AI, etc.), mobile
technologies (5G/Beyond 5G), anddrones· Work style and operational reforms
utilizing digital technologies (DX)
· Promotion of various policies(development and expansion of
ICT infrastructure such as FTTH
connections, 5G networks, and data
centers (DCs) in line with the Vision
for a Digital Garden City Nation)· Growing environmental awareness(carbon neutrality, ESG)
· Construction of factories in Kyushu
because of low-cost and stableelectricity■ Efforts to Create Corporate Value
1) Maximize short-term
opportunities

Risks· Growing security threats due toan increase in cyber-attacks

P62

P71

P88

Main relevant materiality(Increase profit)· Increasing frequency and severity ofnatural disasters, major earthquakes

Related pages P04

2) Expand medium tolong-term opportunities(Increase growth rate (future
growth expectations))· Shortage of and increased difficulty
in securing IT personnel
3) Reduce risk
(Lower the cost of capital)· Strengthen existing services to respond to digitalization across society, including fiber optic broadband internet service BBIQ
and our data center business· Strengthen DX proposals for corporate/municipal customers and expand security-related services· Introduce regional information platforms throughout Japan and develop new services· Undertake commissioned information system development that complies with legal revisions and local government systemstandardization

Co-creating a Smart and Vibrant Society· Establish a new business model for the drone service business· Gain experience in the digital advertising business and enter the mass media domain, including TV· Conduct open innovation to create new businesses and aggressively invest in e-sports and AI· Provide energy storage systems suitable for the proliferation of renewable energy to achieve CN· Propose production management system for factories

Leading the Way toward a DecarbonizedSociety· Construct a business portfolio that takes into consideration return on invested capital (ROIC)· Strengthen our IT governance function and system development framework in cooperation with Group companies· Actively recruit IT personnel and establish an education system within the Group· Strengthen information security measures across our entire supply chain, including external business partners

Strengthening GovernanceCorporate value(economic value)=

IncomeCost of capital

Implementing Continuous Improvements in
Energy Services
Co-creating a Smart and Vibrant Society

Promoting Growth, Success, and Diversityof Human Capital(1) Maximize short-term opportunities− Growth rate

Efforts to address materiality(2) Expand medium to(3) Reduce
long-term opportunities
risk

36

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

37

6 Data Section

Strategies by Business
Growth Businesses
Urban Development Business

Growth Businesses ~Urban Development Business~
Invigorate society and ensure
growth of the Group throughhigh value added businesses

Masanori Kozuma
Director, Urban Development Business
Division

We aim to generate growth for the Kyuden Group and invigorate local communities
and society through our urban development projects both in Japan, particularly in
Kyushu and overseas. To do that, we must increase our earning power.
Optimizing assets and the business portfolio is indispensable for growing thebusiness. In addition to leveraging energy and digital technology, it is also important
to develop high value added businesses by strengthening branding.
Developing human capital and the organization is the most important to achievethat. We will not only strengthen the specialized skills and practical capabilitiesof each employee, but also focus on creating a lively workplace climate in which
employees can feel both personal and organizational growth, as well as theircontribution to society.
We will also continue to be thoroughly market-oriented, ascertain customer
problems and needs and changes in society and the market, and quickly respond.
Finally, aligning with my own perspective on work, we will continue to take on thechallenge of creating businesses that bring happiness to people by drawing out theknowledge that we and trusted partners possess.

■ Vision for the Future,· We will increase earnings both in Japan and overseas by expanding the Urban Development Business in Kyuden Group s own unique way thatmakes use of energy and digital technology.
· Through our business, we will contribute to the sustainable development of local communities and society, which includes increasing the numberof visitors to Kyushu, creating activity and employment, promoting decarbonization, adopting smart technology in society, and offering safe andpeaceful lifestyles.

■ FY2022 Assessment and Progress· Posted ordinary income of ¥3.2 billion (unchanged YoY) for various reasons,
including an increase in real estate leasing earnings

Ordinary Income· Promoted investments in promising assets and areas such as the logistics
facilities development business in the Kyushu region and overseas urban
development business in addition to expanding our office leasing andcondominium businesses(Billions of Yen)
5

3.2

3.2

2021

2022

2025

2030

■ Strengths
Relationships That Extend over a Broad Area
· Possess extensive relationships with companies, local governments, universities, economic organizations, and similar organizations, particularly
those in Kyushu· Boast a customer base that extends throughout Kyushu
Specialized Skills Related to Energy and ICT and the Collective Strength of the Kyuden Group· Possess human capital with specialized skills related to promoting renewable energy and electrification, building smart infrastructure, andsimilar issues· Can provide diverse products and services by marshaling the knowledge and expertise accumulated through the business activities of the
Kyuden Group over the past seventy years

Main Projects

Project to utilize the former Fukuoka City fruit and vegetable market site (LaLaport Fukuoka)(Began operation in April 2022)(FY)

Kumamoto Airport privatized operations business (new passenger terminal building)(Opened for public use in March 2023)

Development of ESG-friendly rental housing in southern USA(Joined in May 2022)

Fukuoka Kasuya-machi Logistics Center project(Plan to begin operation in August 2024)

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

Strategies by Business
Growth Businesses
Urban Development Business■ Business Environment■ Business Strategies

Opportunities

Build a profitable, stable portfolio· Growing need for environmentallyfriendly and efficient energy as theworld shifts to decarbonization· Population concentration in major
cities and rebirth of regional cities· Diverse needs for homes andlifestyles and acceleration of services
that leverage digital technology· Diversification of work styles, flexible
work styles, and use of diverse
human capital· We will categorize businesses into one of three types depending on profitability (long-term businesses, quick turnover projects, and services) and build a portfolio that balances profitability andstability and complements the various distinguishing characteristics of the three types.
- Long-term businesses provide a stable earnings base, and we will conduct development projects primarily in Kyushu.
- Quick turnover projects contribute to faster growth, and we will strengthen and expand the overseas urban development business and condominium business, the core of these businesses.
- For services, we will quickly launch an asset management business, establish a self-sustaining investment cycle based on such products as setting up a privately placed REIT fund, and acquire
management fees.

Expand businesses which provide high added value that only the Kyuden Group can offer by making use of energy and digital technology· We will move forward with development that contributes to a decarbonized society, such as improving energy efficiency and lowering the carbon intensity of energy used.
· We will promote area management and urban development that leverage diverse smart services.
· We will ascertain changes over time and boldly take on challenges in new fields.

Build a robust organization· In addition to securing diverse human capital, we will increase the specialized skills of each employee through our businesses and build a community of Urban Development Business professionals.
· With a transformation-oriented mindset, including the use of digital technology, we will develop businesses that function quickly.
· We will create fulfilling workplaces in which employees can experience both personal and organizational growth, as well as their contributions to society.

Risks· Shrinking and aging populationin Japan and decline of local
communities■ Efforts to Create Corporate Value· Progressing global warming and riskof natural disasters

1) Maximize short-term
opportunities· Rising material prices

Related pages P04

P62

Main relevant materiality· Strengthen and expand the overseas Urban Development Business and condominium businessCo-creating a Smart and Vibrant Society· High value added urban development through decarbonization and DX· Establish asset management business· Build a robust organization and develop professional human capital

Leading the Way toward a Decarbonized Society· Diversification of assets and areas from the perspective of spreading business risks· Establish a cycle of asset sell-off and reinvestment through the promotion of asset management businessCo-creating a Smart and Vibrant Society(Increase profit)

2) Expand medium tolong-term opportunities(Increase growth rate (future
growth expectations))

3) Reduce risk
(Lower the cost of capital)

Corporate value(economic value)=

IncomeCost of capital

Co-creating a Smart and Vibrant Society
Promoting Growth, Success, and Diversity of Human CapitalStrengthening Governance(1) Maximize short-term opportunities− Growth rate

Efforts to address materiality(2) Expand medium to(3) Reduce
long-term opportunities
risk

38

KYUDEN
GROUP REPORTINTEGRATEDKYUDEN GROUPINTEGRATED
2023 REPORT 2023

Chapter4

Creating Value through Business

CONTENTS
Toward Sustainable Enhancement of Corporate Value
Growth through Achieving Carbon Neutrality ................... 42[Leading the Way toward a Decarbonized Society]
Lowering the Carbon Intensity of and Decarbonizing
Energy Sources ........................................................ 43[Implementing Continuous Improvements
in Energy Services]
Stable Supply of Energy ........................................... 59
Affordable Energy .................................................... 61
Solutions Based Around Energy Services .................... 61

Promotion of Electrification ........................................ 47[Co-creating a Smart and Vibrant Society]

Promotion of Energy Conservation .............................. 48

Realizing a Smart Society ......................................... 62

Energy Policy Recommendations and Involvement ........ 48

Creating Safe, Secure and Comfortable Spaces to Live ... 62

Reduction of Environmental Impact ............................ 49

Regional Vitalization ................................................. 63

Disclosure Based on the TNFD Recommendations(Beta Version) ......................................................... 50
Initiatives Based on the TCFD Recommendations .......... 55

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

40

Creating Value through Business

Creating Value through BusinessCorporate Value Enhancement Model
The Kyuden Group has incorporated its materiality initiatives into its Medium-term ESG Promotion Plan as a concrete action plan it issteadily advancing. The Group will create social and economic value through its business under three of these challenges: “leading theway toward a decarbonized society,” “implementing continuous improvements in energy services,” and “co-creating a smart and vibrantsociety.”■ Medium-term ESG Promotion Plan
Materiality

Key
Issue

Corporate value(economic value)=(1) Maximize short-term opportunities

IncomeCost of capital

Efforts to address materiality(2) Expand medium to(3) Reduce
long-term opportunities
risk− Growth rate

<2050 target> Achievement of to net zero GHG emissions throughout the supply chain / contribution to reduction of GHG emissions in society: Help achieve a 100% electrification rate for the household and commercial sectors in Kyushu

Issue

FY2023 Targets

Major Action Plans[Japan]· Ensure start to operation of ongoing projects· Examine development of solar power generation systems at the sitesof old power plants[Overseas]· Consider investment in renewable energy development companies
as development platforms· Promote joint development with Group companies

Impact(1)〇

Steadily develop renewable energy—Development volume of renewable energy : 5 GW
(Japan and overseas)· New development volume: 136 MW· Finalized development projects: 3.16 GW

Maximum utilization of nuclear power
generation

Continuation of safe and stable operation of nuclear power
plants— Zero unplanned outages· Zero unplanned outages· Improvement of utilization rate
—Shortened regular inspection periods, etc.

· Faithfully conduct daily inspections, periodic operator’s inspections, etc.
· Continuation of “polite dialogue” and “active dissemination of
information” concerning nuclear power business〇〇

Carbon reduction for thermal power
generation· Achieve the Act on Rationalizing Energy Use (Energy
Conservation Act) benchmark indicators— Indicator A*3 : 1.0 or more
— Indicator B*4 : 44.3％ or more
— Coal only indicator: 43.0% or higher· Development of hydrogen (1%) and ammonia (20%)
co-firing technologies· Indicator A: 0.95 or more
· Indicator B: 41.44% or more
· Coal only indicator: 41.15% or more
· Investigate and examine hydrogen/ammonia co-firing
technologies· Implement performance management for units and systematic repair
and improvement work at each power plant· Establish a system with power plants or manufacturers, identify issues
and conduct feasibility studies and examinations〇

Advancing transmission anddistribution network

Technological research and development for moresophisticated network operation ahead of an increase in
the adoption of renewable energy

Responding to difficulties in maintaining proper voltage anddeveloping systems to maximize the use of facility capacity· Verify optimal control of multiple voltage regulators on the same
distribution line
· Develop a grid congestion management system for early interconnectionof renewable energy and maximum utilization of transmission capacity(basic design)

Household and commercial

Contribute to the electrification rate of Kyushu— Household: 70% (incremental increase: 1.5 TWh)
— Commercial: 60% (incremental increase: 1.6 TWh)

Steadily implement sales activities that promote electrification
to increase the rate by 2030

· Expand mass PR using TV commercials and online advertisements· Expand and enhance physical contact points (holding events, etc.) anddigital contact points (strengthening online presence) to expand
customer contact points· Promote electrification through individualized proposals to medical,
welfare, school lunch centers, etc.
· Proactively introduce all-electrification in real estate development projects

Transportation

Replacement of company vehicles with EVs— Percentage: 100% replacement

No. of EVs newly deployed: 200
Replace steadily with EVs according to plans
Percentage of company vehicles replaced with EVs: 25% (544 of 2,185)

Regional energy

Early creation of regional energy system business model toensure optimal management and control of energy

Steadily examine potential locations for demonstration· Prepare for pilot tests and evaluation after system installation· Examine potential locations for demonstration

Energy Policy Recommendations
and Involvement

Establish a system that contributes to both decreases incarbon intensity and decarbonization of power sources,
and stable power supply· Undertake review on the introduction of specific measures
to meet necessary supply· Consider the direction of our future power supply portfolio· Continue to appeal to the Japanese government regarding the design ofthe electricity trading market and other systems· Consider the direction of our power supply portfolio based on scenarios
for the future

Promotion of Energy Conservation

Promotion of energy-saving measures to achieve carbon
neutrality

Promotion of energy-saving diagnoses to reduce CO2 andsave costs in line with customers’ needs· Propose detailed energy-saving measures through measurement ofenergy usage and surveys on facility usage· Introduce power saving/energy conservation methods on our website
and through energy conservation workshops, etc.

Promotion of Electrification

Leading the Way toward a Decarbonized Society

Lowering the Carbon Intensity of and Decarbonizing Energy Sources

Shifting our main power source
to renewable energy

Medium-term Targets(Items for which no year is specified are FY2030 targets)*Excluding vehicles that cannot be replaced with EVs

Impacts: (1) Maximize short-term opportunities (increase income), (2) Expand medium to long-term opportunities (increase growth rate (future growth expectations)), (3) Reduce risk (lower the cost of capital)

(2)

〇
〇

(3)

FY2022 Results

Scope of
Performance
Aggregation· New development volume:
58 MW· Finalized development projects:
3.02 GW—

Zero unplanned outages—· Indicator A: 0.98
· Indicator B: 42.83%· Coal only indicator: 41.56％

*2

〇

〇
〇

〇
〇

〇
〇

Start of operation of economic
output control system

—

—

〇

Incremental increase in electricity
volume— Household: 120 GWh— Commercial: 100 GWh(See P47 for the cumulative
performance)〇

No. of EVs newly deployed: 95

*1

〇
〇

Undertook reviews and madeproposals at candidate pilot test sites—〇· Made steady appeals to theJapanese government· Calculated and evaluated the supplydemand balance in 2030—

No. of energy-saving measureproposals: 109

—

〇

〇
〇
〇

*1: Kyushu EP and Kyushu T&D *2: Kyushu EP alone*3: Achievement rate of power generation efficiency performance for each fuel type relative to target values*4: Total power generation efficiency of thermal power after ensuring consistency with the composition of power sources in the energy mix

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

41

6 Data Section

Creating Value through Business■ Medium-term ESG Promotion Plan
Materiality

Key
Issue

Issue

Medium-term Targets(Items for which no year is specified are FY2030 targets)

FY2023 Targets

Major Action Plans

Reduction of Environmental Impact

Leading the Way toward a Decarbonized Society

Establishment of a circular society· Recycling rate of waste other than coal ash: 98% or higher(waste plastic 100%)· Green procurement rate: 99% or higher (office supplies)· Recycling rate of waste other than coal ash: 98% or higher(waste plastic 90%)
· Green procurement rate: 97% or higher (office supplies)· Improve operational efficiency and promote proper management throughjoint collection or utilization of electronic manifests· Conduct pilot tests at model sites for advanced waste plastic recycling· Conduct educational activities related to the promotion of green
procurement

Protection of regional environments

Water usage per employee: Less than the previous fiscal year
every year

Water usage per employee: Less than the previous year
(FY2022: 27 m³/person)

Ensure water-conservation-conscious behavior

Collaborating with society(biodiversity conservation)

Minimize the impact of our business activities on the ecosystem

Acquisition of certification of company-owned forests as places
that contribute to biodiversity conservation

Promotion of environmental management

Violations of law and regulations: Zero

Violations of law and regulations: Zero

OthersPromotion of environment-related business

Establishment of a business model for the woodland J-credit
business· Ensure implementation of conservation measures in development andexecution (construction and service) stages· Acquire certification of company-owned forests as places that contributeto biodiversity conservation as recognized by the Japanese government· Review of information disclosure in line with the TNFD Framework
Disseminate and share information on revisions to environmental laws
and regulations as appropriate· Provide support to Group companies for the self-sufficiency andexpansion of the woodland J-credit business· Provide ongoing coordination for the efficient and effective development
and proposal of woodland-related services· Gather a wide range of information on overseas woodland investment
projects and undertake a cross-departmental review

Impact
(1)

(2)

(3)
〇
〇

〇

〇

〇

Implementing Continuous Improvements
in Energy Services
Co-creating a Smart and Vibrant Society· Waste other than coal ash:
Expected to achieve· Waste plastic: Expected to achieve· Green procurement rate: Approx. 95%*

Water usage per employee:
27 m³/employee*

Appropriate environmental surveys
of existing power supply sites—

Violations of law and regulations: Zero—

Provide support to Hisayama Town,
Kusu Town, and Kumamoto Prefecture(6 municipalities) for the creation of
J-credit—· No. of public accidents involving
electric shocks: Zero
· Overseas equity output: 2.84 GW—

Reduction of power generation costs—

Total amount of electricity sold:96 TWh (Domestic Electricity Business)

—

—

—

· Establish a joint implementation systemwith the Kyushu Economic Federation anddefine business areas· Expand the scale and scope of projects
through collaboration with local
communities—

Participation in urban development
projects in the Kyushu area: 1

—

〇
〇
〇
〇
〇
〇

· Power outages: 25.4 MWh or less (average of past 5 years)· No. of public accidents involving electric shocks: Zero
· Overseas equity output: 2.88 GW· Ensure efficient patrols and inspections to reduce the amount of power
outages, and maintenance through effective facility countermeasures,
tree trimming, etc.
· Foster individual safety awareness and ensure safety behavior incooperation with business partners to eliminate serious accidents· Focus on the development of projects that can be expected to contributeto profits at an early stage

Affordable Energy

Industry-leading price competitiveness

Reduction of power generation costs· Improve maintenance efficiency· Expand procurement of low-quality coal and its procurement sourcesand examine blending businesses

Solutions Based Around Energy Services

Total amount of electricity sold: 120 TWh

Increase in sales by maximizing supply capacity· Non-discriminatory wholesale sales both domestically and internationally 〇· Conduct sales to maximize profits within the scope of supply capacity
〇

〇
〇
〇

〇

Business model reform, business creation, etc.

— Promote co-creation and collaboration with startups and othercompanies from different industries (e.g., Kyuden Open Innovation
Program “Inspiration and Co-Creation”)— Create new businesses and services utilizing our strengths andresources (e.g., smart meter data analysis)〇

Realizing a Smart Society· Create new businesses— Consideration of new businesses, new services, andcollaboration with other companies: 10— Creation of new businesses, new services, andcollaboration with other companies: 2

〇

〇

〇

Regional Vitalization(regional and local development)

Sustainable development of the region and society— Creation of new industries and markets through projects
to create industry· Formulate a concrete business model— Set budget, area, collaborators, and other conditions· Expand the scale and scope of business through collaboration
with local communities· Identify areas for implementation and collaborating companies· Expand and create new businesses and services through collaboration
with local communities (contribution to the expansion of the Group’s
overall profits)

Creating Safe, Secure andComfortable Spaces to Live

Sustainable development of the region and society— Urban development projects in the Kyushu area
Participation: 10 (1 per year) or more projects (cumulative
total to FY2030)

Participation in urban development projects in the Kyushu area:
1 or more projects

Develop projects that contribute to increasing the number of visitors to
Kyushu, revitalize local communities, create jobs and make safe andsecure communities (expansion of offices and residents, urban
development, operation of airports, etc.)

Impacts: (1) Maximize short-term opportunities (increase income), (2) Expand medium to long-term opportunities (increase growth rate (future growth expectations)), (3) Reduce risk (lower the cost of capital)

Scope of
Performance
Aggregation〇· Continuous stable supply— Average duration of power outages per household:
Keep at a world-class level— No. of public accidents involving electric shocks: Zero
· Expansion of development overseas— Overseas equity output: 5 GW

Stable Supply of Energy

FY2022 Results

〇

〇
〇
〇

〇
〇

〇

〇

*: Kyushu EP and Kyushu T&D

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

42

Growth through Achieving
Carbon Neutrality

The Kyuden Group boasts an industry leading ratio of zero-emission power sources due to the wider adoption of renewable energy and the safe and stable
operation of nuclear power. Having set ambitious GHG emission reduction targets for the future, we are promoting information disclosure on strategies to achievethese targets, along with progress made toward achieving these targets. These initiatives have earned us high praise from external bodies, and we have been using
our strength, that is, our high ratio of zero-emission power sources, in wholesale market non-fossil value trading. Furthermore, the Kyuden Group is promoting
green transition finance to support its efforts towards carbon neutrality. P46 Going forward, we will accelerate initiatives toward positioning renewable energy
as a primary power source by integrating the Renewable Energy Business throughout the Kyuden Group. Taking into account the government's policy promotion
regarding GX, the Kyuden Group will work on achieving carbon neutrality and growth concurrently.

Toward Sustainable Enhancement of Corporate Value

Growth through Achieving
Carbon Neutrality

Industry Leading Ratio of Zero-emission Power Sources
Along with positioning renewable energy asa primary power source by promoting its
development through a united effort acrossthe Group, the Kyuden Group is proud to havean industry leading ratio of zero-emission
power sources through maximizing the useof nuclear power with safety as a priority andthe understanding of local communities as aprerequisite.

Integrating the Renewable Energy Business■ Trends in Kyushu Electric Power’s ratio of zero-emission or FIT energy sources

*

55%

58%

2018

2019

49%

55%

2020

2021

■ Renewable energy(excl. FIT)
■ FIT electricity■ Nuclear power43%

By integrating the Renewable Energy Business of Kyushu EP, Kyuden Mirai Energy will become the only producer in Japan topossess all five main renewable energy sources, as well as a nationwide leader in capacity of held renewable energy facilities.
Through this integration, we will make the renewable energy a core business of the Kyuden Group. We will achieve this byaccelerating initiatives aimed at positioning renewable energy as a primary power source, while at the same time meetingcustomers’ and society’s extensive need for renewable energy and taking on the challenge of creating new value.
[Concept for integration]

2022

Kyushu Electric Power

Ratio of zero-emission or FIT energy sources making up the amount of electricity generated and received by Kyushu EP* is approximately 40 to 60%(FY2018-2022 performance)

Nuclear power(Maximal use)

*Ratio includes energy produced and purchased by Kyushu EP and represents the value before Non-Fossil Certificate trading
Note: For amounts for which Non-Fossil Certificates were not used, there is no value for renewable energy or zero-CO2-emission energy sources, and so these are counted
as national average CO2 emissions for electricity production, including that generated from fossil fuels.

External assessments on low-carbon and decarbonization initiatives
Targetsetting

We were the first major energy provider in Japan to be certified under the Science Based Targets(SBT) initiative for our GHG emissions reduction targets*, which take the reduction reference of the
Kyuden Group’s 2030 management (environmental) targets into accountInformation
disclosure

Selected by two of the GPIF’s domestic asset managers for the “Excellent TCFD Disclosure” survey[This year’s disclosure contents are on P55-58 ]Received a leadership level of A- on climate change from the CDP for 2022
Selected for Supplier Engagement Leaderboard* · The Kyuden Group will reduce Scope 1 & 2 related GHG emissions by 47% on the basis of electric power (kWh) between FY2020 and FY2030.
· The Kyuden Group will reduce Scope 1 & 3 GHG emissions attributed to sold electric power by 47% on the basis of electric power (kWh) in the same period.
· In respect of Scope 3, the Kyuden Group will reduce GHG emissions due to energy-related activities and usage of sold products from among GHG emissions not
attributed to sold electric power by a total amount of 25% in the same period.

Non-fossil value trading
Kyushu EP, which has a high ratio of zero-emission power sources, has seenfavorable results from selling these on the market and through bilateral trade(to the tune of several billion to ten billion yen annually) while also backing
other retail electricity utilities in achieving their goals set forth in the Act on
Sophisticated Methods of Energy Supply Structures.
Income from selling Non-Fossil Certificates will be used for investments inthe development (including initial surveys) and replacement of renewable energy(non-FIT power sources), facility renovation work, and the implementation ofsafety measures at nuclear power plants in order to maintain and expand zeroemission power sources.

■ Trading scheme
Achieve carbon neutrality

Non-fossil power sources(renewable energy/nuclear power)
Investments(maintenance/expansion)Powerproducers

Non-fossil
value
IncomeRetailelectricity
utilities

Kyushu Transmission andDistribution
Transmission & Distribution(Upgrading networks)

Sales(Promotion ofelectrification)

Thermal power()

Examiningcarbon-free fuels

Renewable
Energy Business(Hydroelectric +geothermal power)

Kyushu Electric
Power
Renewable Energy
Business(Hydroelectric +geothermal power)

Kyuden Mirai
Renewable Energy
Business(Each type of renewableenergy source)

Anticipatedeffects due tointegration∙ Speeding up decision
making∙ Acquiring management
resources∙ Strengthening ourbusiness foundations∙ Enhancing corporate
value

Further strengthening and expansion through integration
Positioning as a core business

Balancing the Achievement of Carbon Neutrality with Growth
Promotion of GX and growth of the Kyuden Group
Japan has been promoting GX policies aimed at achieving carbon neutrality by 2050, including the establishment of the GX Promotion
Act, which stipulates matters such as issuing GX economy transition bonds on a scale of ¥20 trillion and introducing growth-oriented
carbon pricing, and the GX Decarbonization Power Supply Act, which incorporates promoting the adoption of renewable energy as muchas possible in harmony with local communities and using nuclear power with ensuring safety a major prerequisite.
Through its participation in the GX League, Kyushu EP will work together with stakeholders, including participating companies,
to contribute as much as possible to the formation of market rules and the creation of business opportunities aimed at reducing
greenhouse gas emissions in Japan.
In addition, social interest in GX and low-carbon power supply needs are both rising. In the Kyushu region, which is well supplied withzero-emission energy sources, there have been efforts to make locations, such as data centers and semi-conductor plants, more active.
Considering the needs of our customers and society, the Group will contribute to the revitalization and decarbonization of Kyushu
region, and will achieve sustainable growth of Kyuden Group by responding on two fronts: decarbonization of power sources andpromotion of electrification.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

43

6 Data Section

Leading the Way towarda Decarbonized Society[Leading the Way toward a Decarbonized Society]

Lowering the Carbon Intensity of and Decarbonizing Energy Sources■ Positioning Renewable Energy as a Primary Power Source[Target for renewable energy developed in Japan and overseas: 4,000 MW by 2025, 5,000 MW by 2030]
The Kyuden Group has developed approximately 2,610 MW of renewable energy to date. We will develop
geothermal and hydroelectric power projects, which are where the Group’s strengths lie, as well as expand
offshore wind power, biomass, and other projects that have great potential for adoption, to position renewableenergy as a primary power source.
■ Renewable energy developed [As of the end of FY2022, including overseas]

Solar: 94 MW

Wind: 207 MW

Hydroelectric: 1,295 MW(excl. pumped-storage generation)

Geothermal Power
Geothermal power has been developed over many years.
Domestic facilities owned by the Kyuden Group, have a capacityof approximately 220 MW, which makes up about 42% of thecapacity of facilities nationwide. This includes one of the country’s
largest geothermal power plant Hatchoubaru. We are leveraging
accumulated technologies to further new development not only
in Kyushu, but also in Japan and overseas. Moreover, we areparticipating in the Sarulla Geothermal IPP* project (approx. 330
MW) in Indonesia, which is of the largest geothermal projects inthe world.

Geothermal: 554 MW

Biomass: 457 MW■ Geothermal power plants in Japan(MW output as of March 31, 2021)
Kyuden Group

313

223
(42%)

(58%)

Source: Compiled based on “The Current State and Trendsof Geothermal Power Generation” published by the
Thermal and Nuclear Power Engineering Society* Independent Power Producer. Operators that solely generate electricity forwholesale to electric utilities

Hydroelectric PowerWe also have a long track record of developing hydroelectric
power projects, including the Koyamada Power Plant (Kagoshima
Prefecture), the oldest power plant in Kyushu, which was built
in 1898, and Kamishiiba Power Plant (Miyazaki Prefecture), thefirst power plant in Japan to feature a full-scale arch dam, which
was built in 1955. We are currently working to improve output
and power generation capacity by developing new projects thatmake effective use of untapped energies, along with replacing(updating) existing facilities.

Other companies

Kamishiiba Power Plant

Wind PowerThe Kyuden Group is proactively working to leverage its technologies
and expertise accumulated to date in order to expand the adoption of
not only onshore, but also offshore wind power generation.
Kyuden Mirai Energy has formed a consortium with ElectricPower Development Co., Ltd. (J-POWER), Hokutaku Co., Ltd., Saibu
Gas Co., Ltd., and Kyudenko Corporation. As a member of thisconsortium, we are making progress with Japan’s first large-scale
offshore wind power generation project, at Hibikinada, Kitakyushu
City, Fukuoka Prefecture, aiming to begin commercial operation in
FY2025 (construction commenced in March 2023).

Target waters(Shirashima)
Area C (4 units)

Area A (15 units)

Area B (4 units)(Ainoshima)

Area D (2 units)

Hibiki Wind Energy
construction area
Work yard (wind turbine
foundation pile)

Offshore wind power construction
port (wind turbine assembly)

Implementation area of Kitakyushu Hibikinada Offshore
Wind Farm Project

Biomass
After confirming that with biomass power generation, which generates fuel from unused wood and similar,
fuel is produced in a sustainable manner, we have been working on developing biomass with Kyuden Mirai
Energy at the center.
In March 2023, we began commercial operation of the Ishikari Bay New Port Biomass Power Plant,
funded by Kyuden Mirai Energy and others. The power plant makes fuel from wood pellets and palm kernel
shells (PKS), generating approx. 52 MW of electric power.
Tidal
Kyuden Mirai Energy is working on a pilot project to demonstrate Japan’s first 1MW-class large-scale tidal
power generation facility off the coast of Goto, Nagasaki Prefecture.
The project utilizes the results of the 0.5MW-class pilot that Kyuden Mirai Energy conducted in thesame area in FY2021, aiming to establish a business model that will lead to the technology’s practical andcommercial application by enhancing the efficiency of tidal stream turbines. Through this project, we areaiming for the early commercialization of tidal power generation in Japan.
In addition, Kyuden Mirai Energy and Kyuden International are participating in a pilot project todemonstrate small-scale tidal power generation facilities (7,000W × 4 bases) off the coast of Singapore. By
switching the energy provided to Raffles Lighthouse from diesel to tidal power, we will not only contributeto decarbonization in the maritime andharbor sectors, but will also make use of
the knowledge obtained through this pilot
Raffles Lighthouse
to expand the future distributed powerbusiness overseas.
Created based on Google Maps

Development site

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

44

6 Data Section

Leading the Way towarda Decarbonized Society■ Maximizing Use of Nuclear Power Generation■ Lowering the Carbon Intensity of Thermal PowerAs a comprehensively advantageous power source in curbing CO2 emissions and energy security, we
continue to make maximum use of nuclear power based on the fundamental prerequisite that safety isensured.

Thermal power plays an important role in making up for fluctuations
in output that come with the increased adoption of renewableenergy. We are therefore continually working to maintain andimprove the overall efficiency of thermal power generation as ameans of curbing our fuel consumption and CO2 emissions.
Going forward, we will continue to take steps to reduce ourenvironmental impact, decommissioning or scheduling shutdownsof our aging thermal power plants, aiming to fade out inefficientcoal-fired thermal power plants by 2030, and studying the use ofhydrogen and ammonia as fuels for power generation given they do
not produce CO2 during combustion.

■ Nuclear power plants (as of March 31, 2023)
Station Name

OutputStart of Operation

Genkai

Units 3 & 4,
1,180 MW each

Unit 3: Mar. 1994
Unit 4: Jul. 1997

Sendai

Units 1 & 2
890 MW each

Unit 1: Jul. 1984
Unit 2: Nov. 1985

Type
Pressurized
water
reactor(PWR)

Note: Operations at Genkai Units 1 & 2 ended in April 2015 and April 2019,respectively

Genkai Nuclear Power Plant(Saga Prefecture)

Sendai Nuclear Power Plant(Kagoshima Prefecture)

Maintaining safe, stable, and highly utilized nuclear power operations
In light of ensuring the stable supply of energy over the long term and responding to issues facing the
global environment, Kyushu EP makes the most of nuclear power, an energy source that does not emit CO2
during power generation, with ensuring safety a major prerequisite. We will work on initiatives that improvethe utilization rate that are assuredly safe.
■ Effect of nuclear power generation on reducing CO2 emissions
8 million
tons*1

33.2
million tons*3

Effect of
nuclearpower
Factorsother than
nuclearpower■ Nuclear power plant utilization rate (%)

Reference: Comparison with case in which all
nuclear power plants are shut down (FY2013)12.9
milliontons*2

52.1
million tons

33.2
million tons*3

Kyushu EP

91.4

Effect of
nuclearpower
Factorsother than
nuclear
power

82.0
73.1
57.7 *2

Results for
FY2013 (Kyuden)

Results for
FY2022 (Kyuden)*1: FY2021 CO2 emissions coefficient (adjusted) used: 0.382kg-CO2/kWh*2: FY2013 CO2 emissions coefficient (adjusted) used: 0.617kg-CO2/kWh*3: FY2022 results are provisional; the government is set to announce definitive figuresin December

We are making the following efforts to establish co-firing
technologies that use 1% hydrogen and 20% ammonia by FY2030.
· Investigating the receiving, storage, and delivery facilities
needed for the fuels based on their properties· Conducting tests for safe and stable combustion· Reviewing environmental measures to accompany fuel changes
In April 2023, we began testing co-firing of ammonia at Reihoku
Power Plant, which was a first for Kyushu EP. We will continue toproactively work toward establishing co-firing technologies in future.

Power generation end
(%)

43

44.8

44.8

43.3

43.3

45.3

44.5

44.1
43.4

42.8

42

2016

2017

43.3

42.9

42.1

41
0

45.1

44.7

45
44

Power transmission end

2018

2019

2020

2021

2022 (FY)*Thermal efficiency has been calculated based on lower heating values■ Hydrogen and ammonia co-firing processes
Receipt, storage, delivery

Safe and stable combustion

Environmental
countermeasures

Coal
Exhaust gas
Ammonia

CO2-freeammonia

Coal boiler

Smokestack

LNG
LNG
HydrogenExhaust gas
CO2-freehydrogenGas turbine

Smokestack

62.4 *1
31.9
36.7

20.7

Results for
FY2022 (Kyuden)

Japan average

Studying and establishing hydrogen/ammonia
co-firing technologies■Thermal efficiency trends

0.0
0.0

2.5

5.0

2014

2015

2016

19.3

20.6

2018

2019

13.4

9.1

2017

24.4

2020

2021

Developing hydrogen and ammonia fuel supply chains
19.3

2022

(FY)

The drops in utilization rate are due to equipment shutdowns forregular inspections following works to install SSF*1: at Sendai Units 1 & 2*2: at Genkai Units 3 & 4

Nuclear power’s contribution to earnings
Nuclear power is a power source that can generate electricity at any time of day, regardless of weather.
This not only helps secure stable revenue, but can also generate income from the non-fossil value trading
market because as with renewable energy, it does not emit CO2 during operation.
Even with safety measures and other costs taken into account, nuclear power is competitive from a
medium to long-term perspective, and our investment decisions are made comprehensively based on suchconsiderations.

In preparation for the full-scale adoption of hydrogen and ammonia as CO2-free fuels, we are building collaborative
relationships and conducting joint studies together with companies across an array of fields both in Japan and overseas
in an aim to develop a stable and economical supply chain, upstream to downstream, as soon as possible.

VOICE Steadily advancing toward establishing ammonia co-firing
technologies through continuous efforts

The ammonia co-firing testing at Reihoku Power Plant was a first for the Group. Since actual examples of suchtesting within Japan are limited, we have been examining each issue raised through repeated discussions
with plant personnel. While it was very difficult to anticipate the potential impacts that co-firing could have on
the environment and our facilities, I felt a sense of accomplishment and satisfaction when we began actually
carrying out the co-firing and were able to confirm the condition of the flames and temperature changes using
a thermal imaging camera.
Initiatives aimed at achieving carbon neutrality targets have only just begun, and there are many difficult
issues in the way, however we will continue to take on the challenge of these initiatives so that we can help
achieve carbon neutrality.

Mario Ishibashi
Thermal Power Division
Reihoku Power Plant
Operation GroupKyushu Electric PowerKYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

45

Leading the Way towarda Decarbonized Society■ Upgrading the Transmission and Distribution Network
In order to fully tap Kyushu’s renewable energy potential while at the same time balance the large-scale adoptionof renewable energy with maintaining electricity quality, we are working to expand interconnections for renewableenergy sources and improve our network utilization rate.

Maximizing the introduction of renewable energy
Renewable energy power generation facilities, solar power in particular, are being introduced in Kyushu at a
rapid pace. Against this backdrop, Kyushu T&D is working to maintain stable supply and maximize the amountof renewable energy it receives on its network through flexible thermal power operations, the use of pumpedstorage hydroelectric power plants and large-capacity battery storage, and more effective use of the existinggrid.
■ Panoramic view of the Buzen Battery Storage andAs one such initiative, Kyushu T&D was
Transformer Station, equipped with a large capacity
commissioned for a government pilot project to installenergy storage system
the Buzen Battery Storage and Transformer Station,
NAS battery containers
PCS storage package
Total: 252 units
Output: 200 kW/unit
which includes a large-capacity energy storage system.
Total output: 50.4 MW
We are working to improve the balance between
supply and demand by leveraging the knowledge
and technology acquired through this pilot project toeffectively operate this large-capacity energy storage
system in accordance with fluctuating solar and wind
6 kV power-receiving facility storage package
power generation.

Technological development business for reducing output control of renewable energy
Kyushu T&D has been commissioned as part of the government’s Technological Development Project to Reduce
Renewable Energy Output Control to construct a transfer interception system to immediately shut down multiple
power stations should an incident occur on the Kanmon link line to maintain balance between supply anddemand in the Kyushu area.
This system will make it possible to expand the transmission capacity of renewable energy along the Kanmon
link line from Kyushu to other areas by up to■ System overview(2) Abnormal
er areas
approx. 300 MW, and it has been confirmed to be(1) Incident
signalPower to oth
occursOperational
Honshueffective in reducing output control.
interception system
Kanmonline
erconnection
int
We will leverage the knowledge and(3) Stop signal
technology acquired through this pilot project(3) Stop signal
in working toward maximizing the adoption ofWind power station
renewable energy in future.
Thermal power
stationBiomass power
stationSolar power
stationIntroduction of online proxy curtailment (economically efficient output curtailment)
In December 2022, Kyushu T&D revised its output control method for solar power stations in mainland Kyushu
to the online proxy curtailment method. This new method uses online power stations that can make actual, fine
output adjustments to further reduce output.

66/6 kV connection transformer(2 x 30 MVA units)

Adopting the Connect and Manage scheme

Online power station

Kyushu T&D has introduced the Connect and Manage scheme to make the most of the capacity of existingtransmission and substation facilities, thereby enabling us to maximize the adoption of renewable energy.
Specifically, it employs an “N-1 power system” that instantly curbs power generation in the event of single
equipment failure (N-1 failure) upon having secured enough capacity to ensure stable transmission even in suchan event. By doing so, power sources can be connectedto the network in excess of its operational capacity.
■ Utilizing available capacity through the Connect andManage scheme (illustrative image)On top of this, in January 2021, we began(MW)
introducing “non-firm connections” on the bulk powersystem that generate electricity during the hours when
Power sources connected intransmission and substation facilities are available
excess of operational capacity
thanks to the N-1 power system
Operational capacity
and curtail electricity generation when they are notsufficiently available. We have been expanding these toNon-firm connections
utilize available capacity
local power grids from April 2023.
Flow of currents throughtransmission andsubstation facilities(Time)

offline power station
Power
Proxy
curtailment
Power
generation fee
Supplementationof proxy amountPower
Buyers(Retail companies)(Power transmission
and distribution
companies)

Normal power
generationPowergeneration fee
Deduction ofproxy amount

Improving the accuracy of renewable energy output forecasts
Kyusyu T&D is working to enhance the accuracy of its renewable energy output forecasts in order to maximize
the use of renewables.
Solar radiation estimates are needed for such forecasts, and we are working to improve our precision bysubdividing our forecasting sites across Kyushu for more detailed estimates and using integrated forecasts thatincorporate multiple weather prediction models.

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

46

Leading the Way towarda Decarbonized Society■ Promoting Green and Transition Finance■ Active Development of the Overseas Business - Helping Build Sustainable Societies -Kyushu EP has been promoting green and transition finance in an aim to diversify our capital procurement
sources and better familiarize a wide range of stakeholders with the Kyuden Group’s efforts to lower carbon
intensity, decarbonize energy sources, and promote electrification to achieve carbon neutrality by 2050.
In FY2022, we became the first former general electric utility to issue a transition bond and implement atransition loan, which is the government’s first interest subsidy program.
Moving forward, we will also take steps to achieve carbon neutrality from financial angles as well.

The Kyuden Group is working on renewable energy, thermal power generation, and transmission anddistribution projects that will help lower the carbon intensity of electricity in countries and regions aroundthe world according to their needs by utilizing the technologies and know-how in the electric powerindustry that the Kyuden Group has accumulated in Japan and overseas.
Refer to P05 for overseas development areas [Overseas equity output target: 5,000 MW by 2030]■Kyushu EP transition bonds
Issue order

Issue date

First
SecondMay 24,2022

Issue
amount¥30 billion

TermInterest rate

Use of funds

5 years

0.350%¥25 billion

10 years

0.644%New investments and refinancing of existing
investments in the development of the Hibiki Power
Plant (a state-of-the-art, high-efficiency LNG-fired
power plant in Fukuoka Prefecture) and the shutdown
and decommissioning of existing thermal power plants■Transition loans (use of funds unspecified)Month and Amount ofyear of loan
loan

Period ofloan

Characteristics

November
2022

10 years∙ Uses the result-linked interest subsidy program based on the Act on Strengthening
Industrial Competitiveness (first in Japan)∙ Lowers the interest rate by up to 0.2% through government interest subsidies whenachieving set environmental targets¥50 billion

IPPs and other investment projects
We are expanding into the United States of America and the Middle
East while focusing on Asia, a market with high growth potential, andare working to identify business opportunities in Europe and Africa.
In FY2022, we expanded new initiatives such as participating in
the Group’s first power supply projects in off-grid areas in Africa andrenewable energy development projects in Southeast Asia.

We invested in PetroGreen Energy Corporation,
renewable energy development company, whichowns the Nabas Wind Power Plant in the Philippines

Overseas consulting businessIn cooperation with our own Group companies and other highly specialized partners, we conduct surveys
on the introduction of renewables and support the formulation of electricity master plans.
In FY2022, we continued with several projects that had carried over from the previous year: a projectin Cuba to create an electricity master plan aimed at improving electricity supply using storage batteries
and EMS and introducing renewable energy, in addition to a project in Kenya to reinforce the technologicalcapabilities of power transmission grids.

Entering new business domains
Fund allocation and improvements to the environment (as of March 31, 2023)

We have been expanding our business domains in recent years, taking on microgrid projects in an island
nation and a transmission and distribution project in the Middle East.

■Transition bonds fund allocation
Issue amountAmount allocated(Portion allocated to refinancing)

Unallocated funds¥55 billion¥11.9 billion¥7.4 billion¥43 billion* Amounts are shown rounded down to the nearest 100 million■Main environmental improvements including projects targeted for green and transition finance
Type of renewableenergyRenewable energy
developed (Kyuden
Group)
CO2 emissions
reduced in
FY2022*Geothermal

HydroelectricWind

Biomass

Solar

Total

Approx.
554 MW

Approx.
1,295 MW

Approx.
207 MW

Approx.
457 MW

Approx.
94 MW

Approx.
2,610 MW

Approx.
460,000 tons

Approx.
1,130,000 tons

Approx.
50,000 tons

Approx.
280,000 tons

Approx.
30,000 tons

Approx.
1.95 million tons

* FY2021 CO2 emissions coefficient (adjusted) used: 0.382 kg-CO2/kWh

TOPICSThe Subsea Transmission Project in the United Arab Emirates, implemented,
among others, by the Kyuden Group, wins the PFI Award 2022

The Subsea Transmission Project, which will be constructed and operated in the emirate of Abu Dhabi,
United Arab Emirates, and which includes Kyuden International and Kyushu T&D as participants, won the
PFI Award 2022.
This award is given by the PFI magazine*1 for the most notable project finance*2 projects of the previous
year in the global electricity sector. This project was selected as a target project for the Middle East region in
2022. The project was recognized for successfully structuring financing through large-scale project financing
for a subsea transmission project, where there had been no previous project financing for such projects.
*1: Project Finance International magazine. Dedicated to the product finance industry and is published by Thomson
Reuters*2: Method of financing by which future cash flow generated by projects is used as a resource for repayment

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

47

Leading the Way towarda Decarbonized Society

Promotion of Electrification
Combining environmentally friendly energy with the resources of the Kyuden Group, we will takeon the challenge of maximizing electrification, especially in the Kyushu area where the potential forelectrification is great, helping reduce greenhouse gas (GHG) emissions throughout society.

■ Household and Commercial Sectors
In the household sector, we are promoting the transition to allelectric homes through more events and mass marketing thatconvey the advantages of going fully electric, and engaging insales activities that seize upon various opportunities.
In terms of climate-control and hot water supply systems
for the commercial sector, we offer high-efficiency heat pumpsystems optimized for use in our customers’ facilities. We arealso promoting the adoption of electric facilities in kitchensby extensively publicizing the advantages of electric kitchensystems in terms of ease of use, hygiene, and economy.
Through these initiatives, we aim for a 100% electrification
rate in Kyushu by 2050, and we will contribute to reaching
70% in the household sector and 60% in the commercial
sector by 2030. In achieving this goal, we are aiming for total
incremental increases in power consumption of 1.5 TWh in
the household sector and 1.6 TWh in the commercial sector
between 2021 and 2030.
Incremental Increase
Performance■ Cumulative number of all-electric homes in Kyushu
Cumulative number of all-electric houses(Thousand households)
1,300
1,200
1,000
800
600
400
0

530

600

670

740

800

850

900

940

980

1,030

1,080

1,130

1,170

1,270
1,220

440

In the industrial sector, we are carrying out technical research into heat source conversion equipment such asheat pumps, while also taking on the challenge of electrification in response to heat demand across a wide rangeof temperature bands (hot water, steam, application of heat, etc.) in production processes. We also conduct onsite evaluations and reviews with our customers and provide energy conservation proposals to improve energy
use efficiency.
In the transportation sector, we aim to replace 100% of our company vehicles with EVs by 2030. We also
operate an array of businesses and services to promote the spread of EVs, including EV car sharing, charging
infrastructure expansions, and energy management through EVs.
[No. of company EVs deployed (FY2022): 95 (cumulative:16%)]

Expanding EV charging services

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (FY)

■ Contributing to the electrification rate of Kyushu
Householdsector58%

1.5
TWh
Commercial 70%
sector
48%

2013

1.6
TWh

100%

100%

60%

2050
2030
Note: Figures in parentheses indicate incremental
increase of electricity (2021-2030 total)

Sector

FY2022

Cumulative (from FY2021)

Household0.12 TWh

0.25 TWh

Commercial

0.1 TWh

0.21 TWh

Kyuden Smart Lease
No initial fees!
Pay a fixedmonthly amount!

Guarantees andinspections
with peaceof mind!

From January 2023, we began offering condominium residents
in the Tokyo metropolitan area and Fukuoka City a dedicatedEV charging device in each parking space. This service, called
PRiEV, aims to provide customers with a more comfortable,
convenient EV charging environment.
In June 2023, we concluded a business alliance agreementwith Yanase & Co., Ltd., and we have been working incooperation to introduce EVs at residences where the PRiEV
service has already been introduced or will be in the near
future.

TOPICS

Offering Kyuden Smart Lease, a service for leasing and selling electric water heaters,
storage batteries, and more
In order to contribute to realizing an everyday for ourcustomers that is safe, secure, comfortable, economic, andkind to the global environment, we have been offering Kyuden
Smart Lease, a service where customers can use electricwater heaters, IH cooking heaters, storage batteries, and otherequipment safely over the long term with (1) no initial fees,(2) free repair and regular maintenance (within the contract
period), and (3) high quality installation.

■ Industrial and Transportation Sectors

Quality set-up
that will leave
you satisfied!

Joint development of large-capacity charge-discharge equipment
for EVs with the largest output in JapanThe three companies of Kyushu EP, Kyuden Technosystems, and KYUHEN jointly
developed large-capacity charge-discharge equipment aimed at worksites, such as
businesses and local governments, that are engaged in introducing and operating
electric buses and other industrial and commercial EVs. Charge-discharge equipment
for EVs currently popular within Japan is mostly equipment used to supply power togeneral households combined with passenger use EVs with an output of 10 kW or
less. However, the charge-discharge equipment developed on this occasion has many
advantages, including (1) a discharge output of 45 kW, one of the largest in Japan, (2)capable of supplying a three-phase power load used in plants and similar facilities, (3)capable of connecting to two EVs at the same time to mutually charge and discharge
the two vehicles, and more. We will leverage these advantages to realize multipurpose
uses for EVs, thereby contributing to expanding their adoption.

Large-capacity chargedischarge equipment

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value48

6 Data Section

Leading the Way towarda Decarbonized Society

Promotion of Energy Conservation■ Promoting Carbon Neutrality in the Region
The Kyuden Group will contribute to solving local and social issues and co-create a zero-carbon society byproviding solutions in response to the collaborative needs of local governments in promoting carbon neutrality inthe region and strengthening its resilience.

Creating a regional energy system

The Kyuden Group is engaged in a project through which it supports the creation of J-Credits* using woodland
owned by local governments and other organizations, while it also creates J-Credits from company-owned
woodland.
We plan to use these J-Credits to offset CO2 emissions from the Group’s community relations activities andthe production activities of local companies.
* A scheme whereby the government certifies the amount of CO2 absorbed by woodland and the amount of CO2 emissions
reduced through use of renewable energy or energy-saving measures as credit, and through which this credit is traded

8 years(FY2021–2028)

Expected amount (total)

Approx. 1,500 t-CO2

Of which already created

200 t-CO2

6 entities in Kumamoto Prefecture(4 local governments, 2 private entities)(outsourced to a company in Kumamoto Prefecture)■ Member services offered on Kirei Life Plus
Check yourelectric bill andCheck youron the web!
usage
electric bill andusage on the web!

Check yourpast use

Checkandyourwith tablesgraphs!
past(up to24 usemonths)with tables and graphs!
(up to 24 months)

Visualize
your usage

byVisualize
day and by hour!

your usage

by day and by hour!

(*)
(*)

Get usefulGet useful
information

Prevent overuseviainformation
email!
via email!

Prevent
overusewith email

with email !
notifications
notifications!

!!

Get notified ofof
Get yournotified
optimalyour optimal
rate
rate
planplan

Kusu Town, Oita Prefecture
Preparing for project registration(Scheduled to begin from FY2023 onwards)

Kyuden-owned woodland(Yufu City, Oita Prefecture, etc.)
Creation period (scheduled)

16 years (FY2021–2036)

Creation period (scheduled)

8 years (FY2022/2023 onwards)

Expected amount (total)

Approx. 240,000 t-CO2

Expected amount (total)

Approx. 75,000 t-CO2

Of which already createdApprox. 10,000 t-CO2

Kyushu EP has been working on a DR service via its
Kyuden eco/Kirei Life Plus smartphone application. The
aim of the app is to create a system that helps customers
to conserve energy and reduce their electricity bill, cuts
Kyushu EP’s supply costs, and enables renewable energy to
be used more effectively by optimizing the supply-demandbalance through DR.

(*)(*)* Forcustomers
customers with
* For
withsmartsmartmeters
meters

キレイライフプラス
キレイライフプラス検 索 検 索Features of the Kyuden eco app
Feature 1

Feature 2

Feature 3

Earn points for

Get push notifications

Gamify saving electricity

successfully completing
challenges

when it is time to participate
in a challenge

and shifting electricity
use times* A mechanism for balancing supply and demand of electricity by adjusting electric power demand, whereby customers (thedemand side) who are signed up for one of Kyushu EP’s household plans (and have a smart meter installed) either conserve
electricity or create demand in accordance with guidance from the Company

Energy Policy Recommendations and Involvement■ Endorsement of the GX League Basic Concept
Through its participation in the GX League, Kyushu EP will demonstrate theLeague’s concept of “leadership” as it works toward achieving carbon neutrality,
and work together with stakeholders, including participating companies, tocontribute as much as possible to the formation of market rules and the creationof business opportunities aimed at reducing greenhouse gas emissions inJapan.

▼詳細はこちら▼詳細はこちら■ Demand Response (DR)* Service for Households

Project to create and utilize J-Credits through the utilization of forest resources

Hisayama Town, Fukuoka Prefecture■ Kirei Life Plus, a Members’ Site Offering Useful Information
Kyushu EP offers a number of useful services on its “Kirei
Life Plus” members’ site. Not only can members receive
email notifications on their monthly electricity costs andusage amounts, as well as check these from their PC or
smartphone, but they can also access energy conservation
rankings that compare a member’s energy use withother households and receive overuse emails that senda notification when their usage has gone over a preset
amount.

Regional energy systems have the potential ■ Illustrative image of a regional energy system
to greatly change the business model for
Creation of a zero-carbon society with local regions
our electricity businesses. These energy
systems are based in an area where the
Kyuden Group can leverage its strengths,
therefore we see this as a new opportunity
and are coordinating with local governments
and other bodies to gather information andselect a proof-of-concept field site.
Specifically, we are considering fieldsites and planning to conduct proof-ofconcept testing to acquire the technicalexpertise needed to create a regionalenergy system and build a business model.

Creation period (scheduled)

The Kyuden Group offers a wide variety of services to support the prosperous and comfortable lives of
its customers, and we are working to help reduce not only our own greenhouse gas (GHG) emissions,but those of society as a whole.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

49

Leading the Way towarda Decarbonized Society

Reduction of Environmental Impact
The Kyuden Group recognizes that as a corporate group whose operations impact the environment,
we have a responsibility to be diligent in our efforts to conserve the environment.
For this reason, we are promoting environmental management that balances business activities
with the environment across all such business activities, preserving biodiversity and establishing acircular society in order to contribute to achieving a sustainable society.

■

Activities to Establish a Sustainable Society through Maintaining andManaging Company-Owned Forests

Kyushu EP maintains and manages 4,447 hectares of company-owned forests in cooperation with Group
company Kyushu Rinsan.
Our efforts have been highly praised, and in 2005, we became the first electric power company toobtain FSC® (Forest Stewardship Council®) certification (FSC-CO18956), which certifies that woodland isbeing managed in an environmentally friendly manner. Furthermore, by maintaining and managing thesecompany-owned forests, we absorbed approximately 41,000 tons of CO2 in one year in FY2022, with about
10,000 tons of that amount going toward creating
J-Credits.
In future, we will continue striving to maintainand improve the public benefits of woodland,such as their functions as watersheds (woodlands
conserve water and stabilize river water levels), as
well as absorbers of CO2, through maintaining andmanaging company-owned forests.

■ Engaging in Environmental Activities with Local Communities
The Kyuden Mirai Foundation, established by Kyushu EP, aims to continue protecting the abundance of
nature and providing a bright future for children.
The foundation is engaged in environmental conservation activities to help protect ecosystems andlandscapes, including controlled burning across the whole Bogatsuru Marshlands area (Taketa City, Oita
Prefecture), registered as an important wetland site under the Ramsar Convention, in addition to offering
hands-on environmental education programs to raise awareness of environmental conservation amongchildren at Kyushu EP’s company-owned Kuju Kyuden Forest (Yufu City, Oita Prefecture), as well as digital
environmental education programs that utilize VR technology.
Moreover, with the aim of creating forests as bases for environmental education programs andinteractions among residents, the foundation has decided to expand the Kyuden Future Forest Projectacross the Kyushu region. This project involves working toward carbon neutrality together with children andlocal residents. As the first stage of the project, the foundation began holding afforestation activities andenvironmental education programs at Isahaya Kyuden Future Forest (Isahaya City, Nagasaki Prefecture).

Controlled burning of the Kuju Bogatsuru Marshlands

Activities to protect rare plants at the Kuju Bogatsuru
Marshlands

Environmental education programs

A company-owned forest (by Lake Yamashita in Yufu City, Oita Prefecture)■ Contribution to the 30by30 Target through Certified Conserved Areas
Kyushu EP is participating in the Ministry of the Environment’s
30by30 Alliance in order to contribute to achieving the 30by30
target*1, a global biodiversity target.
In FY2022, our company-owned forests received anassessment of “equivalent to certification” as “Certified Conserved
Areas”*2 as part of a trial scheme. In FY2023, we will continue topromote initiatives aimed at attaining certification.
*1: The 30by30 target is one of the main targets of the Kunming-Montreal Global Biodiversity Framework, which was establishedat the Conference of the Parties to the UN Convention on Biological Diversity held in December 2022. It is a worldwide
initiative that aims to designate 30% of both land and ocean as protected areas by 2030.
*2: A system whereby the Ministry of Environment certifies areas where private-sector companies are engaged in biodiversity
protection initiatives. Trials and studies of the system began in FY2022, with official certification of the system beginning in
FY2023.

TOPICS

Making the Circular Park Kyushu resource recycling center a reality―An effort to socially implement resource recycling at the former siteof the Sendai Power Plant―

The Kyuden Group is making progress with initiatives to position the site of
the Sendai Power Plant (Kagoshima Prefecture) as the base for the resource
recycling center, Circular Park Kyushu, with the aim of building a sustainable
society through the promotion of a circular economy and decarbonization.
On July 26, 2023, we established Circular Park Kyushu Co., Ltd. jointly with
Nakadai Holdings Co., Ltd. Ahead of the launch of the business in April 2024,
we will work on recycling commercial and residential waste into resources
through our resourcing business and carry out joint research and proof-ofconcept testing with the help of our network of industry partners, academic
institutions, and government bodies through our solutions business.

Scene from location agreement
signing ceremony** On July 31, 2023, we concluded a location agreement pertaining to the present project between Satsumasendai City, the location of the Sendai
Power Plant, and Circular Park Kyushu Co., Ltd. in the presence of representatives from Kagoshima Prefecture.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

50

Leading the Way towarda Decarbonized Society

Disclosure Based on the TNFD Recommendations(Beta Version)
In recent years, efforts concerning natural capital have been attracting global attention. These include the Kunming-Montreal Global
Biodiversity Framework, which is a set of new global targets related to biodiversity adopted in Canada in December 2022.
The Kyuden Group has positioned “leading the way toward a decarbonized society” as an important management issue (materiality), andalong with continuing scenario analysis and information disclosure based on TCFD recommendations from 2020 as a response to climatechange, we are also promoting initiatives aimed at “reducing environmental impact,” which include conserving biodiversity and recycling
resources.
This year, we carried out a trial analysis of risks and opportunities related to natural capital in our business activities while referencing
the Taskforce on Nature-related Financial Disclosures (TNFD) beta v.0.4 information disclosure framework and guidance aimed at electricity
utilities. In September 2023, we were the first electric power company in Japan to carry out information disclosure based on TNFD beta
v.0.4 (for details, please refer to the “Kyuden Group TNFD Report 2023 (detailed version)”).
We will continue to evaluate impacts, dependencies, and risks related to natural capital and engage in business activities that contributeto the transition toward a “nature-positive economy.” Additionally, we will continuously strive to enhance trust from our stakeholders.
The “Kyuden Group TNFD Report 2023 (detailed version)” is available on the Kyushu Electric Power website.
Homepage > IR information > Environment, society, and governance (ESG information) https://www.kyuden.co.jp/english_company_esg_environmental.html

Overview of evaluation results
In each business domain of power generation and transmission & distribution, we are managing projects strictly in compliance with laws andregulations, agreements with local bodies, and other rules, and while the impact on natural capital is mostly kept to a low level, the impact anddependency of fuel procurement sources related to natural capital were evaluated as relatively large. In respect of earthquakes, tsunamis, orother natural disasters, as a result of assuming an event that has a high likelihood of occurring, risk pertaining to nuclear power plants, which
are few in number in Japan, was evaluated as being low as countermeasures are thoroughly implemented. On the other hand, thermal power
plants, hydroelectric power plants, and power transmission facilities were evaluated as having a relatively large risk.
Financial impact arising from such risk was evaluated as large in the event that power transmission facilities, particularly in the Oita andMiyazaki areas, were damaged by a Nankai megathrust earthquake, or that regulations on coal-fired thermal power generation were tightened.
Furthermore, we evaluated that there would be a certain level of financial impact in the event that risks associated with fuel procurement
sources were to materialize, or that thermal power, hydroelectric power, or power transmission and distribution facilities were damaged.

Scope and target of the present analysis
We evaluated risks and opportunities related to natural capital in reference to the TNFD beta v.0.4 information disclosure framework and guidance
aimed at electricity utilities.
Included in the scope of evaluation from among those making up the Group’s Domestic Electricity Business were thermal power (coal, LNG),
nuclear power generation, hydroelectric power generation, geothermal power generation (Kyuden Electric Power), and the transmission anddistribution business (Kyushu T&D).
In future, we plan to make further progress in enhancing information disclosure in line with the TNFD framework. This will involve revisingcontents based on the TNFD v.1.0 framework and evaluating items outside the scope of the current evaluation, including overseas electricity
businesses and non-electricity businesses such as urban development and city planning.

Kyuden Electric Power published the “Kyuden Group TNFD Report 2023” in September 2023. This reportillustrates the Company’s approach to natural capital and biodiversity in line with the TNFD beta v.0.4
information disclosure framework.
*TNFD: Taskforce on Nature-related Financial Disclosures. An international initiative to build a framework for appropriately
assessing and disclosing risks and opportunities related to natural capital and biodiversity.

Message from the Director of the District Symbiosis Division
Kyushu’s regional economy and the lifestyles of its residents are supported by thearea’s bountiful natural capital. Without developing this aspect of Kyushu, the Kyuden
Group cannot evolve. Based on the Kyuden Group Environmental Charter, the Kyuden
Group has established Environmental Action Policies as basic medium to long-term
policies that steadily promote environmental management to balance businessactivities with the environment. Through these policies, we have been striving to
reduce environmental burden and risks linked to our business activities while at thesame time working to conserve biodiversity, in order to ensure that this abundantnatural environment survives into the future.
We have come to possess company-owned forests (4,447 ha primarily in Oita
Prefecture) as watershed forests that function to nurture ecosystems and holdwater. We use these forests as a place to grow FSC ® (Forest Stewardship Council®;
headquartered in Germany)-certified timber and hold environmental education
programs. In addition, we have been reviving the practice of controlled burning
across the entire Kuju Bogatsuru Marshlands along with local people, with the aim ofmaintaining rare ecosystems still remaining at the marshlands. Along with this, wehave been carrying out activities to remove non-native plant life threatening rare plant
ecosystems, as well as activities to protect the Kyushu azalea (the Kuju Bogatsuru
Marshlands have been registered as “Kuju Bogatsuru and Tadewara-shitsugen” under
the Ramsar Convention).
Moreover, in order to accelerate resource recycling initiatives, we established
Circular Park Kyushu Co., Ltd., based on the site of the Sendai Power Station, in Julyof this year. In future, we will work to build a sustainable society by promoting acircular economy and decarbonization. We will achieve this through liaising with local
governments and companies to recycle commercial and residential waste (resourcing
business) and carry out joint research and proof-of-concept
testing with the help of our network of industry partners,
academic institutions, and government bodies (solutions
business).
By carrying out analysis from the viewpoint of the
TNFD, such activities and other initiatives rooted in local
communities have once again been recognized as being
valuable. For this disclosure, we will continue to work toward
creating a nature-positive economic society by developing
Yoshirou Uchimura
better business activities through trial and error, while at the
Director of the District
same time, listening to all of our stakeholders’ opinions.
Symbiosis Division

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

51

Leading the Way towarda Decarbonized Society■ Kyuden Group Environmental Management and Promotion Framework

Natural Capital Governance (Including Risk Impact Management)

Board of Directors

Response system related to various environmental issues(Assessing risks and opportunities, management process)Supervise

Submit/report

Submit/report

Sustainability Promotion Committee
Stakeholders

In July 2021, we established the Sustainability Promotion Committee, chaired by the President andsupervised by the Board of Directors, to actively promote ESG initiatives.
In addition to establishing strategies and policies concerning all aspects of ESG (specifying
materiality), as well as deliberating on specific measures and managing the progress of theirimplementation, the Committee deliberates on and supervises strategies and risks related to climatechange. The Carbon Neutrality and Environment Sub-Committee, chaired by the Chief ESG officer, wasadditionally established under the Sustainability Promotion Committee, and its members deliberate on
all aspects of environmental issues from a more specialist viewpoint.
The Committee meets at least twice yearly, and the results of their discussions are reported
without delay to the Board of Directors, which supervises all ESG-related activities.

Disclose
information
Reflect
opinions· Formulating of strategies and basic policies
related to ESG· Monitoring of policy progress, etc.

Management meetings
LiaiseCarbon Neutrality and Environment Sub-Committee· Examining of all aspects of environmental
issues from a more specialist viewpoint

Indication of policies and plans,monitoring, etc.

Formulation of departmental
plans, reports on progress, etc.

· Formulating of Medium-termManagement Plan, etc.

Coordinate/
instruct

Submit/report

Divisions, Group companies, etc.

■Sustainability Promotion Committee[Structure] Chairperson: Member of the Board of Directors, President & Chief Executive Officer
Vice-chairperson: Chief ESG officer (Member of the Board of Directors, Vice-Presidential Executive Officer)
Committee members: External directors, executive directors of relevant divisions, etc.
Frequency: Twice yearly in principle, and additionally as necessary■Carbon Neutrality and Environment Sub-Committee[Structure] Chairperson: Chief ESG Officer (Member of the Board of Directors, Vice-Presidential Executive Officer)
Vice-chairperson: Executive Director of the Corporate Strategy Division and Director of the District Symbiosis
Division
Committee members: Directors of relevant divisions, etc.
Frequency: Twice yearly in principle, and additionally as necessary■ Natural capital-related targets
Subject
Climate change(Carbon Neutral Vision 2050 p. 1,
ESG Data Book 2023 p. 8)
Promotion of environmental management(ESG Data Book 2023 p. 5)
Establishment of a circular society(ESG Data Book 2023 p. 5)

TargetCarbon neutral· Achieving carbon neutrality by 2050

Supply chain greenhouse gas emissions(Scopes 1, 2, and 3)· 60% reduction in greenhouse gas emissions by 2030 compared to FY2013, and 65% reduction indomestic businesses

Promoting environmental management· Violations of law and regulations: Zero

Appropriate management and disposal ofindustrial waste· Recycling rate (excl. coal ash): 98% or higher(plastic waste: 90%) (FY2023)

Promoting green procurement· Green procurement rate of office supplies :97% (FY2023)

Strengthening supply chain management(ESG Data Book 2023 p. 7)

Raising awareness of ESG in the supply chain· Response rate to questionnaire survey on sustainability improvement initiatives for major business
partners: 90% or higher (FY2023)

Enhancing stakeholder engagement(ESG Data Book 2023 p. 7)

Raising the level of stakeholder satisfaction(enhancing environmental education programs)· Percentage of people who answered in the questionnaire that they had an increased awareness ofenvironmental conservation: 90% or higher (FY2023)

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

Leading the Way towarda Decarbonized Society■ Natural Capital-related Impacts and Dependencies
An important step on the way to creating a positive outcome for biodiversity and other natural capital is understanding the impacts that a company’s business activities (including fuel procurement) have on natural capital and theecosystem services on which these activities depend. We evaluated the impacts and dependencies on natural capital in our business activities using a five-level scale (Very High, High, Middle, Low, and Very Low). This evaluation took
into consideration factors such as power plant locations, facilities essential to our operations, and agreements with local governments, while referring to the guidelines provided by TNFD beta version 0.4 LEAP approach and utilizing
ENCORE (an evaluation tool based on global data) as a reference.

■ List of evaluations on natural capital-related impacts and dependencies in our businesses (Heatmap of natural capital-related factors)
Natural capital-related

Other factors

ImpactPower
generation
types

Land modification
Process

Direct collection

Dependence

ClimatechangePollution

Other

Supply service
Surfacewater
supplyGroundwater
supplyAdjustment service

Foundation service

Earthquakes/
Tsunamis

Air

Water areas

Soil

Waste

Noise/
Light
pollution

High

High

High

High

High

High

High

High

-

Very
Low

-

-

Middle

High

-

Very
Low

-

Very High

Low

Low

Low

Low

Low

Low

-

Very
Low

Very
Low

Low

Low

Low

Low

Low

High

Very High

-

High

High

High

High

High

High

Very
Low

Very
Low

Very
Low

Very
Low

Very
Low

Very
Low

Low

Very
Low

-

High

Low

Low

-

Middle

Low

Low

Low

Low

Low

Low

-

Very
Low

Very
Low

Low

Low

Low

Low

Low

High

Very
High

High

-

Very High

-

High

High

High

High

High

High

High

High

-

Very
Low

-

-

Middle

High

-

Very
Low

High

-

Low

Low

Low

-

Very
Low

Low

Low

Low

Low

Low

Low

-

Very
Low

Very
Low

Low

Very
Low

Low

Low

Low

Very
Low

MiddlePowergeneration

Middle

Low

-

Low

-

Very
Low

-

Low

Low

-

-

High

-

Very
Low

Very
Low

Very
Low

High

High

High

Low

High

Low

Pumped Storage
HydropowerPowergeneration

Low

Low

-

Low

-

Very
Low

-

Low

Low

-

-

Low

-

Very
Low

Very
Low

Very
Low

High

High

Low

Low

High

Very
Low

Geothermal
Power

Power
generation

-

-

-

Low

-

Very
Low

-

Low

Low

-

Low

Low

-

Very
Low

Very
Low

Very
Low

Low

Low

Low

Low

Low

Transmission & Distribution

Low

-

-

-

-

Very
Low

-

Low

-

-

-

-

-

-

High

-

Low

Low

-

-

High

Other than Greenhouse
water
gas

Land areas

Fresh water
areas

Marine
areas

Water

Fuel
procurement

Very HighHigh-

Very High

-Power
generation

-

Low

Low

Low

Fuel
procurement

High

High

Very High

Power
generation

-

Low

Fuel
procurement

Very High

Power
generation

Conventional
Hydropower

ThermalPower(coal)

Thermal
Power
(LNG)

MakingClimateFilteringFloodcontaminants
adjustment contaminants prevention
less harmful

Maintaining
Corrosion Maintainingwater
prevention water flow
quality

LegendNuclearPower*In the production of heatmaps, for natural disasters, we assumed an event that had occurred in the past 30 years or so, or a case where an event having a high chance of occurring in the next 30 years occurred.

52

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

53

Leading the Way towarda Decarbonized Society■ Reasons for evaluating natural capital-related heatmaps[Natural capital-related]
Power
Generation
Category

Process■ Impact and dependency indicators(TNFD beta v.0.4 core indicators)
Reasons for Evaluation

Since land modification in land and fresh water areas, direct collection of water, greenhouse gas emissions, and pollution are highly likely to impact natural capital, this was evaluatedFuelas “High / Very High.” Further, the level of dependency on ecosystem services related to supplying groundwater and surface water and supplying water for maintaining water flow
procurement
was evaluated as “High.”
Coal
Thermal Power

Power
generation

While seawater and fresh water are used as cooling water, seawater makes up a large proportion; very little fresh water is used. Furthermore, since fresh water is taken from Kyushu,
an area with little water-related risk (ESG Data Book 2023 p. 23), the impact on regional natural capital was evaluated as “Low.” In addition, since we ensure thorough managementof power plants based on agreements such as those concluded with local governments of sites where plants are located and can no longer operate plants at a stage prior to themnot clearing standards, the impact on regional natural capital due to air pollution, waste, and noise/light pollution was evaluated as “Low.” However, impact from greenhouse gas
emissions was evaluated as “Very High.”

Fuel
The impact of land modification in land, fresh water, and marine areas, direct collection of water, greenhouse gas emissions, and pollution on natural capital was evaluated as “High /procurement Very High.” On the other hand, when compared to coal, LNG is mined using a different method, therefore its dependency on ecosystem services had a result of “Low / Very Low.”
LNG

Nuclear
Power

Power
generation

ClimatechangePowergeneration

Changes inland/fresh
water/sea
usage

Power
generation

Transmission &Distribution

Since some conventional hydroelectric power plants are built in key biodiversity areas (KBAs), impact of land modification in land areas was evaluated as “Middle.” However, in lightof the fact that power plants and other facilities that greatly impact ecosystems are no longer being newly built in recent years, that we are operating plants appropriately and in strict
compliance with all related laws and regulations, including the River Act, and that we are carrying out various ecosystem-friendly initiatives in harmony with regions where power
plants are located, other impacts on natural capital were evaluated as “Low” to “Very Low.”
In addition, some of our hydroelectric power generation facilities are located in mountainous areas and along rivers, and since these are environments likely to be impacted byflooding, earthquakes, and similar, the level of dependency on flooding and corrosion prevention functions and earthquakes were evaluated as “High.”
Since a certain level of water is required for operating conventional hydroelectric power plant facilities, the level of dependency on surface water supply and water flow maintenancefunctions was evaluated as “High.” On the other hand, since with pumped storage, the water is basically cycled between an upper and lower reservoir, the level of dependency on
surface water supply and water flow maintenance functions was evaluated as “Low.”[Other causes]
Reasons for Evaluation

Earthquakes/
tsunamis

Kyushu is home to the Fukuchiyama, Kego, and Hinagu fault zones, and the Unzen fault group. These faults lie directly under the Kyushu region and are predicted to have a 3% or higher
chance of generating an earthquake within the next thirty years. Along the coast, there is also a risk of earthquakes and subsequent tsunamis in places including Hyuga Nada (approx. 80%
chance of a magnitude 7.0-7.5 earthquake), the Nankai Trough (approx. 70-80% chance of a magnitude 8-9 earthquake), and the Akinada Sea-lyonada Sea-Bungosuido Strait (approx. 40%
chance of a magnitude 6.7-7.4 earthquake). There is also a risk of earthquakes and subsequent tsunamis occurring overseas.
While the risk to LNG fuel procurement, thermal power generation, conventional hydropower and transmission has been evaluated as “High,” works have been carried out at nuclear power
plants as countermeasures against such risk, so this risk has been evaluated as “Very Low.”

Degree of change inland/fresh water/sea
usage by ecosystemand business activity

Total amount ofcontaminants released
into the soil by type

Pollution/
removing
pollution

Condensed water from water vapor taken from under the ground is mainly used as cooling water; very little river water is used. Furthermore, river water is taken from Kyushu, anarea with little water-related risk (ESG Data Book 2023 p. 23). In addition, since we ensure thorough management of power plants based on agreements such as those concluded withlocal governments of sites where plants are located and operate plants on a scale that does not impact regional natural capital, the impact on natural capital due to water and soil
contamination, and noise/light pollution was evaluated as “Low.”*Procurement was not included in the scope of this evaluation.
Since falling trees and similar caused by strong winds during a typhoon can damage or bring down utility poles and snap power lines, potentially leading to power outages, thedependency of transmission facilities on climate adjustment functions was evaluated as “High.” When selecting locations to install steel towers, unstable locations where landslides,
flooding, and similar are expected are not chosen, therefore dependency on flooding and corrosion prevention functions was evaluated as “Low.”

References, etc.
Supply Chain GHG Emissions (Scopes
1, 2, and 3)(ESG Data Book 2023 p. 71)

Fresh water: Usage amounts of tap
water and water for power generation(ESG Data Book 2023 p. 77)
Sea: Used as cooling water at power
plants; no data available on usage
amounts

While seawater and fresh water are used as cooling water, seawater makes up a large proportion; very little fresh water is used. Furthermore, since fresh water is taken from Kyushu,
an area with little water-related risk (ESG Data Book 2023 p. 23), the impact on regional natural capital was evaluated as “Low.” In addition, since we ensure thorough managementof power plants based on agreements such as those concluded with local governments of sites where plants are located and can no longer operate plants at a stage prior to them notclearing standards, the impact on regional natural capital due to air pollution, waste, and noise/light pollution was evaluated as “Low.”

While seawater and fresh water are used as cooling water, seawater makes up a large proportion; very little fresh water is used. Furthermore, since fresh water is taken from Kyushu,
an area with little water-related risk (ESG Data Book 2023 p. 23), the impact on regional natural capital was evaluated as “Low.” In addition, since we ensure thorough managementof power plants based on agreements such as those concluded with local governments of sites where plants are located and operate plants on a scale that does not impact regional
natural capital, the impact on natural capital due to air pollution, waste, and noise/light pollution was evaluated as “Low.”

Indicator
Amount of Scope 1, 2,
and 3 greenhouse gas(GHG) emissions

Land: land area of power generationand switching facilities (Annual
Securities Report FY2022 pp. 43-47)

Since land modification in land and fresh water areas, direct collection of water, greenhouse gas emissions, and pollution are highly likely to impact natural capital, this was evaluatedFuelas “High / Very High.” Further, the level of dependency on ecosystem services related to supplying groundwater and surface water and supplying water for maintaining water flow
procurement
was evaluated as “High.”

Hydroelectric
Power
Power
generation

Geothermal
Power

Category

Wastewater amountand concentration ofmajor contaminants in
wastewater by type

Wastewater amount (ESG Data Book
2023 p. 77)
Appropriate disposal of wastewater
carried out at wastewater disposal
facilities located at each power plant

Total amount of toxic
waste generated bytype

PCB disposal amount (ESG Data Book
2023 p. 75)

Total amount of toxic
substances excluding
carbon dioxide by type

(ESG Data Book 2023 p. 72, 73)

Total collection andconsumption amountsof water from waterstressed regions

Using/complementing
resources

Essentially, no contaminants are
released into the soil from our facilities

Usage amount of water for power
generation (ESG Data Book 2023 p. 77)* Kyushu has been recognized as a region
with a relatively low level of water risks
by using the Aqueduct tool

Trends in numberof high-risk natural
products procured
from the land/sea/fresh
water by category

Procurement sources and procured
amounts of fuel (coal, LNG, uranium)(ESG Data Book 2023 p. 26)

Amount of natural
products procured frompriority ecosystems
by category and ratio
thereof(Future examination)

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

54

6 Data Section

Leading the Way towarda Decarbonized Society■ Natural Capital-related Risks and Opportunities
The natural capital-related risks and opportunities in our businesses were organized (it is recommended to create a TNFD framework core global matrix with indicators set for financial capital, assets, and operating revenues, along withrisk and opportunity, however in light of the availability of comprehensive data, this was excluded this time).

Natural capital-related risks
Items for which the natural capital-related impacts or dependencies in our businesses were evaluated as being at a large degree (“High,” “Very High”) were evaluated in respect of their financial impact after being classified into risk categories. Fuel procurement was evaluated as being at risk of risingcosts due to an increase in fuel prices. When operating power plants, we are in compliance with laws and regulations, agreements with local bodies, and other rules and are capable of reducing risks that damage natural capital. At the same time, however, Kyushu is geographically likely to be heavily
impacted by natural disasters caused by climate change*, and is at risk of flood damage due to typhoons or linear rainbands. In the event that regulations on coal-fired thermal power generation are tightened, there is a risk that fuel costs will rise or similar. Furthermore, Kyushu and its surrounding areas
lie on troughs and faults predicted to have a 3% or higher chance of generating an earthquake within the next thirty years, therefore the risk of damage from an earthquake and tsunami is expected.
* The island of Kyushu sits directly in the path of westerlies from the East China Sea that can generate linear rainbands and cause damage through heavy rain and flooding. Also, the frequency of typhoons landing on shore is rising in Kyushu compared to other parts of Japan.

■ Risks based on categories indicated in TNFD Beta v.0.4
Risk Category
Fuel procurement

Coal

Power
generation

Thermal Power

Fuel
procurement

LNG

Power
generation

Fuelprocurement

Nuclear Power

Hydroelectric
PowerTransmission& Distribution

Physical risk

Transition risk
Physical risk
Transition risk

Risk Type

Risk Overview

Impacts on Finances

Acute risk

Landfalls, land subsidence, and fires occur due to the modification of land areas caused by mining operations.

Chronic risk

Degradation and division of terrestrial ecosystems, invasions by non-native species, and adverse effects on local plant life and plant environments due to the modification of land areas
caused by mining operations. Exhaustion of aquifers due to excessive water use during mining. Hindering mining operations due to increased severity and frequency of droughts.
Greenhouse gas emissions due to mining operations, toxic emissions in the atmosphere, adverse impacts on plant life and soil, and changing ecosystems due to species migration.

Legal and regulatory risk

Worsening finances due to rising global costs of coal.

Level II

Burden arising from countermeasure costs for each chronic risk associated with mining.
Burden arising from carbon costs with respect to indirect greenhouse gas emissions, including the process of coal mining.

Acute risk

Damage to thermal power plant facilities and shutting down of power plants due to an earthquake or tsunami.

Restoration costs and costs related to securing alternative power sources.

Level II

Chronic risk

Greenhouse gas emissions due to operation.
Cost burden in respect of greenhouse gases emitted during operation in the case that surcharges and taxes are introduced in order to regulate the operation of coal-fired thermal power
plants. The operation of coal-fired thermal power plants is regulated.

Rising unit costs for coal-fired thermal power generation in the case thatsurcharges and taxes are introduced, and increased fuel costs due toswitching using LNG thermal power.

Level III

Acute risk

Operation of gas fields is stopped due to exhausting water. Negative environmental impact due to accidental spillage of toxic substances. Negative impact on rare organisms insurrounding areas due to accidental contamination. Earthquake or tsunami damage to LNG shipping facilities, thereby making shipping not possible.

Worsening finances due to rising global costs of LNG.

Chronic risk

Adverse impacts on land, fresh water, and marine ecosystems. Plant life living at the bottom of bodies of water and fresh water plants die due to contamination. Negative impact on rareorganisms in surrounding areas due to accidental contamination. Polluting the surrounding environment without appropriately disposing of waste.

Legal and regulatory risk

Physical risk

Note that we have been procuring LNG through long-term contracts frommultiple projects to suppress any impact to a certain degree.

Transition risk

Legal and regulatory risk

Local government order to shut down operations to procurement sources of the Company due to toxic emissions.

Physical risk

Acute risk

Damage to thermal power plant facilities and shutting down of power plants due to an earthquake or tsunami.

Restoration costs.

Acute risk

Landfalls, land subsidence, and fires occur due to the modification of land areas caused by uranium mining.

Worsening finances due to rising global costs of uranium.

Chronic risk

Degradation and division of terrestrial ecosystems, invasions by non-native species, and adverse effects on local plant life and plant environments due to the modification of land areas
caused by mining operations. Exhaustion of aquifers due to excessive water use during mining. Hindering mining operations due to increased severity and frequency of droughts.
Greenhouse gas emissions due to mining operations, toxic emissions in the atmosphere, adverse impacts on plant life and soil, and changing ecosystems due to species migration.

(

Physical risk
Transition risk

Legal and regulatory risk

Physical risk

Acute risk

Physical risk

Financial Impact

Acute risk

Burden arising from carbon costs with respect to indirect greenhouse gas emissions, including the process of uranium mining.

Level II

Level II

Since the price of uranium in proportion to the cost of nuclear power
generation is low, and the likelihood of there being an impact large
enough to have a financial impact is also low, the financial risk ofuranium was judged to be a legal and regulatory risk.

)

Level II

Damage to hydroelectric power plant facilities and shutting down of power plants due to flooding or earthquakes.

Restoration costs and costs related to securing alternative power sources.

Level II

Falling trees and similar caused by strong winds during a typhoon damaging or bringing down utility poles and snapping power lines, leading to power outages.

Restoration costs.

Level II

Damage to facilities, particularly in the Oita and Miyazaki areas, due to a Nankai megathrust earthquake, causing wide-scale power outages.

Restoration costs.

Level III

[Financial impact evaluation criteria] Level I: Less than ¥1 billion; Level II: ¥1 billion to ¥10 billion; Level III: ¥10 billion or more

Natural capital-related opportunities

The Kyuden Group is aware of the following business opportunities. We are committed to working towards each of the 2030 global targets of the Kunming-Montreal Biodiversity Framework, a new set of worldwide goals for biodiversity.
Biodiversity Framework Targets

Kyuden Group Initiatives

Target 3

Conservation

Joining the 30by30 alliance / Application for Natural symbiosis site accredited by the Ministry of the Environment (ESG Data Book
2023 p. 20)

Target 4

Extinction risk

Implementation of environmental assessment (ESG Data Book 2023 pp. 17, 18)

Target 7

Waste

Appropriate waste disposal (ESG Data Book 2023 p. 22)
Commercialization of Circular Park Kyushu (ESG Data Book 2023 p. 22)

Target 8

Climate change

Promotion of renewable energy (ESG Data Book 2023 pp. 9-11)
Maximum use of nuclear power based on the fundamental prerequisite that safety is ensured Maximise the use of highly efficient
thermal power plants (ESG Data Book 2023 p. 13)

Target 9

Managing wild
species

Implementation of environmental assessment (ESG Data Book 2023 pp. 17, 18)
Implementation of the Kyuden Future Forest Project (ESG Data Book 2023 p. 19)

Biodiversity Framework Targets
Target 10 Building a production system
Target 11

Recovering, maintaining, and strengthening
contributions from nature (NCP*)

Kyuden Group Initiatives
Creating J-Credits through Use of Woodland Resources (ESG Data Book 2023 p. 16)
Growing FSC® (Forest Stewardship Council®; headquartered in Germany)-certified timber (ESG Data Book 2023 p. 20)
Salmon farming business (ESG Data Book 2023 p. 49)
Environmental conservation activities across the entire Kuju Bogatsuru Marshlands (ESG Data Book 2023 p. 19)

Evaluation and disclosure of dependency
Target 15
and impact

Information disclosure conforming to the TNFD Framework

Target 21 Provision of data and information

Publication of Kyuden Group ESG Data Book

Target 22 Participation in decision making
Target 23 Gender equality

Implementing human rights due diligence (ESG Data Book 2023 pp. 60-62)*NCP: Nature Contributions to People

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

55

Leading the Way towarda Decarbonized Society

Initiatives Based on the TCFD Recommendations

Kyushu Electric Power expressed its support for the TCFD* recommendations in July 2019.
* Task Force on Climate-related Financial Disclosures (TCFD) is a task force established by the Financial Stability
Board (FSB) in response to a request from the G20 Finance Ministers and Central Bank Governors Meeting. In
June 2017, we published recommendations for promoting information disclosure on financial impacts brought
about by climate-related risks and opportunities.

The Kyuden Group has positioned its response to climate change as an important management issue (materiality), and from 2020, we have been continually carrying out scenario analysis and information disclosure based on the TCFD
recommendations.
In addition, the Group was the first energy provider in Japan to receive recognition from the international Science Based Targets (SBT) initiative for its targets to reduce greenhouse gas (GHG) emissions, which have been certified as
science-based targets.
In future, we will realize our goal of “leading the way toward a decarbonized society” and fulfill our responsibility to provide our stakeholders with information through formulating strategies using the TCFD recommendations andenhancing our information disclosure based on these recommendations.

■ Governance & Risk Management

Response system
Supervise

Response system for climate change (risk and opportunity assessment and management process)

Refer to P86
Refer to P78

for details on the risk management system
for the Director Skill Matrix

Main climate change-related agenda items discussed by the Board of Directors, Sustainability
Promotion Committee, etc. (from July 2022)
Supervise

Board ofDirectors

ExecuteSustainability
Promotion
Committee· Reviewing materiality (including examining necessity)· Direction for formulating the Medium-term ESG Promotion Plan and progress on its implementation· Policies aimed at reducing GHG emissions· Policy for issuing the Integrated Report and disclosure contents (including contents of TNFD/TCFD
disclosure)· Details of dialogues with the capital market (including initiatives toward enhancing external ESG
assessments)· Acquiring SBT certification· GX League-related

Submit/report

Submit/report

Sustainability Promotion Committee
Stakeholders

In July 2021, we established the Sustainability Promotion Committee, chaired by the President and under thesupervision of the Board of Directors, to actively promote carbon neutrality and other ESG initiatives.
In addition to establishing strategies and policies concerning all aspects of ESG (specifying materiality), as well as
deliberating on specific measures and managing the progress of their implementation, the Committee deliberates onand supervises strategies and risks related to climate change. The Carbon Neutrality and Environment Sub-Committee,
chaired by the Chief ESG officer, was additionally established under the Sustainability Promotion Committee, and its
members deliberate on all aspects of environmental issues, including carbon neutrality, from a more specialist viewpoint.
The Committee meets at least twice yearly, and the results of their discussions are reported without delay to theBoard of Directors, which supervises all ESG-related activities.
Our Action Plan to Achieve Carbon Neutrality announced in November 2021, which includes our goals for 2050
and the upward revision to our management (environmental) targets for 2030, was approved by the Board of Directors
following deliberation by the Carbon Neutrality and Environment Sub-Committee and the Sustainability Promotion
Committee.
We will continue to further enhance and strengthen the process of evaluating and managing climate change risks
and opportunities to enhance the corporate value of the Kyuden Group.

Board of Directors

Disclose
information
Reflect
opinions· Formulating of strategies and basic policies
related to ESG· Monitoring of policy progress, etc.

Management meetings
LiaiseCarbon Neutrality and Environment Sub-Committee· Examining of all aspects of environmental
issues from a more specialist viewpoint

Indication of policies and plans,monitoring, etc.

Formulation of departmental
plans, reports on progress, etc.

· Formulating of Medium-termManagement Plan, etc.

Coordinate/
instruct

Submit/report

Divisions, Group companies, etc.

■Sustainability Promotion Committee[Structure] Chairperson: Member of the Board of Directors, President & Chief Executive Officer
Vice-chairperson: Chief ESG officer (Member of the Board of Directors, Vice-Presidential Executive Officer)
Committee members: External directors, executive directors of relevant divisions, etc.
Frequency: Twice yearly in principle, and additionally as necessary■Carbon Neutrality and Environment Sub-Committee[Structure] Chairperson: Chief ESG officer (Member of the Board of Directors, Vice-Presidential Executive Officer)
Vice-chairperson: Executive Director of the Corporate Strategy Division and Director of the District Symbiosis Division
Committee members: Directors of relevant divisions, etc.
Frequency: Twice yearly in principle, and additionally as necessary

Linking climate change response to executive compensation
Kyushu EP offers its directors (excluding directors who are Audit & Supervisory Committee members and external
directors) and other executives performance-based compensation, and has adopted GHG reductions aimed at carbon
neutrality as one of its performance indicators (refer to P79 for details on executive compensation).

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

56

Leading the Way towarda Decarbonized Society■ Strategies (Risks, Opportunities, and Measures) - Climate Change Countermeasures based on Scenario Analysis - [Detailed contents of response strategies are listed on P42-49 ]We have analyzed a number of scenarios based on the Intergovernmental Panel of Climate Change (IPCC)’s 6th Assessment Report, an IEA report, and Japan’s 6th Strategic Energy Plan among others to assess the impact of climate change on the Kyuden Group.
The results of this analysis have been properly reflected in our Action Plan to Achieve Carbon Neutrality, the Kyuden Group’s low carbon transition plan, and we have formulated our Medium-term ESG Promotion Plan to steadily implement it. The Sustainability
Promotion Committee and the Carbon Neutrality and Environment Sub-Committee are to review and discuss our progress on the Action Plan, and revise it as appropriate based on social trends and movements in terms of technical innovation.
Furthermore, from last year, in addition to conducting scenario analyses on the risks, opportunities, and financial impacts related to our electricity businesses (Domestic, Overseas, and Renewable Energy businesses), we have also been doing the same for the ICT
Service and Urban Development businesses, which are two of our growth businesses.

Scenario analysis (1.5°C case)
Scenario

Policy and Regulation
Technology
MarketTopic
Costs andinvestments
accompanying
tighter GHG
emission
regulations

DriverPhase-out of inefficient coal-fired power andimprovements to thermal efficiency

Expanded earnings by promoting the development of
Making renewable renewable energy (including overseas)energy a primarysource of power
Decreased grid stability
Maximizing theuse of nuclear
power

Electric power
demandFuel prices

Improving nuclear power plant utilization rate
Unplanned outages of nuclear power
Increased electricity sales as a result of progress inelectrification
Decreased electricity sales due to the spread of
distributed energy systems, increased competition, etc.
Higher fuel prices
Higher financing costs due to investors deeming ourefforts toward carbon neutrality as insufficient
Sales of non-fossil value

Changing
customer needs

Policy andRegulation

Costs andinvestments
accompanying
tighter GHG
emission
regulations

Products andServices
PhysicalICT Service / Urban Development businesses

Reputa- Credibilitytion

Increased carbon neutrality needs in the region

Changing
customer needs

Facility damage

Operational costs

Risk or Opportunity

Carbon pricing (taxes, emission rights, etc.)

Products andServices

Electricity businesses (including Renewable Energy and Overseas)

1.5°C Case

Across the globe, carbon
pricing schemes and otherregulations have beenstrengthened and efforts
to address climate change
have been underway. As aresult, GHG reductions havesteadily progressed.
With the rise intemperature kept undercontrol, there are no
significant increases inabnormal weather or events,
including changes in theflow rate of water also in
Kyushu, the Kyuden Group’s
main area of business.
In Japan, the adoptionof zero-emission powersources has progressed,
maximizing the use ofrenewable energy andnuclear power.
Customers are highly
environmentally conscious,
and with progress madetoward ambitious energy
conservation measures,electrification has madeheadway in all sectors,
including the widespreaduse of EVs.

Scenario Drivers
Major Theme

Carbon pricing (taxes, emission rights, etc.)
Increased costs following a tightening of the Energy
Conservation Act
Increased need to promote electrification and forenergy management in response to growing demandfor decarbonization and energy conservation
Increased demand for products/services tied toensuring resiliency
Losses incurred due to typhoons, floods, torrential
rain, and other natural disasters (increased costs torestore damaged facilities and reduced earnings due tosuspended operations)
Increased electricity costs for air conditioning due tohigher average temperatures

Transition risk
(policy andregulation)

Opportunity(source of energy)
Transition risk(technology)
Opportunity(source of energy)
Transition risk
(policy and regulation,technology)
Opportunity(products andservices)
Transition risk
(market)Timeframe Likelihood
Medium tolong-term

MediumShort,
medium,long-termHigh

Short,
medium,long-term
Medium tolong-term
Medium tolong-term
Short,
medium,long-term
Short,
medium,long-term
Medium tolong-term
Short,
medium,long-term
Medium tolong-term
Short,
medium,long-term

High

Financial Impact (P&L basis)
Costs would increase by ¥10 billion to ¥15 billion
if GHG emissions were not reduced (assuming a carbon price of¥2,000–¥3,000/t-CO2)
Several tens of billions of yen(amount of increased fuel costs in a case where Kyuden LNG thermal
power is co-fired with 1% hydrogen and coal-fired thermal power is
co-fired with 20% ammonia)¥13 billion in ordinary income from the renewable energy business(FY2025)

Low

Small to medium

Medium

A 1% increase in the utilization rate would reduce fuel costs byabout ¥5 billion

Low

Approx. ¥10 billion per reactor for a one-month outage

High

Sales will increase by approx. ¥60 billion if electrification target is reached(increase in sales if 2030 target KPI is achieved)High

A 1% decrease in retail electricity sales would reduce sales byapprox. ¥15 billion

High

Certain financial impact, but mitigated by a stable nuclear power supply

MediumApprox. ¥0.8 billion (the impact of a 0.1% change in the interest rate on
approx. ¥700 billion in actual funding from FY2022)High¥20 billion to ¥40 billion(potential sales if all non-fossil value was sold)Medium tolong-term

High

Approx. several hundred million yen(increased sales from distributed energy systems, EV services, etc.)

Medium tolong-term

MediumSmall

Medium tolong-term

High

Small

Short,
medium,long-termHigh

MediumMedium tolong-term

MediumSmall

Physical risk
(acute)Short,
medium,long-term

Low

Small

Physical risk
(chronic)

Medium tolong-term

High

Small

Transition risk
(reputation)
Opportunity(products andservices)
Opportunity(products andservices)
Transition risk
(policy andregulation)
Transition risk
(policy andregulation)
Opportunity(products andservices)[Timeframe] Short-term: Now through FY2025; Mid-term: FY2026-FY2030; Long-term: FY2031-FY2050[Financial Impact] Small: Less than ¥1 billion; Medium: ¥1 to 10 billion; Large: ¥10 billion or more *FY2022 figures used to determine financial impact unless otherwise stated[Presumptions]1.5°C case: Intergovernmental Panel of Climate Change (IPCC)’s 6th Assessment Report (SSP1-1.9 scenario), IEA WEO 2022 (Net Zero Emissions by 2050 (NZE) scenario), Japan’s 6th Strategic Energy Plan, etc.

4°C case: Intergovernmental Panel of Climate Change (IPCC)’s 6th Assessment Report (SSP5-8.5 scenario), etc.

Response Strategy∙ Reduce GHG emissions∙ Make recommendations on and get involved in energy policies∙ Establish co-firing technologies at our existing thermal power plants∙ Develop ammonia and hydrogen supply chains∙ Produce carbon-free fuel using renewable energy and nuclear power∙ Switch from coal-fired to LNG combined cycle thermal power∙ Develop geothermal and hydroelectric power projects, which our where our strengths lie∙ Develop offshore wind power and biomass projects that have great potential for adoption∙ Utilize battery and pumped storage
Upgrade supply and demand operation and grid stabilization technologies through the use of digitaltechnology
Shorten inspection periods, operate on long-term cycles, improve electricity output
Allocate appropriate budgets for repairs and improvement costs in line with the state of facilities
Contribute to the electrification of Kyushu—Household: Strengthen liaisons with housing-related businesses—Commercial: Suggest highly efficient heat pump systems, etc.
Establish distributed energy resource (DER) control technologies and develop an aggregation business using
battery storage∙ Diversify supply sources∙ Curb price hikes through contractual fixed price options, etc. (coal)∙ Consider diversifying pricing methods by using new indicators with higher price stability (LNG)∙ Steadily implement the Action Plan
∙ Promote proper information disclosure, including on the progress toward our KPIs
∙ Maximize the use of zero-emission power sources∙ Expand renewable energy and CO2-free rate plans∙ Establish distributed energy resource (DER) control technologies and develop an aggregation business using
battery storage∙ Consider new business models using EVs

Maintain and improve profitability by differentiating ourselves and adding higher value by improving energy
saving performance, creating self-sufficient zero energy buildings (ZEBs) and houses (ZEHs), introducing
renewable energy-based electricity, and promoting the use of digital transformation. Also, reduce the impact
of carbon pricing∙ Provide an accurate response to disaster response needs of local governments and enter into agreementswith them∙ Collaborate with other companies on related products and services to differentiate us from competitors,
including drone services and uninterruptible power supplies
Minimize impacts by constructing disaster-resistant facilities, selecting development sites and implementing
disaster prevention measures based on hazard maps, and hedging risk with insurance coverage∙ Build a decentralized and disaster-resilient telecommunication network∙ Prepare disaster response manuals, etc.
∙ Improve the energy efficiency of air conditioning at our data centers, etc.

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

57

Leading the Way towarda Decarbonized Society

Scenario analysis (4°C case)
Scenario

Topic

Policy and Regulation

Costs andinvestments
accompanying
tighter GHG
emission
regulations

Technology

Maximizing theuse of nuclear
power

MarketElectric power
demandReputa- Products
andtionServices

Electricity businesses (including Renewable Energy and Overseas)

Physical

4.0°C Case

DriverRisk or Opportunity

Carbon pricing (taxes, emission rights, etc.)

Phase-out of inefficient coal-fired power andimprovements to thermal efficiency

Transition risk
(policy andregulation)

Timeframe Likelihood

Financial Impact (P&L basis)

Response Strategy

Medium tolong-term

MediumCosts would increase by ¥20 billion to ¥30 billion
if GHG emissions were not reduced (assuming a carbon price of¥4,000–¥6,000/t-CO2)

Short,
medium,long-term

High

Greater than the 1.5°C case

∙ Reduce GHG emissions∙ Make recommendations on and get involved in energy policies∙ Establish co-firing technologies at our existing thermal power plants∙ Develop hydrogen and ammonia supply chains∙ Produce carbon-free fuel using renewable energy and nuclear power∙ Switch from coal-fired to LNG combined cycle thermal power

Unplanned outages of nuclear power

Transition risk
(policy andregulation,technology)

Short,
medium,long-term

Low

Approx. ¥10 billion per reactor for a one-month outage

Increased electricity sales as a result of progress inelectrification

Opportunity(products andservices)

Short,
medium,long-termHigh

Not as prominent as the 1.5°C case

Decreased electricity sales due to the spread of
distributed energy systems, increased competition, etc.

Transition risk
(market)Medium tolong-term

High

A 1% decrease in retail electricity sales would reduce sales
by approx. ¥15 billion

Credibility

Higher financing costs due to investors deeming ourefforts toward carbon neutrality as insufficient

Transition risk
(reputation)

Medium tolong-term

MediumChanging
customer needs

Increased carbon neutrality needs

Opportunity(products andservices)

Medium tolong-term

Low

Not as prominent as the 1.5°C case

Reduced hydroelectric power generation

Physical risk
(chronic)

Medium tolong-term

Low

Approx. several hundred million yen/%(sensitivity of income and expenditures to a 1% change in flow rate)

Update our existing power plants and promote new development using FIT and FIP systems

Medium tolong-term

Low

Fuel costs would increase by about ¥30 billion due to higher fuel prices(sensitivity to price increases of $10/t for coal and $1/MMBtu for LNG)

∙ Diversify supply sources∙ Curb price hikes through contractual fixed price options, etc. (coal)∙ Consider diversifying pricing methods by using new indicators with higher price stability (LNG)

Medium tolong-term

High¥7.1 billion to recover from disasters(actual cost of Typhoon Nanmadol in 2022)

Medium tolong-term

MediumSmall

Medium tolong-termHigh

Not as prominent as the 1.5°C case

Short,
medium,long-termHigh

Not as prominent as the 1.5°C caseMedium tolong-term

MediumGreater than the 1.5°C case

Fuel
Inability to operate resource development sites
Facilities

Policy andRegulation
Products andServices

Costs andinvestments
accompanying
tighter GHG
emission
regulations

Changing
customer needs

Physical risk
(acute)Facility damage
Carbon pricing (taxes, emission rights, etc.)
Increased costs following a tightening of the Energy
Conservation Act
Increased need to promote electrification and forenergy management in response to growing demandfor decarbonization and energy conservation
Increased demand for products/services tied toensuring resiliency

Transition risk
(policy andregulation)

Opportunity(products andservices)

Allocate appropriate budgets for repairs and improvement costs in line with the state of facilities
Contribute to the electrification of Kyushu—Household: Strengthen liaisons with housing-related businesses—Commercial: Suggest highly efficient heat pump systems, etc.
Establish distributed energy resource (DER) control technologies and develop an aggregation business using
battery storage

Approx. ¥0.8 billion∙ Steadily implement the Action Plan(the impact of a 0.1% change in the interest rate on approx. ¥700 billion∙ Promote proper information disclosure, including on the progress toward our KPIs
in actual funding from FY2022)

Facility damage

Losses incurred due to typhoons, floods, torrential
rain and other natural disasters (increased costs torestore damaged facilities and reduced earnings due tosuspended operations)Physical risk
(acute)Short,
medium,long-term

MediumGreater than the 1.5°C caseOperational costs

Increased electricity costs for air conditioning due tohigher average temperatures

Physical risk
(chronic)

Medium tolong-term

High

Greater than the 1.5°C case

PhysicalICT Service / Urban Development businesses

There is a wide gap between
the efforts different countries
and regions have taken toaddress climate change, and
GHG emission reductions
have not progressed whenviewed on a global basis.
Temperatures have risen
across the world, causing
abnormal weather, includingchanges in the flow rate ofwater to increase also in
Kyushu, the Kyuden Group’s
main area of business. The
impacts of this have grownapparent, with someresource development
sites overseas becoming
inoperable.
In Japan, the adoptionof zero-emission powersources has progressed,
maximizing the use ofrenewable energy andnuclear power. Moreover,the growing need for
decarbonized power sources
is advancing the debate
on new types of nuclear
reactors.
Customers are highly
environmentally conscious,
and with progress madetoward ambitious energy
conservation measures,electrification has madeheadway in all sectors,
including the widespreaduse of EVs.
As total global GHG
emission reductions havebeen insufficient, stricter
carbon pricing schemes andother regulations are about
to be imposed on power
producers in developed
countries.

Scenario Drivers
Major Theme[Timeframe] Short-term: Now through FY2025; Mid-term: FY2026-FY2030; Long-term: FY2031-FY2050[Financial Impact] Small: Less than ¥1 billion; Medium: ¥1 to 10 billion; Large: ¥10 billion or more *FY2022 figures used to determine financial impact unless otherwise stated[Presumptions] 1.5°C case: Intergovernmental Panel of Climate Change (IPCC)’s 6th Assessment Report (SSP1-1.9 scenario), IEA WEO 2022 (Net Zero Emissions by 2050 (NZE) scenario), Japan’s 6th Strategic Energy Plan, etc.
4°C case: Intergovernmental Panel of Climate Change (IPCC)’s 6th Assessment Report (SSP5-8.5 scenario), etc.

∙ Maximize the use of zero-emission power sources∙ Promote the shift away from utility poles∙ Improve disaster response capabilities (through training, etc.)

Maintain and improve profitability by differentiating ourselves and adding higher value by improving energy
saving performance, creating self-sufficient zero energy buildings (ZEBs) and houses (ZEHs), introducing
renewable energy-based electricity, and promoting the use of digital transformation. Also, reduce the impact
of carbon pricing∙ Provide an accurate response to disaster response needs of local governments and enter into agreementswith them∙ Collaborate with other companies on related products and services to differentiate us from competitors,
including drone services and uninterruptible power supplies
Minimize impacts by constructing disaster-resistant facilities, selecting development sites and implementing
disaster prevention measures based on hazard maps, and hedging risk with insurance coverage∙ Build a decentralized and disaster-resilient telecommunication network∙ Prepare disaster response manuals, etc.

Improve the energy efficiency of air conditioning at our data centers, etc.

For details on the Carbon Neutral Vision 2050 (including the Action Plan), please visit the following page:https://www.kyuden.co.jp/english_index.html
Home > For investors > Information on our Sustainability initiatives> Carbon Neutral Vision 2050

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

58

Leading the Way towarda Decarbonized Society■ Indicators and Targets - Setting Climate-related Targets and their Progress As an industry leader in low-carbon and carbon-free efforts, we will take on the challenge of achieving net zero greenhouse gas (GHG) emissions in our supply chains by 2050 and make significant contributions to reducing emissions across society by helping
improve Kyushu’s rate of electrification. In doing so, we aim to achieve carbon negativity for all of the Kyuden Group’s business activities as early as possible before 2050.
We have also set interim management targets (environmental targets) for 2030 on our way toward carbon neutrality by 2050. These have been set at a level that goes far beyond the targets for reducing GHG emissions announced by the Japanese government,
and we have formulated a concrete action plan (refer to P40-41 for details on progress) to achieve them.
KGI (2050)

Indicator
Supply chain GHG emissions

SupplyNet zero supply chain GHG emissions

Positioning renewableenergy as a primary
power source
Lowering the carbon
intensity of thermal
power

DemandContribution to reduction of GHG
emissions in society– Help achieve a 100% electrification
rate for the household andcommercial sectors in Kyushu

Promotion of electrification

Interim Targets and KPIs (2030)

FY2022 Performance

60% reduction of supply chain GHG emissions (65% for domestic business) (compared to
FY2013)26% reduction (28% for domestic business)

Renewable energy developed: 5,000 MW (Japan and overseas)

3,020 MW (Japan and overseas, approved projects *1)

Achieve the benchmark indicators in the Energy Conservation Act(Indicator A: 1.0 or more; Indicator B: 44.3% or more; Coal only indicator: 43.0% or more)

Indicator A: 0.98; Indicator B: 43.02%; Coal only Indicator: 41.66

Establish technology toward co-firing of 1% hydrogen / 20% ammonia

Investigated and examined hydrogen/ammonia co-firing technologies(tested co-firing of ammonia at Unit 1 of the Reihoku Power Plant from April 2023)

Contribute to the electrification of Kyushu (Household: 70%; Commercial: 60%)

Household: 61%; Commercial: 48% *2

Household sector

Incremental electricity: 1,500 GWh (2021-2030 total)

Incremental electricity: 120 GWh

Commercial sector

Incremental electricity: 1,600 GWh (2021-2030 total)

Incremental electricity: 110 GWh

Transportation sector

100% replacement of company vehicles with EVs (excluding special-purpose vehicles)

Percentage of company vehicles replaced with EVs: 16% (95 EVs deployed)

Contribution to reduce GHG emissions: 7 million t-CO2

Approx. 1 million t-CO2

Contribution to reduction of GHG emissions in society*1: Total of projects for which development is expected by 2030 at the present stage *2: Calculations are based on the FY2020 figures (provisional figures) in the “Energy Consumption Statistics by Prefecture” reported by the Agency for Natural Resources and Energy

Trends in supply chain GHG emissions (management targets) (Refer to P95

for details)

61.66
60.96
(Japan)

45.10

39.72

Supply chain
GHG emissions*

38.40

43.41

Making renewable energy
the primary power source
Maximizing the utilization of
nuclear power
Lowering carbon intensity ofthermal power

-60%

-65%

26

Carbon negativity(Supply chain GHG emissions <Contribution to reduce GHG
emissions in society)as early as possible
GHG emissions(Scopes 1, 2, and 3)(Net zero)
↓

22
2013

2021

2022

Contribution to
Approx. 1
Approx. 1
reduce GHG
emissions
Initiatives to contribute to the reduction of GHG emissions in society:2030

Unit: million t-CO2–

7

Promotion of electrification within the Kyushu area (contribution to the electrification rate)
Promotion of renewable energy development outside Kyushu and overseas
CO2 absorption through adequate woodland management, etc.
* GHG emissions data have received an Independent Practitioner’s Assurance from Deloitte Tohmatsu Sustainability Co., Ltd in our ESG Data Book 2023.

2050

Internal carbon pricing
The Kyuden Group has set an internal carbon price based on trading conditions in the non-fossil value market and other factors
to use in making investment decisions to promote our renewable energy business in an aim to achieve carbon neutrality by 2050.
Our internal carbon price has been set at around ¥1,400 to ¥2,900/t-CO2 based on the trading price (¥0.6 to ¥1.3/kWh), etc.
of non-fossil value on the market (market for achieving the target mandated by the Sophisticated Methods Act).
We will also consider including making further use of the internal carbon price (expanding the scope of its application, reviewing
the price level, etc.) to accelerate our efforts toward decarbonization, taking into account social trends and other factors.

Total investments in low-carbon and decarbonized energy sources
Total investments for FY2021-FY2025: Approx. ¥500 billion(of which renewable energy-related: approx. ¥250 billion)
In FY2022, we became the first former general electric utility in japan to issue a transition bond and implement a transition loan,
which is the government’s first interest subsidy program.
(For details related to promoting green and transition financing, refer to P46 )Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

59

6 Data Section

Implementing Continuous
Improvements in Energy Services[Implementing Continuous Improvements in Energy Services]

Stable Supply of Energy
In our electricity businesses, we have made it our fundamental mission to continuously deliverenvironmentally friendly energy at a low cost and in a reliable manner with safety as our top priority,
which we see as our greatest social responsibility. To that end, we will continue to maintain the high levelof supply dependability we have achieved to date by accurately responding to trends in electric power
demand, efficiently forming our facilities, taking steps to reduce power outages, upgrading the operationand management of our facilities, and working to restore power as soon as possible after outages caused
by major disasters.

■ Initiatives to Improve the Safety and Reliability of Nuclear Power
Kyushu EP has been ahead of its competitors in complying with the government’s new regulatory standards
following the accident at the Fukushima Daiichi Nuclear Power Plant, and has restarted its nuclear reactors.
Moving forward, we will continue our efforts to continuously improve the safety and reliability of our nuclear
power operations, not only within the regulatory framework, but also by doing due diligence in collecting thelatest technical insights and data and applying it to operations.
Reactor containment vessel

Installation of Specific Safety Facilities
Power
generator

Reactor depressurizationequipment

To tank

Emergency
control room
Water tanks

Control rods

Water injection
pump

Reactordepressurizationequipment(nitrogen cylinders,etc.)

Steam generator

Under the new regulatory standards set by thegovernment, it is mandatory to install Specific
Safety Facilities (SSFs)* that are capable ofhandling terrorist and other threats.
Sendai Nuclear Power Plant was the firstin Japan to pass government inspection under
the new regulatory standards, and it began
operation in 2020. In addition, installation works
were also completed for Genkai Nuclear Power
Plant, which is currently in operation (Unit 3:
December 2022, Unit 4: February 2023).

Efforts to prevent nuclear accidents
We are working to improve our response capabilities by developing emergency
systems and conducting repeated drills in preparation of a nuclear accident sothat we will be able to promptly respond to any type of situation at our nuclear
power plants.
In addition, we are stepping up our cooperation with related organizations
and businesses by participating in nuclear power disaster drills offered by thenational and local governments, as well as joint drills carried out by nuclear
power operators.

In-house nuclear emergency drill simulatinga major accident at Genkai Nuclear Power
Plant (February 2023)

Environmental radiation control around nuclear power plants
We continuously monitor and measure radiation levels in the vicinity of nuclear power plants, and disclose thatdata in real time on the website of Kyushu EP. In addition, we regularly measure the radioactivity containedin environmental samples such as soil, seawater, crops, and marine products, and to date, there has been no
identification of any environmental impact due to the operation of our nuclear power plants.
The radiation dose received by people in the vicinity of the nuclear power plant is less than 0.001 millisieverts
per year, which is far below the legal dose limit of 1 millisievert per year and the target value of 0.05 millisieverts
per year set by the former Japanese Nuclear Safety Commission.
■Radiation levels in daily life (unit: millisieverts)
2.4‒12.9Filter vent100

CT scan (one scan)

Specific Safety Facilities* A facility with functions to prevent damage to the reactor containment vessel in theevent that the reactor’s core is severely damaged due to the loss of the reactor’scooling ability caused by the deliberate collision of a large aircraft with the reactor’s
auxiliary building or any other act of terrorism

Air travel between
Tokyo and New York(round trip)

Less than 0.001
Actual amounts released
from nuclear
power plants(annual)

0.1
0.01

0.001

50

(

1

0.01

In order to operate a nuclear power plant beyond the 40-year limit, an application for extension must be
submitted to the Nuclear Regulation Authority and permission must be granted.
We submitted an application for extension for Sendai Nuclear Power Plant Units 1 & 2 in October 2022, andwill take measures as appropriate toward getting permission.

10

Amount of radiation exempted frombeing regarded as radioactive
material for safety reasons
Clearance level (annual)Application for extension of the operation period of Sendai Nuclear Power Plant Units 1 & 2

100 Whole body irradiation

0.08‒0.11

Reactor vessel

0.06

No clinical symptoms have been identified
at doses lower than thisMaximum allowable for workers
at power stations (annual)Not to exceed 100 millisieverts per 5 years
and 50 millisieverts per year)

2.1 (Japan average)

Chest X-ray
done in group0.05 examination (one X-ray)
Dose targets in the vicinityof nuclear power plants (annual)

Natural radiation per person(annual)0.3
0.33
From the air (breathing) 0.48
From food
0.99
From space

From the Earth

Source: Prepared based on “Radiation Q&A,” The Federation of Electric Power Companies of Japan

Enhancing communication with local residents regarding nuclear power■Period of extension
Start date of extension

End date of extension

Extension period

Unit 1

July 4, 2024

July 3, 2044

20 years

Unit 2

November 28, 2025

November 27, 2045

20 years

In order to make local residents feel assured about nuclear power generation,
we make sure to disseminate easy-to-understand information about our
initiatives to improve the safety and reliability of our power plants. We arecommitted to making use of visits, plant tours and other opportunities toengage in interactive communication activities Company-wide.

Dialogue with local residents

KYUDEN GROUP INTEGRATED REPORT 2023

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

60

Implementing Continuous
Improvements in Energy Services■ Maintaining and Improving the Reliability of Supply
In order to deliver stable, high quality electricity to our customers that they can use with peace of mind, Kyushu
T&D is constantly working to patrol, inspect, and repair facilities, operate them safely and efficiently, and develop
and improve construction methods.

Preventing power outages

Planned updates to aging facilities
In preparation for the aging of facilities built to meet an increase in electric power demand following economic
growth, we are making progress in inspections and repairs focused on aging facilities and planned updates tofacilities in order to stably maintain facility functions over the long term. We are also working to improve theaccuracy of equipment life estimates through analysis of equipment deterioration data, etc., which is reflected inplans for the renewal of older equipment.

■ Promotion of Safe and Disaster-resistant Urban Development
Prevention of public electric shock incidents
Kyushu T&D has been regularly carrying out PR activities and requests for cooperation to civil engineering,
construction, and crane companies, elementary and junior high schools and boards of education, local
governments, police and fire stations, and other organizations in order to prevent incidences of electric shock
among the general public.
In addition, we are strengthening■ Number of public electric shock incidents (number of deaths andour safety measures by implementing
hospitalizations)equipment-related measures to prevent
FY
2018
2019
2020
2021
2022
public electric shock incidents that are
No. ofcaused by contact with power equipment.
1
1
0
0
0
incidents

No. of power outages (times)

Duration of power outages (mins.)

In order to prevent power outages along our transmission ■Annual duration and frequency of power outages per
customer household
and distribution lines, we are working to identify points of
561 (mins.)
hazard ahead of time by patrolling facilities, in addition to
Duration of power outages (mins.)
3.5
600 3.13 (times)
No. of power outages (times)
implementing countermeasures and preventing birds and
3.0500
other animals from building nests. We also continuously
2.5
400
2.0
survey the distance between trees and our power lines
Impact of typhoons,
300
earthquakes, etc.
1.5
and fell them as necessary with the understanding and200
1.0
cooperation of all parties concerned to prevent power
100
115 (mins.) 0.5
outages and equipment damage caused by trees.
0.15 (times)0
0.0
Other efforts include reinforcing our facilities to reduce
1970
1980
1990
2018
2019
2020
2021 2022(FY)
power outages caused by lightning, typhoons, and othernatural disasters, and maintaining them meticulously
based on their condition.

Disaster emergency information transmission system that utilizes
utility poles
In order to address the issue of the current emergency broadcast system
not fully reaching all areas, Kyushu T&D is working on a disaster emergency
information transmission system that uses speakers attached to utility
poles to deliver disaster preparedness information with clarity to residents.
Pilot testing of the system conducted from January 2020 in Toho Village,
Asakuragun, Fukuoka Prefecture obtained positive results. As such, webegan full-scale introduction of the system in this same village in March
2022. We are now actively visiting many municipalities in Kyushu topropose introduction of the system.

Speaker

Secondarystation
System installed on a utility pole

■ Improvement of Disaster Response Capabilities
Strengthening the disaster response system
We have been strengthening cooperation with relevant authorities to rapidly
restore power during disasters. We have entered into cooperative agreementswith not only the Ground and Maritime Self-Defense Forces, but also the 7th
and 10th Regional Coast Guard Headquarters and all local governments in the
Kyushu area (7 prefectures, 233 municipalities) in the event of a disaster.
Based on these cooperative agreements, we strive to maintain a joint
cooperation system, carrying out drills and other activities in preparation forlarge-scale disasters with related organizations.
In addition, we are also working to strengthen cooperation with othercompanies, including entering into agreements for joint cooperation with
West Nippon Expressway Company Limited, Lawson, Inc., and AEON Co., Ltd.
with the goals of facilitating the passage of emergency and other vehicles,
diversifying the means of procuring relief supplies, and securing sites that canserve as a base for recovery efforts.

Agreement finalization ceremony with the
7th Regional Coast Guard

Personnel and equipment loading training with
the Japan Coast Guard Headquarters

Responding to large-scale disasters
Kyushu EP and Kyushu T&D have developed a joint disaster response system and will work together with partnercompanies and government agencies to quickly disseminate information and resolve power outages as soon as
possible in the event of a typhoon, torrential rain, or other large-scale disaster.
In September 2022, Typhoon Nanmadol caused power outages in up to 350,000 households, mainly insouthern Kyushu. We mobilized up to 5,900 employees, including those from northern Kyushu, which suffered
relatively little damage, to dispatch support to the south, and worked closely with local governments to restore
power as soon as possible.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

61

Implementing Continuous
Improvements in Energy Services

Affordable Energy

Solutions Based Around Energy Services

Kyushu EP is working to improve management efficiency by reducing fuel costs through diversifying fuel procurement methods and reducing equipment procurement costs, thereby aiming to lower power generation costs.

The Kyuden Group works as one to provide products and services that precisely address the diverse needs andconcerns of our customers, lead to more prosperous, comfortable lives for them, and generate economic activity.
We will keep working to enhance our services based on customer feedback so that customers continue totrust and choose us.

■Efforts to reduce fuel costs
Initiative

Overview

Expand procurement throughcompetitive quotations· Procure with more competitive quotes to reduce fuel prices, transportation costs, import agent fees, etc.

Diversify supply sources· Expand the use of sub-bituminous coal and standard-grade coal, which are less expensive thanhigh-grade coal, and introduce high-ash coal, which is expected to be more economical· Diversify our supply sources by introducing South American and Central Asian coals that had
previously been shipped to Europe

Cooperate with other companies· Respond to fluctuating requirements flexibly in cooperation with other operators to optimize supply anddemand operations

Diversify pricing methods· Reduce the risk of price fluctuations and fuel procurement costs by diversifying and optimizing our pricing
methods, including fixed-price and market-price-linked methods· Adopt LNG pricing methods that use new indicators to curb procurement price fluctuations and improve
economic efficiency

Pursue economic efficiency
based on market trends· Reduce procurement costs through an appropriate combination of and negotiations on long-term, shortterm, and spot contracts based on market conditions

Strengthen participation in thefuel value chain· Acquire upstream equity interest (contributes to stable fuel procurement, flexibility, and enhanced
procurement capabilities by acquiring information from producers)· Reduce transportation costs by thoroughly managing and maximizing the use of our own vessels· Balance supply and demand internally with contracts for the use of LNG terminals overseas that canreceive and dispense LNG■Efforts to reduce equipment procurement costs
Measures

Overview

Make use of the competition
principle· Expand and enhance competitive effect by improving motivation toward placing orders, including
introducing new suppliers, separating orders, and ranked allocation, etc.

Assess overall advantages· Pursue overall economic efficiency through a multifaceted assessment of factors other than initial costs,
such as running costs and other maintenance costs, efficiency, durability, and reliability, etc.

Contrive ordering methods· Pursue economies of scale by joint procurement with other companies and combining and ordering
multiple projects· Apply optimal ordering methods to balance stable procurement with reduced costs, etc.

Work with suppliers and makeuse of their knowledge
Revise specifications andtechniques· Proactively make use of supplier knowledge, including value engineering (VE) and technological proposals,etc.
· Unit cost reduction activities such as cooperating with suppliers to revise specifications and improving
work efficiency on-site, etc.
· Ease required specifications, improve efficiency by contriving better techniques, etc.

· In FY2022, we achieved a cost reduction of ¥20.8 billion through efforts to reduce equipment procurement costs.

■

The Kyuden Group’s Diverse Products and Services Helping Solve Local andSocial Issues

Starting from February 2019, the Kyuden Group has been marketing the Group’s various
products and services to local governments and corporations under the name “with Q.”
In 2021, we packaged together Group products and services related toelectrification, renewable energy, and energy conservation to offer customers basedaround the theme of decarbonization, which is of growing societal concern.
Along with offering products in the four categories of disaster prevention measures,countermeasures against extreme heat, information security, and switching to LEDs,
which are of high interest to local communities and society, we also provide a lineup of
related products that take a separate approach for each customer, including medical
institutions, offices, and manufacturing sites, proposing optimal solutions for eachindividual customer’s issues.

We provide optimal services
that help efforts toward

decarbonization.

■ Providing Rate Plans that Meet Customer Needs for Decarbonized Electricity(For households)
Kyushu EP offers the “Marugoto Saiene (100% renewable energy) Plan” for a fixed monthly fee of ¥500 to meetthe needs of households wanting to use electricity derived from renewable sources, and the “Let’s Grow Future
Forest Plan” through which a fixed monthly donation of ¥300 goes to environmental conservation activities
undertaken by the Kyuden Mirai Foundation.

100% Renewable Energy Plan
Electricity rateplan(main contract)

Electricity rate
plan
(optional contract)

Household Plan

100% Renewable
Energy Plane’s electricityr hom
You renewable ene is
rg y
0%
!
10

(For corporate customers)
Based on the growing and diversifying renewableenergy needs of customers, as well as changes in theenvironment such as revisions to the non-fossil value
market, Kyushu EP offers three renewable energy andCO2-free plans for corporate customers to meet customer
needs with great care.

Let’s Grow Future Forest PlanYour support will help preserve Kyushu’s natural environment.

Monthlyelectricity bill+ ¥300
donation

Utilized for tree-planting, forest
growing, environmental education, andenvironmental conservation activities

Kyuden Mirai Foundation●Provides electricity from renewable energy

Renewable
Energy ECO
KiwamiRenewable
Energy ECO Plussources (hydroelectric, geothermal, etc.)
and renewable energy value, as well as
further value by specifying the type of powersource, etc.
●Contributes to the maintenance andexpansion of renewable energy sources●Provides additional renewable energy value

to the electricity you are currently using●Makes the introduction of renewable energyplans more accessible
CO2 Reduction
Plan●Provides CO2-free value added to yourcurrent electricity●Specialized in the value of zero-carbon

emissions

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

62

Co-creating a Smart andVibrant Society[Co-creating a Smart and Vibrant Society]

Realizing a Smart Society

Creating Safe, Secure and Comfortable Spaces to LiveTo create new businesses and increase earnings as part of our “new business development” strategy,
the Kyuden Group is collaborating and co-creating with companies in other industries (startups, etc.)
and creating new businesses and services by leveraging Group strengths and resources across all
Group companies.

The Group is promoting the development of urban areas that will increase the number of visitors to
the region, enliven the community, create jobs, and contribute to safe and secure communities for thesustainable development of local communities and society.

■ Open Innovation Program: Inspiration and Co-creation
We hold an open innovation program to create new businesses by combining
the creative, innovative business ideas of outside companies and the likewith the management resources of the Kyuden Group. Among the ideas
submitted through the program, we are making progress in materializing
those awarded through the selection process and working on pilot projects
toward their commercialization.
Development of the Smart Padlock
We are promoting the joint development of KEYes INC.’s Smart Padlock,which was awarded the excellence prize in FY2022. The Smart Padlock isa smart lock mechanism that allows the padlock to be unlocked and usage
history to be checked via a smartphone. Due to not needing to manage
physical keys, the Smart Padlock creates a system for reducing moving time
for transferring keys and managing entry/exit, as well as preventing trouble,
such as the loss or duplication of keys.

■

Contributing to the Sustainable Development of Communities and Society
through Our Urban Development BusinessWe are working on a wide range of urban development projects in not only the Kyushu region, but the rest ofJapan and overseas, leveraging the Kyuden Group’s corporate network and other resources.
In addition to expanding our office, housing, airport, and other businesses, we will step up our initiatives in new sectors
such as area development, including urban development and mixed-use development, industrial real estate including
logistics facilities, and fee-based businesses. Further, as an energy provider, we will strive to decarbonize society bypromoting environmentally friendly development through improved energy efficiency and low-carbon energy use.

The Open Innovation Program award ceremony■ Offering Services to Support the Safety and Security of Communities
At the Kyuden Group, we offer services that support the safety and security of local communities and society.
These include labor-saving drone services that enable more advanced on-site work and a monitoring service forchildren and the elderly.

Smart Padlock■ Creating New Services and Solutions Across Divisions
We are exploring the use of digital technology to improve the value of our products and services, fundamentallyreform our customer contact points, and radically reform our business model, and are taking on the challenge ofcreating an array of new businesses that will generate new value and lead to solutions for social issues, such as
by building a platform to analyze and utilize data from smart meters and the like and offering services based on it.
Development of Q-ie Monitoring
Kyushu EP has developed Q-ie Monitoring, a service aimed at real estate companies that uses data on electric
power used in 30-minute intervals and measured using a smart meter and proprietary analysis technology
to notify relatives of tenants who live alone in rental properties when there has been a change in that
person’s activities. The service was born through a collaboration between the Marketing Division and Digital
Transformation Promotion Division while working to promote DX internally. The aging of society is causing a social
issue whereby rental properties drop in value when elderly tenants die alone at home, and consequently, theelderly end up being refused as tenants. We will strive to create an environment where people who live alone canmove into rental properties through this service with peace of mind.

Aerial photography, inspection, and surveying services by drones
Kyushu EP provides the Kyuden Drone Service (QDS), which uses a wide selectionof drones to carry out aerial shooting, inspection, and surveying across Kyushu
and other regions. We offer a variety of services that contribute to solving issues,
including internal inspections of smokestacks using special drones and visualizing
woodland resources by high-precision image analysis that combines laser
surveying with AI.
IoT-based monitoring service for children and the elderly
Kyushu T&D offers the monitoring service Qottaby in Fukuoka City and the towns of Kasuya and Hisayama. Parents
and guardians, or police officer can check the location information of children or the elderly by a monitoring device
carried with them. Recently, with crime prevention volunteers getting older and a rise in the number of households
where both adults are working, less people are taking part in neighborhood watch activities. In response to thisdecrease, we are using ICT to create safe and secure places to live.
LocationrecordMonitoring point

The person’s location is recorded when he/sheenters within a radius of approximately 30 to 50
meters* of a watchdog point.
*Depends on the surrounding environment.

LocationrecordLocationrecordLocationrecordMonitors
Administrative
services
Dedicated
contact point

Police,etc.

Paid-for services
Parents and guardians

LocationrecordMonitoring
deviceApprox. 43 x 43 mm
Waterproof
design (IPXS)
Battery life of
approx. 1 year

KYUDEN GROUP INTEGRATED REPORT 2023

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

63

6 Data Section

Co-creating a Smart andVibrant Society

Regional Vitalization
The Kyuden Group is working to create new businesses and services together with local communities
aimed at the sustainable development of local communities and society.

■ Promoting Initiatives for Solving Regional Issues
Kyushu EP has entered into partnership agreements with local governments across Kyushu to promote solutions
to local issues as well as sustainable community development.
Utilizing the Kyuden Group’s management resources, products, and services, we are working to develop
systems to restore power as soon as possible in the event of a disaster, distribute needed equipment andsupplies to evacuation centers, stimulate industry by taking advantage of local tourism resources, and promoteelectrification for a zero carbon world.

■ Q-Den Nigiwai Startup Project

The Kyuden Group is actively working to attract companies from outside the Kyushu region by utilizing its
network spanning throughout Kyushu.
Kyushu EP branches located in each of Kyushu’s prefectures liaise with local governments to match themwith companies, and provide support and other services to meet the needs of companies and other entities
expanding to the Kyushu area. We also introduce products and services suitable for new plant and officeconstruction and relocation by utilizing the Kyuden Group’s products.
To contribute to regional revitalization, Kyushu T&D liaises closely with local governments to gather
information on industrial parks and idle land, and reviews measures on supplying electricity for expedited supply.

■Supporting Regional Economic Revitalization by Providing a Local Information
Platform

In May 2021, Kyushu EP established Machi no Wa Co., Ltd. with SBI Holdings, Inc. and The Chikuho Bank, Ltd. forthe purpose of vigorously promoting regional development and community revitalization. This company provides
electronic services for premium gift certificates to local governments and organizations.
Based on this service, the company aims to serve as a regional platform that
People from outside the region
consume in the region
not only circulates local currency within the region but also brings in people andmoney from outside the region by issuing childcare benefits, tourism promotion
coupons, and other digital local currencies according to the policies of each
community.
In February 2023, Machi no Wa was selected for the Green Life Point project
People living in the region
promoted by the Ministry of the Environment, and will contribute to the realization
consume within the region, not outsideof carbon neutrality through such measures as awarding points via a local
currency application for environmentally conscious behavior.
In the future, the company will work to build a sustainable ecosystem that
contributes to solving regional issues and creating new value through co-creation
The kind of local community that Machi
with various parties.
Outside the region

Within the region

Goods/services

People/money

Within the region

Local residents

Money in the region

Producers, shopping districts,
retailers, restaurants, roadsidestations, transportation, andservices in the region

Goods/services

no Wa is aspiring toMultiple schemes ina single app
Electronic gift certificate
with premium

Dissemination of
information through the app
Daily life information
Event information
Tourism and industry
information

Grants and subsidies

Shopping district
information

Hometown Tax
Payment

Recruitment
information
Disaster information

Coupons・・・

Local information platform connecting communities and people

Industrial
promotion

Environment

Toward sustainablelocal communities
through co-creationChild
rearing andeducation

Disaster
preparedness
Urban
development

WelfareandhealthEnergySolving local issues
Creating new value

Regional points

Local information
platform

Kyushu EP launched the Q-Den Nigiwai Startup Project in July 2019, which aims to help solve local issues bybuilding sustainable business models in collaboration with local communities. This project will focus on thethemes of “increasing the number of visitors to the area,” “creating a population of people who relate to andsettle in the region,” and “promoting local industry.” We will work together with local residents to plan and jointly
undertake sustainable businesses that solve local issues.
In 2020, we established the Kyuden Nigiwai Startup Company, a general incorporated association to serve as
the business entity for the project, and currently, the company is promoting initiatives at two sites in Nagasaki
and Fukuoka prefectures.
In Higashisonogi Town, Nagasaki Prefecture, we have been collaborating with the Higashisonogi Hitokotomono
Foundation to sell products aimed at increasing the number of visitors in the area, as well as operate acommunity hub with the aim of creating a connected and settled
population. At umino Wa (opened in February 2022), a community
hub for interaction between local residents and tourists featuringa café where people can enjoy the local specialty, Sonogi Tea, andother facilities, we share information on the region and support thosemoving to or starting a business in the town.
Furthermore, on Ainoshima Island (a remote island that is part ofumino Wa (Higashisonogi Town, Nagasaki Prefecture)
Shingu Town, Fukuoka Prefecture), we are working as one with ourbusiness partner, Ainoshima Regeneration Council, and Shingu Town,
on the three measures of industry creation, living, and new residents inlight of the shortage of people available to work in the local community.
To develop the fishing industry, a key industry on the island, we havebeen developing a processed seafood business, and since January2023, we have been working to create industry by manufacturing andselling bouzushi, a sushi dish prepared by pressing a whole fish on top
Bouzushi(Ainoshima Island, Shingu Town, Fukuoka Prefecture)of a sushi roll, using seasonal fish from the Genkai Sea.

■ Attracting Businesses

KYUDEN
GROUP INTEGRATEDKYUDEN GROUPINTEGRATEDREPORT 2023 REPORT 2023

Chapter

5Foundation for Creating Value

CONTENTS
Toward Sustainable Enhancement of Corporate Value[Strengthening Governance]

Further Strengthening Human Capital Management . . . . . . 67

Promotion of Value Co-Creation and Innovation . . . . . . . . 68

Improving Effectiveness of Corporate Governance . . . . . . . 77
Overview of Dialogue between External Directors . . . . . . . 80
and Investors
Members of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 81

Securing and Developing Human Capital . . . . . . . . . . . . . . . 70

Ensuring Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Promotion of (DX) Digital Transformation . . . . . . . . . . . . . . . 71

Strengthening Risk Management System . . . . . . . . . . . . . . . . 86

Promotion of Diversity and Inclusion . . . . . . . . . . . . . . . . . . . . 72

Strengthening Supply Chain Management . . . . . . . . . . . . . . . 87

Respect for Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Ensuring Information Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Prioritization of Health and Safety . . . . . . . . . . . . . . . . . . . . . . . 75

Enhancing Stakeholder Engagement . . . . . . . . . . . . . . . . . . . . . 89

[Promoting Growth, Success, and Diversity of Human Capital]

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

65

Foundation for Creating Value

Foundation for Creating Value
Corporate Value Enhancement Model
The Kyuden Group has incorporated its materiality initiatives into its Medium-term ESG Promotion Plan as a concrete
action plan it is steadily advancing. Based on the two ideas of “promoting growth, success, and diversity of humancapital” and “strengthening governance,” we will create a firm foundation for creating value.
■ Medium-term ESG Promotion Plan
Materiality

Corporate value(economic value)=

Cost of capital− Growth rate

Medium-term Targets(FY2030 target unless otherwise stated)

FY2023 Targets

Major Action Plans

Promoting Growth, Success, and Diversity of Human CapitalStrengthening Governance

Respect for Human Rights

Reduce the risk of serious human rights violations, including
throughout the supply chain

Introduction of new and expanded initiatives (12 items) related tohuman rights due diligence and remedial measures• Steadily promote human rights due diligence and remedial
measures• Implement systematic and effective inner branding incooperation with related departments

Promotion of Value Co-Creation and Innovation

Create new value by leveraging individual will
― Number of commercialized projects: more than 30 (cumulative
total to FY2030)― Number of proposals and entries: 10,000• No. of participants in KYUDEN i-PROJECT: 100 participants/year• No. of individual projects leading to commercialization, services,and ﬁnal proposals: 3 or more projects/year• Strengthen functions to create business ideas and develop
projects• Strengthen functions to accelerate growth of potential projects• Create a foundation and culture that fosters innovation

Promotion of Diversity and Inclusion

Organization that makes the most of diversity of knowledge andexperience― Female manager appointments: 30% or more (percentage ofwomen appointed to section chief level or higher (excluding
executives))― Management transformation training: All heads of organizations
to attend (FY2025)• No. of women newly appointed as managers or to top
management positions in the organization (FY2019–2023): Morethan three times that of FY2009–2013• Percentage of male employees who took childcare leave: 100%
• Eruboshi certiﬁcation• Create an organizational culture that leverages and co-creates
diversity of knowledge and experience• Create a system that allows for ﬂexible work styles

Prioritization of Health and Safety• Zero serious occupational accidents including contractors andsubcontractors• Continuous approval under the Certiﬁed Health & Productivity
Management Outstanding Organizations Recognition Program• Overall health risk in stress check: 80 or less

• No. of serious accidents (employees): 0• Continuous approval under the Certiﬁed Health & Productivity
Management Outstanding Organizations Recognition Program• Overall health risk in stress check: 80 or less

• Thoroughly implement preventive measures that focus on serious
accidents• Promote health management based on the Kyushu EP Health
Declaration

Securing and Developing Human Capital• DX follower training: All employees to participate (FY2025)(training to acquire basic knowledge and skills in digitaltransformation)• DX specialist training: Approx. 240 participants (FY2025)• DX specialist human resources training: 200 participants(to be developed intensively in FY2023)• Secure and develop human resources with diverse knowledge and experience,
including highly specialized human capital and DX human capital• Create a system that stimulates employee autonomy and makes the most of it• Create an organizational culture that leverages and co-creates diversity ofknowledge and experience

Promotion of (DX) Digital Transformation(business framework and process transformation, etc.)

Proﬁt generation effect of digital transformation:
Approx. 40 billion yen (cumulative total to FY2030)• Promotion of individual digital transformation plans: 50 cases• Self-BI (Tableau) implementation and deployment: 50 cases• Check the progress of the digital transformation plan of eachdepartment in charge, and provide appropriate advice andsupport for its implementation• Provide support for further promotion of data utilization based on
business unit needs

Improving Effectiveness of Corporate Governance• Ensure diversity and appropriate scale of the Board of Directors(percentage of external directors, etc.)• Ensure transparency and objectivity of nominations andremuneration• Enhance monitoring system• Enhance the information we disclose relevant to corporate
governance• Improvement of the functioning of the Board of Directors• Further delegate authority to persons responsible for businessexecution to accelerate decision-making• Further invigorate discussions on management strategies andimportant issues for the entire group, etc.
• Verify the signiﬁcance of policy shareholdings and take action to
reduce the number of shares held

Improve the accuracy of risk management

Improve the accuracy of risk management

Clarify major risks, share risk awareness among senior
management and executive ofﬁcers, reﬂect risk countermeasuresin the Medium-term Management Plan, and implement propermonitoring• No. of serious compliance violations: 0• Monitoring of the number of whistle-blowing and consultationcases• Take appropriate measures to address the results of the Japan
Fair Trade Commission investigation and inappropriate handlingof customer information of new energy providers, etc., and takethorough measures to prevent recurrence• Prevent compliance violations that could have a signiﬁcant
impact on management• Establish a contact person in charge of regulating conduct• Communicate messages from senior management and enhancedialogue

Ensuring Compliance

Efforts to address materiality(2) Expand medium to(3) Reduce
long-term opportunities
risk< 2030 Target > Improve employee engagement ‐ Employee satisfaction score: 80% [Overall and focused (challenge, fulfillment, sense of accomplishment, etc.)] / Increase added value*1 per employee – 1.5x compared to FY2021

Key Issue

Strengthening Risk Management System(1) Maximize short-term opportunities

Income• No. of serious compliance violations: 0• Creation of an organizational culture conducive to consultations

Impact: (1) Maximize short-term opportunities (increase income), (2) Expand medium to long-term opportunities(increase growth rate (future growth expectations)), (3) Reduce risk (lower the cost of capital)

Impact
(1)

(2)

(3)
〇
〇

〇
〇
〇

〇
〇

〇
〇

FY2022 Results

Scope of
Performance
Aggregation• Identiﬁcation of signiﬁcant human rights
risks• Establishment of Supplier Code of
Conductー• No. of participants in KYUDEN
i-PROJECT: 169 participants/year• No. of individual projects leading tocommercialization, services, and ﬁnal
proposals: 2ー• No. of new female managers appointed:
2.72 times increase (16 (49 cumulatively))
No. of women appointed to top
management positions in the organization:
4 times increase (6 (28 cumulatively))• Percentage of male employees who tookchildcare leave: 80.6%• Eruboshi certiﬁcation*2• No. of serious accidents (employees): 0• Continuous approval under the Certiﬁed Health &Productivity Management Outstanding
Organizations Recognition Program• Overall health risk in stress check: 76*2• DX specialist training participants: 36• DX literacy training participants:
Approx. 9,000*2• Promotion of individual digitaltransformation plans: 50 cases• Self-BI (Tableau) implementation anddeployment: 30 casesー• Enhance the information we disclose
relevant to corporate governance• Revision of standards for Board of
Directors meetings*3

Conduct company-wide risk analysis, shareawareness with senior management, andreﬂect risk countermeasures in theMedium-term Management Planー• No. of serious compliance violations: 3• No. of whistle-blowing andconsultation cases: 30 (No. of
consultations through complianceconsultation desks and theHarassment Advice Counter of Kyushu
EP and Kyushu T&D)

*2

〇
〇
〇
〇

〇

〇

〇
〇
〇
〇

〇
〇

〇
〇
〇

*1: Added value = operating revenues minus value of external purchases (such as fuel expenses, outsourcings costs) anddepreciation. I.e. ordinary income + personnel expenses + rent + finance expenses + taxes and dues.
*2: Kyushu EP and Kyushu T&D *3: Kyushu EP

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

66

Foundation for Creating Value■ Medium-term ESG Promotion Plan
Materiality

Key Issue

Strengthening Supply Chain Management

Ensuring Information Security

Strengthening Governance

Enhancing Stakeholder Engagement(Building Trust with Stakeholders, etc.)

Improving and Strengthening our Financial Structure

Medium-term Targets(FY2030 target unless otherwise stated)
Raise supply chain awareness of ESG

FY2023 Targets

Major Action Plans

Response rate to questionnaire survey on sustainability
improvement initiatives for major business partners: 90% or
higherPromote initiatives to improve sustainability in the supply chain,including carbon neutrality and human rights considerations,based on the Sustainable Procurement Guidelines• No. of personal information leaks: 0• No. of serious information security incidences due tocyber-attacks: 0• No. of system failures that have a signiﬁcant impact on
customers: 0• No. of personal information leaks: 0• No. of serious information security incidences due tocyber-attacks: 0• No. of system failures that have a signiﬁcant impact on
customers: 0

Raise the level of stakeholder satisfaction— Improvement of trust in the Group— Improvement of customer satisfaction• Level of trust in and satisfaction with the Kyuden Group― Trust: 59.1% or higher (over FY2021 results)― Satisfaction: 63.4% or higher (over FY2022 results)• Improvement ratio in the questionnaire survey― Image of the Kyuden Group: 90% or more
― Environmental conservation awareness: 90% or more

Achieve ﬁnancial objectives― Consolidated ordinary revenue: ¥125 billion or more
(FY2025)
Domestic Electricity Business: ¥75 billion (FY2025)
Growth businesses: ¥50 billion (FY2025)― Equity ratio: Approx. 20% (end of FY2025)• Consolidated ROIC: 2.5% or more (FY2025)

Achieve ﬁnancial objectives― Consolidated ordinary revenue: ¥125 billion or more
(FY2025)
Domestic Electricity Business: ¥75 billion (FY2025)
Growth businesses: ¥50 billion (FY2025)― Equity ratio: Approx. 20% (end of FY2025)• Consolidated ROIC: 2.5% or more (FY2025)

Impact: (1) Maximize short-term opportunities (increase income), (2) Expand medium to long-term opportunities(increase growth rate (future growth expectations)), (3) Reduce risk (lower the cost of capital)• Thoroughly implement measures to prevent recurrence in termsof awareness, education, systems, and business operations
based on the cause of the information leakage incident• Strengthen the response toward security incidents further• Strengthen information security measures across our entire
supply chain, including external business partners• Promote steady system development and operation inaccordance with the division of responsibilities and roles
between the business and IT departments

Impact
(1)

(2)

(3)

〇

〇
〇
〇
〇

〇

• Develop public relations and public hearing activities to enhancetrust in the Kyuden Group― Promote dialogue with customers and other activities toregain their trust• Enhance information dissemination to stakeholders to improve
corporate value• Promote collaborative activities in communities in line with theneeds of each branch area and raise environmental awarenessamong the next generation through face-to-face and digital
environmental education

〇

〇

〇

〇

• Monitor the progress of plans, identify downside risks andexamine their countermeasures to achieve ﬁnancial targets andquickly restore the damaged ﬁnancial base (reﬂect in themedium-term management plan)• Improve proﬁtability of growth investments by continuing toensure thorough efﬁcient electric business investment andsteadily ﬁnding proﬁtable projects• Set and publish ROIC targets• Implement PDCA based on ROIC targets (management throughmedium-term management plan and divisional overview reports)• Conduct activities to promote understanding of capital efﬁciency
and ROIC

〇

〇

〇

〇

〇
〇

〇
〇

〇

〇

〇

FY2022 Results

Scope of
Performance
Aggregation

Establishment of Supplier Code of
Conduct*1• No. of personal information leaks: 1* Guidance from and reports to the
Personal Information Protection
Committee based on laws andregulations• No. of serious information security
incidences due to cyber-attacks: 0• No. of system failures that had asigniﬁcant impact on customers: 0*1• Level of trust in and satisfaction with
the Kyuden Group― Trust: 74.8%― Satisfaction: 63.4%• Improvement ratio in the questionnaire
survey― Environmental conservation
awareness: 90.6% or moreー• Consolidated ordinary revenue: -¥86.6
billion(-¥25.6 billion when the impact oftime lag is excluded)― Domestic electricity business:-¥133.4 billion― Growth businesses: ¥47.4 billion(consolidated elimination: -¥0.7 billion)• Equity ratio: 12.2% (10.4% when the
hybrid bonds assigned equity credit
excluded)ー*1: Kyushu EP and Kyushu T&D*2: Kyushu EP

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

67

Further Strengthening
Human Capital Management

Toward Sustainable Enhancement of Corporate Value

Further Strengthening
Human Capital ManagementーPromoting Growth, Success, andDiversity of Human Capital ーAs the business environment surrounding the Kyuden Group undergoes profound changes, our human capital will be the driving force in realizing
the Management Vision 2030 and Carbon Neutral Vision 2050. For this reason, we will further strengthen human capital management based on thefollowing concept, with the aim of “creating future value by fostering an organizational culture where people and the organization can continually
grow.” We have set “Improve employee engagement” and “Increase added value per employee” as KGIs and quantitative indicators to accurately
grasp our progress in achieving our Vision for the Future.
Furthermore, in order to foster a corporate culture where both people and the organization can grow together, we have launched the Qden
Transformation (QX) project and are rolling out various initiatives.

Qden Transformation (QX) Project

Basic Concept
In order to respond to changes in the business environment and achieve organizational targets, even as individual
values diversify, we will make “linking individual passions with the vision of the organization to create value whilepeople and the organization grow together” the core of human capital management● To achieve this, under the strong leadership of senior management, we will work to create a framework for fosteringa corporate culture in which people and the organization grow together transforming the behavioral patterns of theentire company●

To further strengthen human capital management, we will accelerate efforts for “human and organizational growth” and the“creation of added value,” in which each employee enthusiastically takes the initiative to act on their own toward a sharedvision and builds organizational strength through co-creation.
We launched the QX Project in FY2023 to embed this concept in our corporate culture. Through this project, the entire
company will join forces to promote efforts under the strong leadership of senior management, with the president personallycommunicating messages to employees.

Group Philosophy: “Enlighten Our Future”
Management Vision 2030

Carbon Neutral Vision 2050

Create value sustainably through therealization of management strategies[KGI] Improve employee engagement:
Employee satisfaction score of 80%[KGI] Increase in added value * per employee:
1.5x compared to FY2021

Superiors

Creating value sustainably through human andorganizational growth

Promotion of Digital Transformation (DX)
Creating value and improving productivity and job fulfillment
through reforms to our business structure and processes

Respect for Human Rights

Promoting initiatives in all business activities,
including the supply chain

Individual
Dialogue & Support
Colleagues[Key Issues]
Co-creating Value & Promoting Innovation

Connect /Contribute

Share

Securing & Developing Strategic Human Capital

Systematically developing managerial human capital and theknowledge and skills necessary to realize our management strategies

Promotion of Diversity and Inclusion

Support for the Workplace

Creating systems and environments that promote the participation ofdiverse human capital and harness their abilities

Prioritization of Health and Safety

Promoting business and health management practices thatprioritize safety* Added value = operating revenues minus value of external purchases (such as fuel expenses, outsourcings costs) and depreciation.
I.e. ordinary income + personnel expenses + rent + finance expenses + taxes and dues.

Understand the current situationand support improvements
through the engagement surveys

Conduct training for allorganizational leaders totransform their management style

Provide diverse learning
opportunities (management,
teamworking, etc.) through theestablishment of a Group-wide
platform

Create Value

Experience a sense of fulfillment andpurpose in working for the Kyuden Group

Senior Management’s
Commitment

Human Growth x
Organizational Growth[Vision for the Future]
Creating Future Value by Fostering an Organizational Culture Where People
and the Organization Can Continually Grow

Company / Workplace Vision & Goal

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

68

Promoting Growth, Success,and Diversity of Human Capital[Promoting Growth, Success, and Diversity of Human Capital]

Promotion of Value Co-Creation and Innovation– Creating Value Sustainably Through Individual Growth and OrganizationalGrowth –We are working on “individual growth,” in which employees share the vision of the Group andworkplace and take on challenges autonomously, and “organizational growth,” in which we leverage
the strengths of diverse human capital. Through these efforts, we will fully leverage the strengths ofhuman capital with diverse knowledge and experience and work together to realize value co-creationand innovation.

■ Implementing “Core Actions”

・Speed & Challenge: Quickly, eagerly, and constantly challenge yourself■ Cycle to build momentum for implementation

Example-sharing and Commendation related Initiatives
・ Share and roll out examples of implementation
across the entire Kyuden Group by posting on our
information-sharing platform (Tsunagaru Site)▼

・ Commend outstanding initiatives by employee vote(employee participation system)▼
Take ownership of the “core actions”

Share examples andpresent awards

DiverseExperiences

Career realization
through
applications
Endeavors inside
the company

In-house recruitment (applications for specific work)

Idea proposals

KYUDEN i-PROJECT (startup proposals)

No. of people utilizing the program(cumulative)• Concurrent jobs inside the company:
105 people (29 subjects)• Side jobs outside the company:
15 people (16 subjects)

Concurrent jobs inside the company(ideas and plan proposals for divisions)Side jobs andconcurrent jobs
Endeavors outside
the company

System-based personnel changes(FY2022)• Job Challenge: 34 people• Internal recruitment: 31 people

Job Challenge (applications for divisions)Side jobs outside the company(endeavors toward work outside the company)

Privately funded graduate (or post-graduate) studies and study abroad(leave of absence for studies)• Voluntary training participants(FY2022): 1,630

Company-funded study abroad■ Supporting Workplace Transformation Through Engagement Surveys

・Learning: Enjoy learning and growing indefinitely

Evaluate

CareerRealization

Various training sessions (voluntary) and self-development support

・Open: Open your mind to new worlds

Review andmotivate■Support for self-directed efforts to challenge oneself

Learning■ Core actions of each individual to realize our management vision

Createopportunities forthe implementationof core actions

By supporting each employee in self-directed learning and gaining diverse experiences inside and outside thecompany, we will help them achieve their individual career goals and create value for the Kyuden Group.

Human resource bank (matching skills of individuals with departments)

We have established “core actions of each individual to realize our management vision,” and encourage
employees to implement them, leading to “individual growth.”
Concrete examples of employees practicing essential activities are appropriately evaluated fromperspectives such as embracing challenges and efforts made. We also share excellent initiatives throughout
the Group and commend them to encourage further practice. On top of that, we will motivate each employee
to implement those actions by reviewing their progress in supervisor meetings and confirming their next
initiative’s goals.

Implement■ Support for Self-directed Efforts to Challenge Oneself

Foster a workplace culture of proactive
implementation

In order to transform into workplaces that increase employee engagement (“enthusiasm” to take on challenges
autonomously based on alignment with the Group’s direction) we will gradually introduce engagement surveys inall workplaces starting in FY2023. This will enable us to monitor the status of employee engagement across theGroup, evolve Group-wide measures, visualize workplace conditions, and promote initiatives aimed at workplacereform, with a focus on the improvement items relevant to each workplace.
We will also accelerate the transformation of workplace culture by conducting Management Transformation
Training for all organizational heads to cultivate management skills and attitudes that will enhance employee
engagement.
Group-wide improvement cycle[KGI: Improve employee engagement]
・Monitor employee engagement through surveys
・Evolve Group-wide measures, leading to improvements inengagement
Workplace-specific improvement cycle
・Visualize workplace conditions through surveys and identify issues
・Facilitate dialogue within the workplace and discuss andimplement initiatives to improve workplace culture・Measure the effectiveness of initiatives through pulse surveys
focused on improvement items→ Continue/review activities, change improvement items

Group-wide

SurveyPulse survey

Improvement
activities

Developmentof measures

Workplace
Intraworkplacedialogue

Issue
identiﬁcation

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

Promoting Growth, Success,and Diversity of Human Capital■ Co-creation of New Businesses and Services – KYUDEN i-PROJECT –Main commercialization projects born from KYUDEN i-PROJECTIn Kyushu, the very foundation of the Kyuden Group, we aim to contribute to more comfortable andenvironmentally friendly customer lifestyles through our efforts to generate innovation and to change the world
through the creation of world-class businesses and services in Kyushu. In order to realize this goal, we havelaunched the KYUDEN i-PROJECT in January 2017 and are working as a united Group to promote innovation.

weev

PRiEV

An EV sharing service for
condominium residents.
Provides residents witha safe, convenient, andcomfortable EV experience

An EV charging service for
condominiums. DedicatedEV charging facilities are
installed in individual
parking lots to provide
a pleasant EV charging
environment

Initiative promotion framework
The KYUDEN i-PROJECT is a project directly under the president in order to achieve prompt and flexible decisionmaking without being bound by traditional organizational and operational conduct.
When considering the commercialization of businesses and services, we appoint venture capitalists, university
professors, and other parties as advisors so that we can incorporate the opinions of outside experts.

KYUDEN i-PROJECT

Sponsor: President
Sub-sponsors: Vice president, others
Advisors(in-house and outside experts on innovation)

Each division
Group companies

Incubation Lab(Secretariat)

Collaboration to create business
Share knowledge and know-how

Project to create business ideas: i-Challenge
We are working to create promising business ideas
by recruiting people and teams from across theentire Kyuden Group with an interest in and passion
for innovation, and combining a “nurturing phase”
involving workshops and mentoring by outside experts
with a “selection phase” involving presentations.
i-Challenge has been held annually since FY2017, andit will be held for the seventh time this year. About 500
business ideas have been proposed, and about 800
members have participated to date.

■No. of i-Challenge proposals and participants (total)

Production and sales of lithium-ion battery packs business

PDLOOK

Manufacturing and salesof battery packs forindustrial machinery using
EV lithium-ion batteries,
utilizing battery control
and monitoring technology,
etc., owned by Kyushu EP

A service that measures anddiagnoses the soundness ofprivate use on-site cables of
special high-voltage and highvoltage operators without
stopping their businessactivities, and monitors trends
and diagnoses indicators ofabnormalities, which is usefulfor maintenance management

Mirai salmon

Okeiko Town

An onshore salmon farmconstructed on the site of the
Buzen Power Plant (Buzen
City, Fukuoka Prefecture).
Contributes to a stable supplyof marine products in Japan
with a target production
capacity of approximately
3,000 tons annually

A learning-matching
platform that links people
who want to teach withpeople who want to learn

781

VOICE

636
344 368251424

519 483

530

208

2018

2019

2020

2021

2022

■ No. of proposals ■ No. of participants

Leveraging my experience in tasks that do not have a set ‘form’ to contribute to the creationand growth of new businesses.
I am responsible for supporting new business ventures. So far, I have been involved in the new
business projects themselves, experiencing tasks such as designing evaluation metrics anddeveloping new services that don’t have a set ‘form’. Particularly in the development of newservices, I repeatedly considered what value we could provide to our customers while building
a specific service. While leveraging this experience, I would like to continue to extend my radar
across various fields, and strive to contribute to the creation and growth of innovative businesses.

Ayumi Takata
Acceleration Group
Incubation Lab
Corporate Strategy Division
Kyushu Electric Power69

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

70

Promoting Growth, Success,and Diversity of Human Capital

Securing and Developing Human Capital
We are working to secure human capital with the knowledge andskills necessary to realize our management strategies, both by
fostering internal talent and acquiring external talent. In addition,
we will further accelerate the acquisition of human capital and theirautonomous growth through an evaluation and compensation systemthat leverages and recognizes diverse knowledge and experience.

■ Nurture: Foster Human Capital

Discover
Secure humancapitalLeverage
andrecognize
Evaluate andcompensate
accordingly■ Discover: Secure Human Capital with Diverse Knowledge■ and Experience

NurtureFoster humancapitalCombine diverse knowledge and experiences
Leverage the knowledge
former employees gained
outside the Company

Flexibly utilize
in various ways
Acquire external
perspectives• Accepting external workers withside jobs and concurrent jobs
• Contract employees(advanced and specialized)• People with experience at other companies• Human capital with a high level of
specialization (in startups or growthbusinesses)■ Leverage and Recognize: Evaluate and Reward Diverse Human Capital
To enable diverse human capital to demonstrate their fullest potential, we conduct highly objective and well-reasoned
personnel evaluations that recognize multiple career paths and encourage insights and further growth.
■ Multiple career paths
Professional path

Demonstrate rare knowledge, skills, experience, and expertise with highmarket value (compensation based on market value)

Expert path

Demonstrate expertise developed in-house in specific fields■ Initiatives in respect of personnel evaluations
360-degree evaluation

Collect facts and other information about the evaluatee’s behavior to
supplement a supervisor’s evaluation

Feedback on evaluation results

Make it a rule to notify evaluatees of their performance evaluation results inorder to improve their understanding of the results and further motivate them

Optional training

Compulsory education

By level• Employees who left due to childbirth, childcare,nursing care, etc. (comeback system)• Employees who left to start their own
businesses, switch companies, etc.
(job return recruitment)■ Overview of the education system

All levels

We are working to acquire diverse perspectives by hiring people with experience at other companies, hiring highly
specialized human capital targeted at new businesses and growth businesses, and rehiring employees who havepreviously left the Company due to childbirth, childcare, family care, or other reasons. From May 2021, we havebeen flexibly utilizing external personnel, such as accepting outside workers with side jobs and concurrent jobs.

In addition to supporting character-building and the development of common skills through compulsory
education for all job levels, we provide level-specific education to help employees acquire and improve theskills required at each level, such as basic skills development training for young to mid-level employees andleadership development training for mid-level to management-level employees.
We also offer a wide menu of training options to meet the needs of each individual, which sparks the desire
for autonomous learning. In addition to the above, we cultivate the expertise we need for our businesses throughon-the-job training and division-specific training.

(voluntary/selective)

Problem-solving skills training

・Career support ・Sustainability ・Compliance・Human rights ・Diversity ・Safety
・Information security and personal information protection

Training for new department heads
and new general managers
Training for newly appointed groupmanagers

Employees can choose from a diverse
range of options to learn what they need,when they need it

Specialmanagement level
Management level

Training for new managers
Career advancement training foryounger employees
New employee training

Self-development
support・Distance learning
・E-learning
・Assistance in acquiring
important qualifications, etc.

Management leader training
・Executive course
・Advanced course
Basic management course
Management &leadership course

Mid-level employees

Dispatch-type
training
・ The KyushuAsia
Institute of
Leadership・ Overseas
MBA, etc.

Next generation capacity
building course(implemented on a trial basis)

Young employees

・Content based on the concept ofautonomy, co-creation, and learning
together

Department-specific training/on-the-job training support, on-site WS
On-the-job training (OJT)

Securing and developing human capital in DX
DX leads to improvements in productivity and the creation of new businesses by fundamentally transforming
business operations, and it is essential to the realization of the Kyuden Group Management Vision 2030. For
these reasons, we are systematically developing human capital with the knowledge and skills necessary
to promote DX based on our DX Roadmap.
For details, refer to “Promotion of Digital Transformation (DX).” P71

Developing managerial human capital
We select human capital with future management potential at an early stage and implement an educational
program (Management Leader Training) to progressively cultivate the mindset, perspective, and judgment
required of managers. Participants are managed in a human capital pool and systematically developed
through personnel rotations that allow them to gain experience in multiple areas and on-the-job
assignments to key positions in Group companies.

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

71

Promoting Growth, Success,and Diversity of Human Capital

Promotion of (DX) Digital Transformation (business framework and process transformation, etc.)
The Kyuden Group views DX as being essentially about “corporate transformation.” By utilizing digitaltechnology and data to fundamentally transform our services, business model, and business processes, we aim to not only increase revenue, create new businesses, and reinforce our operationalfoundation, but also contribute to improving operational productivity and the sense of fulfillment felt by
each and every employee by transforming our people, organizational climate, and culture.

■ DX Vision & DX Roadmap
In order to realize “corporate transformation,” which is the essence of DX, it is important for each and every
employee to have a sense of ownership and promote a transformation in awareness. Based on this concept, theKyuden Group has defined the DX Vision, which outlines our ideal future through DX, and the DX Roadmap, which
is a basic plan related to the promotion of DX. By clarifying and sharing the basic concept and other information,
we aim to ensure that the Group is on the same page in terms of its awareness and intent. We will contribute to
the realization of the Kyuden Group Management Vision 2030 by promoting Group-wide efforts based on the DX
Vision and DX Roadmap.
Kyuden Group Management Vision 2030
Strategy II: Building asustainable community together

Strategy I: Developing theEnergy Service Business

Strategy III: Strengthening
Our Business Foundation

Kyuden Group DX Vision
Business reforms
utilizing digitaltechnology
Innovation
DX human capitaldevelopment andliteracy improvement

DX Roadmap
Reforms inboth directions

Structural reform of
ICT infrastructure

Promotion ofdata utilization

Promotion of
agile development

Promote DX by advancing business reforms, innovation and ICT infrastructure structural reforms,
supported by human capital development, data utilization promotion, and the promotion of Agile development■ Promotion Framework
On July 1, 2022, we established the role of Chief DX Officer and the Digital Transformation Promotion Division
to further accelerate our drastic operational reforms and new business development. The Digital Transformation
Promotion Division will cooperate with the Information & Communications Division and each business division
and Group companies to create new businesses and transform operations through the use of digital technology,
thereby enhancing the corporate value of the Kyuden Group and leading to sustainable growth.

■ Efforts to Transform Business Structures and Processes, etc.
Transforming operations with digital technology
We are working to transform operations using digital technology based around eight themes we have defined,
including “automation and centralization of field operations,” “advancement and streamlining of supply-demand
operations,” and “data-based decision-making,” as well as 18 measures. Executive directors and other leadersfrom each business division serve as “Operational Reform Leaders,” and under their leadership, the businessdivisions cooperate with the Digital Transformation Promotion Division and Information & Communications Division
to promote these transformation efforts. In addition, we are actively promoting the use of generative AI by making
it available to all employees with the aim of improving work processes and increasing productivity (introduced inJuly 2023).
Promotion of data utilization
To facilitate data-driven corporate activities, we are working to enable and establish data utilization within andacross the organization, which will drive productivity improvements and business reforms. First, in order to focus on
making data utilization more widespread and prolific, we will promote the use of self-service BI (visualization andsimple analysis) and advanced analysis (forecasting and optimization), and develop a data utilization environmentthat balances security with high convenience to encourage each employee to utilize the data on their own.
Structural reforms to ICT infrastructure
We are moving forward with initiatives based on eight themes, including “establishing simplified development
frameworks to bring system development in-house,” “building a platform for utilizing data,” and “expanding our
virtual infrastructure and external cloud services,” as well as 23 measures.
Structural reforms to ICT infrastructure are key in supporting DX, which is why we will take prompt action toaddress it.
Developing and securing human capital in DX
We will develop human capital with skills related to digital technology and data who can lead the fundamental
transformation of our business models and work processes. We will develop “digital transformation experts” whohave a high level of specialized knowledge and can take the lead in implementing DX throughout the Group andin each division. In addition, we will conduct training for all employees aimed at equipping them with basic DX
knowledge and skills, and develop “DX followers” who can independently and actively tackle DX in the workplace(all employees will be trained by FY2025). Finally, senior management will adopt a “reverse mentoring” approachin which younger employees will serve as their mentors to promote a better understanding of digital technology.

DX Specialist Human Resources
Possess skills required for DX, such as highly
specialized knowledge and drive

DX followers
Have basic knowledge of digital technologies and datautilization, and promote DX both independently
and proactively

DX literacy training participants (FY2022: completed by all employees)
Understand DX basics and its necessity

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

72

6 Data Section

Promoting Growth, Success,and Diversity of Human Capital

Promotion of Diversity and Inclusion
At the Kyuden Group, we are building a workplace culture that emphasizes diversity and inclusion
in order to strengthen our business foundation.
We will strive to maximize the strengths, individuality, and abilities of each employee, regardlessof gender, age, nationality, beliefs, or other traits, as much as possible and enhance corporate
value with the aim of realizing “Kyuden Group: creating the future, starting from Kyushu” byhaving diverse employees work in a comfortable, growing, and rewarding work environment.

■ Promoting Diversity of Human Capital
Promoting participation regardless of gender
Our aim is to create a workplace where people can work with a sense of fulfillment and purpose regardless of gender,
and a corporate culture brimming with vitality. To this end, we are promoting initiatives focused on “supporting women’s
career development,” “transforming awareness and fostering our culture,” and “supporting a healthy balance between
work and family life.” We are also working to increase the ratio of female managers through a series of initiatives aimed
at utilizing diverse knowledge and experience in our business activities, including in management decision-making.

Support for active participation of senior employees
As a mechanism to motivate employees aged 60 and older, who are “valuable human capital with awealth of experience and advanced knowledge and skills,” we have introduced a system for rehiring
retirees and the Career Bank Program, in which duties are assigned based on the retiree’s wishes.
■ Creation of an environment to promote theparticipation of senior workers■ Career awareness initiatives

Career Employee Program

Career design training

Target: Employees up to 65 years of age who have reachedretirement age
Objective: To create an environment for continued employment
through post-retirement reemployment

Target: Employees aged 53 to 55
Objective: Create opportunities for becoming more concretely aware of one's
own future, enhancing one's future work life and thinking about
post-retirement paths

Career Bank Program

Preparation training for post-career-track employees

Target: Retirees, voluntary retirees over 50 years of age, etc.
Objective: To improve the working environment in the form ofoutsourcing

Target: Employees aged 59 (employees wishing to utilize the program)Objective: Become prepared, mentally and otherwise, to change one's
awareness with the change in role that comes with being a career
employee and to willingly work in harmony with regular,
pre-retirement employees

Side Job System■ Initiatives by Kyushu EP and Kyushu T&D
Supporting women’s careerdevelopment

・Expanding women’s job opportunities
・Roundtables for female employees, career development seminars
・Publishing career development support materials, holding one-on-one consultations, etc.

Transforming awareness andfostering our culture

・Sharing messages from the President
・Communicating information through in-house newsletters, the Intranet, etc.
・Encouraging managers (training, exchange opinions, etc.)

Supporting a healthy balance
between work and family life

・Holding work-life balance seminars, “fatherhood classes”
・Creating and disseminating guidebooks to support the balancing of work withchildcare/nursing care, etc.

■ Number and percentage of female managers(Kyushu EP and Kyushu T&D)
(No. of women)
140
120

108

100
80

2.3

117
2.5

123

127

(%)

136

3

2.6

2.7

2.9
2

60
1

40
20
0

0
2018

2019

2020

2021

2022

The number of women appointed to management positions
is steadily increasing due to our efforts to promotewomen’s advancement. The results, as shown in the tablebelow, indicate that we are making good progress toward
our female manager-related targets for FY2023.
In addition, two female employees who joined Kyushu EP
as new graduates have been appointed as directors (as ofJune 2023).

(FY)

FY2023 Targets

FY2022 Performance

No. of women newly appointed as managers or to top
management positions in the organization (FY2019–2023):
More than 3x that of FY2009–2013

No. of female managers newly appointed: 2.72x increase
No. of women appointed to top positions in theorganization: 4x increase

Target: Employees 57 years of age and older; career employees
62 years of age and younger
Objective: To support employees in pursuing a second career by
allowing them to work for other companies or start theirown businesses while working for the Company

Promotion of employment of people withdisabilities
At the Kyuden Group, the entire Group strives topromote the employment of people with disabilities
in order to contribute to the creation of a society inwhich people with disabilities can play an activerole in their community and society at large. In
particular, Q-CAP Co., Ltd., a special subsidiarycompany, is working to expand job opportunities
for people with disabilities by developing abusiness support service, in addition to its existing
subtitling service.

Career development consultation
Target: Employees
Objective: To confer with a career consultant to clarify the individual's
perspective on career planning by becoming cognizant of their own
aptitude, abilities and interests■ Number and percentage of employees with disabilities over time(No. ofpeople)360

Employment rate ofpersons with disabilities

Number of employeeswith disabilities

2.26

340
320

2.00

300
1.91
280
260
240

2.04
2.00
271.5

253.5

2.08
2.00
276.5

2.20
300.5

Statutory employment rate

2.34

2.32

2.20

2.20

310.0

307.0

2.30

2.46

2.29

2.30
320.5

301.0

(%)
2.5
2.4
2.3
2.2
2.1
2.0
1.9
1.8
1.7
1.6
1.5
1.4

Jun. 2015 Jun. 2016 Jun. 2017 Jun. 2018 Jun. 2019 Jun. 2020 Jun. 2021 Jun. 2022 (month/year)*Under the special rule for related subsidiaries, Q-CAP Co., Ltd. and Kyushu T&D are subject tolump-sum accounting

LGBTQ+ initiatives
To promote understanding of LGBTQ+ issues among our employees, we conduct level-specific training.
We are also creating booklets (Harassment Prevention Booklet, Diversity Booklet). Moreover, we offer
consultations regarding LGBTQ+ issues at the Harassment Advice Counter.

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

73

Promoting Growth, Success,and Diversity of Human Capital■ Promotion of Men’s Participation in Childcare■ Promotion of Work Style Reforms

We have adopted the slogan “IkuQ: over 2 weeks” to encourage male employees totake at least two weeks off to focus on childcare, with the aim of strengthening familyties and improving personal growth, time management skills, and new ideas throughthe experience of childcare. We are aiming for a 100% male employee utilization
rate for childcare leave in FY2023 by implementing initiatives to promote the use ofchildcare leave, such as making part of the leave paid and issuing our own fatherchild record book (PAPANOTE) that contains information on such issues as mentally
preparing oneself to be a good father.
[FY2022 results: 80.6％ (Kyushu EP and Kyushu T&D)]

We are promoting a three-part initiative to improve productivity and work-life synergy that consists ofoperational reforms, awareness and climate reforms, and the creation of a better working environment. In
Step 1, we implemented initiatives to build our momentum and improve operational efficiency based on on-site
recommendations, which included having senior management declare their commitment through workshops.
In Step 2 and beyond, we are promoting work styles that are not restricted by “time” or “place,” such as
introducing a super-flextime system with no core hours that allows for more flexible work styles, and a fully
remote work system (on a trial basis) that does not require employees to come to the office. This also contributes
to the acquisition of diverse human capital and the utilization of human capital with various life circumstances.
Father-child record book
PAPANOTE■ Main initiatives related to work style reforms

Acquiring Eruboshi and Kurumin certification
・We have been certified by the Minister of Health, Labour and Welfare
as an “Eruboshi” company, which certifies that companies have
implemented excellent measures to promote the advancement of
women.
・We have acquired “Kurumin” certification, which is granted by the
Minister of Health, Labor and Welfare based on the Next Generation
Nurturing Support Measures Law to companies that meet certain
standards.

First Step2017 onward

Establishment and utilization of the Key Rules of Work (common rules on how work can be performed efficiently, etc.)

Operation
reforms

Eruboshi certification markKurumin certification
mark

Second Step
2020 onward

Solicitation of reform proposals andimplementation of reforms basedon proposals

Awareness andour culture reforms

Senior management
workshops
Hosting of the Work Style
Reform Festa

Utilization of generative AI

Sharing of good examples of measures that improve work efficiency, etc.,
at every site through the in-house Intranet

Work styles not restricted by time

VOICE

Sharing my own experience with the company to support the use ofchildcare leave

Introduction of flex system

Because we are a dual-income household, I took childcare leave to coincide with my wife returning to work and my childstarting daycare. While I was on leave, the childcare and housework did not go as I had envisioned. Looking back on it
now, however, I think it was an invaluable experience to have been able to watch my child grow up, and it was something I
could only see at that time. First of all, to convey what this experience was like to prospective leave-takers and workplaces
promoting the use of leave, I kept a journal of my own actions and reflections while on childcare leave and shared it
internally. I would like to keep encouraging others to take leave from the standpoint of someone who has done it.

広佐
報賀
グ支
ル店
ー
プ企
画
副・
江長総
島
務
部
亮
太

Ryota Eshima
PR Group
Saga Branch
Planning Dept.
Kyushu Electric Power

1

育
休
た の
か 記
が 録
一
か
月
、
さ
れ
ど
一
か
月

The childcare leave journal he shared within
the company

Creation of abetter working
environment

Introduction of staggered
work hours system

Sequential expansion of targets and promotionof work styles that contribute to work-lifebalance and improved productivity

Super-flex system without core hours(expanded Group-wide)
Expansion of staggered work hours system(additional time segments)

Work styles not restricted by place
Introduction of remote work

Promotion of highly productive work styles
by offering remote work even after COVID-19

Full-remote work
(implemented on a trial basis)

Introduction of laptops, Teams,
and company smartphones■ Initiatives for work styles not restricted by time or place (restated)
６
．
一
瞬
～
も
っ
と
で
き
た
は
ず
～

５
．
成
長
～
順
応
す
る
子
供
、
焦
る
親
～

４
．
反
省
～
苦
悩
の
日
々
～

３
．
始
動
～
決
戦
の
火
蓋
～

２
．
輻
輳
～
育
休
開
始
前
の
戦
い
～

１
．
助
走
～
育
休
の
取
得
に
向
け
て
～

目
次

Initiative

Implementation Aims

Super-flex system without
core hours

Improved productivity through an autonomous work style and the ability to do meaningful
work whenever in limited amounts of time, such as in situations where you have to interrupt
your work for childcare, nursing care, etc.

Full-remote work
(implemented on a trial
basis)

Ability to work wherever, even in situations where commuting is difficult, such as when aspouse is transferred to a far-off location outside of Kyushu, etc., or when you have to bereadily available for childcare, nursing care, etc. (total no. of people utilizing the program: 14)

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

74

Promoting Growth, Success,and Diversity of Human Capital

Respect for Human Rights
In order to sustainably improve our corporate value, we recognize the importance of respecting the humanrights of our employees so as to maximize the power of our human capital and taking responsible actions
concerning human rights in local communities and in our supply chain. The Kyuden Group respects
international norms such as the UN Guiding Principles on Business and Human Rights, and is committed torespecting the human rights of all stakeholders concerned with the Group’s business activities.

■ Kyuden Group Human Rights Policy
Under the Kyuden Group Human Rights Policy formulated in April 2023, we are promoting business activities that
respect human rights through initiatives such as human rights due diligence* (human rights DD).

■ Human Rights Due Diligence
The Kyuden Group has established a human rights due diligence framework under which it implements
initiatives related to human rights, and is continuously improving these initiatives.

Overview of our human rights initiatives
Three Actions

Specific Initiatives

Policy-based commitment

Formulate a human rights policy
・Formulate the Kyuden Group Human Rights Policy* A series of actions taken by a company to identify, prevent, and mitigate negative impacts on human rights through its business activities and explain what it has done toaddress such impacts

Kyuden Group Human Rights Policy
1. Commitment to Respect for Human Rights
5. Dialogues and Discussions with Stakeholders
2. Scope of Application
6. Education and Awareness among Officers and Employees
3. Human Rights Due Diligence
7. Disclosure of Information
4. Corrective and Remedial Measures for Human Rights Violations(The details of each section are provided in the ESG Data Book 2023 (p. 60))

■Promotion framework

Board of Directors
Supervise

Submit/report

Sustainability Promotion Committee

Information
disclosure

Stakeholders

Submit/report

・Formulating of strategies and basic policies
related to ESG・Monitoring of policy progress, etc.

Reflect
opinions

LiaiseStructure
Chairperson: President
Vice-chairperson: Chief ESG officer
Committee members:
External directors,executive directorsof relevant divisions, etc.

Frequency
Twice yearly in principle,
and additionally asnecessary

Formulation of departmental plans,
reports on progress, etc.

Establishment of remedial
measures for human rights
violations

Establish a mechanism for handling complaints
・Establish internal and external consultation desks

Identification of “significant human rights risks”
By singling out and assessing human rights risks that could occur through the Kyuden Group’s business activities, we haveidentified the following five human rights risks as “significant human rights risks” that should be addressed as priorities.

We are working to prevent and mitigate risks by developing internal infrastructure and systems, providing education and training
for executives and employees, and managing our supply chain, with a particular focus on significant human rights risks.

■Community and Society Sub-Committee
Structure
Chairperson: Executive Director of Business
Solution Headquarters
Vice-chairperson: Director of District Symbiosis Division
Committee members:
Directors of relevant divisions, etc.

Monitoring (follow-up surveys)
・Regularly monitor and improve thestatus of initiatives

・Discrimination (including gender gap) ・Inappropriate restrictions on the rights of local communities
・Accidents caused by products/services (e.g., deaths resulting from public accidents involving electric shocks)
・Environmental pollution and destruction ・Harassment

Divisions, Group companies■Sustainability Promotion Committee

Disclose information publicly
・Disclose information on our website,
in the Integrated Report, etc.

■ Significant human rights risks

Management
meetings(management
plans, etc.)

Community and Society Sub-Committee
Indication of policies andplans, monitoring, etc.

Consider and implement
countermeasures
・Check, evaluate, and improve existingmeasures・Consider and implement additional measures
・Conduct education and training, etc.

Implementation ofhuman rights DD■ Promotion Framework
The human rights policy, policy-based measures, and status of implementation are deliberated on by the
Sustainability Promotion Committee, which is chaired by the President and supervised by the Board of Directors.
Under this committee, we have established the Community and Society Sub-Committee, chaired by the Executive
Director of the Business Solution Headquarters, to conduct deliberations from a more specialized standpoint.
Respective divisions and Group companies implement initiatives based on the discussions by this committee
and the Board of Directors.

Assess impact on human rights
・Assess negative impacts on humanrights through our business activities
・Identify significant human rights risks

Frequency
Twice yearly in principle,
and additionally asnecessaryRemedial measures
At the Kyuden Group, we have established internal and external consultation desks to receive reports andconsultations from all our stakeholders, including reports and consultations concerning human rights issues.
If it becomes clear that the Kyuden Group’s business activities are causing or contributing to negative impacts onhuman rights, we will work to correct and remedy the situation.

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

75

6 Data Section

Promoting Growth, Success,and Diversity of Human Capital

Prioritization of Health and Safety
Based on the recognition that safety takes precedence over all else, we are promoting initiatives
related to “safety as the foundation of our management,” using the Kyuden Group Safety Conduct
Charter, which outlines the basic policy, as the basis for awareness and action.
As for health, we promote initiatives based on the Kyushu Electric Power Health Declaration and
the Kyushu Electric Power Health and Productivity Management Policy so that employees can workwith vigor.

■ Promotion of Initiatives to Eliminate All Major Accidents
To thoroughly enact safe practices on-site with the goal of “zero serious accidents,” we promote proactive prevention
measures such as risk assessment, implement measures to prevent the recurrence of accidents by digging deeper
into the root causes after the occurrence of an accident, and monitor the status of implementation of these initiatives.
Furthermore, we offer various types of education, including education related to work safety and health laws andregulations from a compliance perspective, level-specific safety education, and safety education to prevent work
accidents among older people.

■ Work-related accidents at Kyushu EP and Kyushu T&D(by type of accident)■ Frequency Rate of Workplace Accidents

Figures in parentheses indicate thenumber of fatalities(No. ofFigures in circles indicate the number
accidents) of serious accidents

2.50(No. of accidents)

No. of serious accidents

50

Other accidents*
Traffic accidents(No. ofaccidents)

Falls

4

Electric shocks

38（0）

40

41（0）

38（0）

3

30

31

2
31

20

27（0）

3

27（0）

2

2

30

22
9

0

2018

5

0

1

2019

2020

7

1

0

3

2022

(FY)

1

2021

0.00
0

* Accidents caused by careless falls, trips, handling of tools, etc.

■ Labor accident severity (degree of business impact) over time*(No. of days)

Kyushu EP and Kyushu T&D

1.83

0.28

1.80

1.95

2.09

0.39

0.09

0.09

0.09

0.09

0.00

2018

0.012
2019

0.009
0.004
（0.002） （0.009）
2020

0.000
（0.000）2021*No. of working days lost due to labor accidents in 1,000 total working hours
Note: For FY2020 and after, figures in parentheses are for Kyushu EP only

2022 (FY)

20

17

10
0

■ Efforts to Foster a Culture of Safety2019

0.06（0.00）

2020

2021

Education Subject

Statutory
training

Level-specifictraining

Foremen

TOPICS

16

252

57
1,542

Safety training for regular employees

794

Total

26（1）

20
15

16

2021

2022

7
2018

2019

2020

(FY)

* Number of work absences of 4 days or more (including accidents involving free collection)

Opened the Anzen Mirai Kan, a Safety Education Facility
for the Kyuden GroupNo. of Attendees

Total

Safety training for management

No. of serious accidents

24（1）2022 (FY)1,233

Safety managers

No. of accidents

30（3）

27（2）

*

In order to minimize possible radiation doses for those who work in radioactive environments, Kyushu EP has installedshielding equipment at its nuclear power plants or made changes such as enabling automation or remote operation.
The actual exposure received by radiation workers was 0.3 millisieverts on average in FY2022, which is far below thelegal dose limit*.

■ Safety education record (FY2022)(Kyushu EP, Kyushu T&D, and some Group companies)

0.05

0.003

30

*No. of accidents per 1 million working hours
Note: For FY2020 and after, figures in parentheses are for Kyushu EP only

Kyushu EP and Kyushu T&D

0.09(Kyushu EP and Kyushu T&D)
Figures in parentheses indicate
the number of fatalities(No. of accidents) Figures in circles indicate thenumber of serious accidents.
40■ Radiation Management for Radiation Workers

2.06

0.29（0.19）0.30（0.10）

When hired (new employees)
0.10■ No. of contractor and subcontractor accidents* Annual limit for workers at power plants and other facilities: 100 millisieverts per 5 years and not exceeding 50 millisieverts per year
2018

National industry average

0.15

*

1.00
0.50

24

10

7

1.50

We are working together with contractors and subcontractors
to ensure safe work practices by promoting safety activities
that focus on the most frequently occurring accidents.
Specifically, we share basic items to eliminate the fourtypes of serious accidents (electric shocks, falls, crushes,and heavy machinery-related accidents), check the stateof safety management at worksites based on safety patrols
and assessments by safety consultants, and improve safety
awareness through direct dialogue with onsite workers.

At the Kyuden Group Safety Convention, lectures are offered by outside experts to encourage strong determinationon the part of top management and front-line managers, who are the key players in promoting safety, and provide
an opportunity to drive further safety efforts. In addition, activities to foster a culture of safety, such as encouraging
autonomous safety activities at each workplace through the Kyuden Group Safety Initiative Commendation Program,are promoted.

National industry average

2.00■ Promoting Safety Activities with Contractors and Subcontractors

466
1,260

In April 2023, we opened the Anzen Mirai Kan, a new educational facility specializing
in safety, to serve as a place to learn the value of safety and inspire pride anddetermination to pursue safety in the Kyuden Group, as well as create a culture ofsafety across the entire Group.
In the future, we will make effective use of video and virtual reality (VR) equipment
at the facility to develop training for all employees of the Kyuden Group that willfurther improve safety.

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

76

Promoting Growth, Success,and Diversity of Human Capital■ Promotion of Health and Productivity Management®*
Kyushu EP and Kyushu T&D aim to increase the motivation and vitality of our employees, who are the very
foundation of our business activities, and utilize their power for
enduring company development.
In March 2023, both companies were recognized as CertifiedHealth & Productivity Management Outstanding Organizations(“White 500” enterprises) in recognition of their efforts to support
employees’ physical and mental health.
* Health and Productivity Management® is a registered trademark of NPO Kenkokeiei

Promotion Framework
The Human Resource Vitalization Division, workplaces, and the Kyushu Electric Power Health InsuranceSociety cooperate with occupational health staff (occupational physicians and public health nurses) toimplement various health management initiatives.
In addition, they regularly report to senior management on the status of employees’ physical and mental
health in order to promote better health management.

■ Concept

Vision for Health and Productivity Management

Invigorating the organization and growing the company through the motivation and vitality of employees
Achieving employee self-realization(growth as a person and contributions
to society through work)

Realizing healthy and fulfilling lives
for employees

Physical health(1) Efforts to raise awareness and lead to concrete actions to improve lifestyle and exercise habits
・Top management drives health management through measures such as internal broadcasts of messages fromthe President
・In-house newsletters disseminate information that can lead tobetter health awareness, including topics such as quitting
smoking and women’s health・We conduct physical fitness tests and various health classes,
and have public health nurses provide advice to promote health,etc., with the aim of raising awareness of improving lifestyle
habits・We implement initiatives such as the Group-wide Walking
Campaign, in which employees can participate with theirworkplace colleagues, to encourage the development of
Initiative to encourage the development of exercise habits
exercise habits(Group-wide Walking Campaign)(2) Measures to prevent passive smoking and ban smoking
・As a rule, smoking is prohibited indoors, and we have eliminated smoking rooms that do not meet legal
standards
・Support for those quitting smoking is provided by public health nurses, etc.
Mental health(1) Group-wide simultaneous stress checks
・Stress checks are conducted simultaneously Group-wide to assess employee and workplace stress(2) Stress reduction activities based on stress check results
・Enforce self-care based on stress check results ・Based on the results of the stress check at each workplace, employees participate in discussions on thestrengths and weaknesses of their own workplace, and measures are implemented to improve theworkplace environment with the participation of all employees

Fields of initiatives
Support for maintaining
healthCreate an environment where
employees can work with vigor

Work style reforms

Foster health awarenessGood communication

Greater productivity

Uptake rate

Flexible work system

94.5%

Preventive measures
Early detection and early treatment

Workplace where workers
notice changes in each otherAppropriate worktime management

Regular health exams

Conduct stress checks

Overwork preventive measures■ Stress check implementation

Overall health risk*
94.8%

94.8%

100 (National average)
79

78

76

2020

2021

2022

Passive smoking countermeasures

Legal compliance and risk management

2020

2021

2022

*Good condition is below 100 (better than national average)

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

77

Strengthening Governance[Strengthening Governance]

Improving Effectiveness of Corporate Governance
At Kyushu EP, we believe that engaging in operations that are socially meaningful from a longterm perspective leads to sustainable value for all stakeholders. In order to properly carry out thesebusiness activities, we are striving to strengthen our corporate governance system.
In FY2018, we transitioned to a company with an Audit & Supervisory Committee based on ourbelief in the importance of strengthening governance and accelerating decision-making in order to
respond to the rapidly changing business environment with greater flexibility and speed than before.
In addition to implementing an organizational design system, we believe it is important to improvethe effectiveness of actual operations, and are working to further improve operational effectivenessthrough such initiatives as having external directors attend Corporate Management Committee
meetings and instituting Director Roundtables, a forum for all directors to freely exchange opinions.
2015

2016

2017

2018

2019

2020

2021

2022

Total number of directors*

20 (2)

20 (2)

21 (2)

19 (2)

16 (2)

15 (3)

15 (3)

15 (3)of whom are external directors*

5 (2)

5 (2)

5 (2)

5 (2)

5 (2)

5 (3)

5 (3)

5 (3)

(FY)

(Audit Committee through FY2017)

Evaluations of the effectivenessof the Board of Directors

Director Roundtables* Includes corporate auditors through FY2017. Figures in parentheses indicate the number of women■ Promotion Framework
With governance based on the Board of Directors and Audit & Supervisory Committee as its foundation, Kyushu EP
strengthens the supervision of management by appointing highly independent external directors and has the Audit &Supervisory Committee and Internal Auditing Body collaborate to increase the effectiveness of audits. In addition toundertaking such initiatives as clarifying the role of directors and executive officers in supervision and execution andthoroughly implementing compliance management, we continually work to enhance the system by establishing the
Basic Internal Control Policy.
■ Corporate Governance Structure (as of July 2023)
General Meeting of Stockholders
Consult and recommend

Appoint or dismiss

Personnel Advisory
Committee

Appoint or dismiss

Board of Directors

Remuneration Advisory
Committee

ReportAppoint, dismiss, anddelegate businessexecution

ReportMembers of the Board of Directors(Audit & Supervisory Committee members)

Audit

Audit & Supervisory Ofﬁcer

ReportDetermine that
account audits areappropriate

Audit & Supervisory Committee Ofﬁcer

Compliance Committee

Business Execution Structure

LiaisePresident & Chief Executive Ofﬁcer

Implement
monitoring

Corporate Management Committee
Coordinate and instruct

Submit and report on important matters

Headquarters, divisions, branch ofﬁces, Group companies, etc.

InstructInternal audit

ReportInternal Auditing Body

Audit accounts

Accounting Auditor

Supervise

Appoint or dismiss

Audit & Supervisory
Committee

Audit

Members of the Board of Directors(excluding Audit & Supervisory Committee members)

Delegate

As a rule, Kyushu EP’s Board of Directors meet once a month or as needed to make decisions onimportant matters related to corporate management and supervise the execution of those decisions. In
order to properly fulfill their roles and responsibilities, all directors are required, in principle, to attend
at least 75% of the Board of Directors’ meetings. In addition, five highly independent external directors(including three external directors who are Audit & Supervisory Committee members), comprising at least
one-third of the total number of directors, provide necessary advice during Board of Directors’ meetings
based on their insight and experience. They are also appropriately involved in and provide advice
regarding the nomination of candidates for the Board of Directors and their remuneration.
■ Overview of meeting bodies at Kyushu EP■ Changes in governance

Audit & Supervisory Committee■ Characteristics and Activities of the Board of Directors, Etc.

Framework

Members (as of June 30, 2023)

Meetings held
in FY2022

Attendance rateof all directors

Board of Directors

14 (of which 5 are external directors)

23

97.1％

Audit & Supervisory Committee

4 (of which 3 are external committee members)

22

100％

Personnel Advisory Committee

4 (of which 3 are external directors)

2

100％

Remuneration Advisory Committee

4 (of which 3 are external directors)

2

100％

In addition, since FY2021, we have been holding Director Roundtables for all directors to discuss material issues
impacting the entire Group during the policy and strategy-building stages in an effort to further improve theeffectiveness of the Board of Directors.

■ Main discussion topics at Board of Directors’ meetings and Director Roundtables in FY2022

Board of Directors
・ Basic policies on sustainability management
・ FY2023 Medium-term Management Plan
・ Integration of the renewable energy business・ Basic Internal Control Policy
・ Delegation of authority to a part of the Board of Directors

Director Roundtables
・ Direction of initiatives for the utilization of ROIC・ Direction of initiatives for enhancing human capital・ Group-wide risk analysis
・ Issues related to strengthening governance and the direction of actions
・ Evaluation of the effectiveness of the Board of Directors

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

78

Strengthening Governance■ Evaluation of the Effectiveness of the Board of Directors■ Director Skill Matrix

The Kyushu EP Board of Directors has evaluated the effectiveness of the Board since FY2015. In FY2022, we
carried out a survey using a questionnaire on the following topics targeted at all directors. The results of thequestionnaire were analyzed and evaluated at the Directors Roundtable, a forum for deliberation by all directors.

To generate sustainable growth and enhance the Kyuden Group’s corporate value at a time of drastic changes
in the business environment, we identified the skills that Kyushu EP’s Board of Directors should possess inorder to indicate the direction of management from highly insightful and multifaceted perspectives, implement
quick management decision-making, and appropriately fulfill its management supervision function. We thenclarified the areas in which we expect each director to lead based on his or her knowledge and experience.

■ Questionnaire topics(1) Composition and operation of the Board of Directors (2) Management and business strategies(3) Corporate ethics and risks (4) Performance monitoring and evaluation/remuneration of management(5) Dialogue with shareholders, etc.
■ Efforts aimed at improving the effectiveness of the Board of Directors
Tasks for improving
effectivenessFields with Particularly High Expectations*
(1)

Name

Expansion of deliberations on
management strategies and issues
related to overall Group material issues

Delegation of authority from the Board of
Directors to executive officers to speed up
decision-making

Deliberated on a total of seven topics,
including human capital, Group-widerisks, and ROIC utilization, at the Directors
Roundtable, a forum for deliberation by all
directors

Reviewed the criteria for submitting
proposals concerning financing, etc., to theBoard of Directors, and delegated authority
to executive officers provided they aremonitored by the Board of Directors

Position within Kyushu EP

Personnel
Advisory
Committee

(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Legal
Innovation Technology Sales
GlobalRemuneration Corporate Finances
affairs
EnvironHumanandand digital and R&D
Advisoryand business
management accounting
and risk capital ment transformation (including marketing
Committee
management
ICT)○

Chairperson

Kazuhiro Ikebe

President & Chief
Executive Officer

NaoyukiToyoshima

Vice-Presidential
Executive Officer○

NoboruHashimotoVice-Presidential
Executive Officer○

Atsushi Soda

Vice-Presidential
Executive Officer○

Yoshiharu
Senda

Senior Managing
Executive Officer○

Takashi Nakano

Senior Managing
Executive Officer○○

MasaruNishiyama

Senior Managing
Executive Officer○○

Sakie Tachibana
Fukushima

Director■ Policy on Appointing Candidates for the Board of Directors

Junji Tsuda

Director

The Articles of Incorporation stipulate that Kyushu EP’s Board of Directors is to consist of up to 19 directors (of which
up to five are to be directors who are Audit & Supervisory Committee members) from the perspective of achieving
active deliberations and strengthening the supervisory function. Candidates for internal directors are selected bycomprehensively taking into account their personal character, insight, ethics, career background, and capabilities.
For external directors, who account for at least one-third of the directors, we select candidates who meet the decision
criteria for independence and have abundant experience and insight in corporate management and specialized fields.
In addition, the composition of the entire Board of Directors takes overall fields of business into account while
ensuring diversity in terms of gender, international experience, professional background, and age, as well as an
appropriate ratio of Board members, with, for instance, three women among the directors.

Yasuaki Endo

FY2022Michiaki Uriu

Result of efforts

Evaluation

FY2023

Tasks for further
improvement

・Questionnaire data and additional comments confirmed that all topics
showed improvement
・On the other hand, during the Director Roundtable, there was the opinion that it wasnecessaryto continue to expand deliberations at the Board of Directors’ meeting regarding
the overall direction of corporate strategy, etc.,and to consider the delegation of authority
to the executive side

Further invigorate discussions on
management strategies and material issues
for the entire Group, etc.

Further delegate authority to persons
responsible for business execution toaccelerate decision-making

Kazuko Fujita

Yuji Oie
TomokaSugihara

Audit andSupervisory
Committee Member
Audit andSupervisory
Committee Member
Audit andSupervisory
Committee Member
Audit andSupervisory
Committee Member

Member Member

External Woman
Independent
External
Independent○

Member Member○

Chairperson○

Chairperson

○

○

○

○
○
○

○

○

○

○

○

○

○

○

○

○
○

○

External○○
Member Member*This does not indicate all the knowledge and experience possessed by the director.

○
○

○

○

Independent

Independent

○

○

○

○

Independent

External Woman○○○
External Woman

○

○

○

○

○

○

○

○

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

79

Strengthening Governance■ Remuneration System■ Basic remuneration [monetary remuneration, monthly remuneration] (FY2022)

Remuneration for directors (excluding directors who are Audit & Supervisory Committee members) consistsof basic remuneration and performance-linked remuneration. Performance-linked remuneration is based not
only on consolidated ordinary income outlined in the financial objectives of the Management Vision but also
other performance metrics, such as reduction in GHG emissions in order to become carbon neutral anddividends paid to shareholders. Remuneration for external directors, based on their duties, consists only ofbasic remuneration and does not include performance-linked remuneration.
The Remuneration Advisory Committee, chaired by an external director and a majority of whose members
are external directors, deliberates on the amount of remuneration, which may not exceed the total amount of
remuneration and upper limit on the number of shares approved at the General Meeting of Shareholders, thenthe Board of Directors decides on the amount.
In addition, Audit & Supervisory Committee members attend Remuneration Advisory Committee meetingsand confirm the appropriateness of deliberations by the Committee.

Members of the Board of Directors (Internal)

11 directors¥398 million

Members of the Board of Directors (External)

7 directors¥60 million

Total

18 directors¥458 million■ Director remuneration structure
Type of Remuneration(Monthly
remuneration)
Fixed

Basic remuneration(Bonus)Short-term*1:

WeightTiming of Payment

Monetary

Determined according to responsibilities

62–76%

Once a month
Fixed timing

Monetary

A standard amount determined according
to responsibilities is linked to the degree ofachievement of performance indicators (consolidated
ordinary income outlined in the financial objectivesof the Management Vision) by 0% to 120%

12–19%

Once a year
Fixed timing

Members of the Board of Directors (Internal)

9 directors

Stocks*2

Around 20% of a standard number of points
determined according to responsibilities is linked
to the degree of achievement of performanceindicators (consolidated ordinary income outlinedin the financial objectives of the Management
Vision and GHG emissions reduced to achievecarbon neutrality of the Kyuden Group)*3¥0 million■ Performance-linked remuneration [non-monetary remuneration, stock-based remuneration(linked to medium to long-term performance)] (FY2022)
Members of the Board of Directors (Internal)

9 directors¥61 million■ Cross-shareholdings
Every year, the Board of Directors assesses the rationale of holding each cross-shareholding by comprehensively
considering its relationship with business strategies and district symbiosis, such as the stable procurement of
capital and equipment, and its contribution to regional vitalization, and then examining its profitability and future
prospects based on the cost of capital and other factors. Those that are determined to lack sufficient rationale forholding are sold off, though we also sell off those with an accepted rationale for holding as much as possible.

■ Cross-shareholdings over time (listed shares)(Billionsof yen)50(Issues)30

29
28(Stock-based
remuneration)
Medium to long-term

Variable

Performance-linked remuneration

Overview■ Performance-linked remuneration [monetary remuneration, bonus (linked to short-term performance)] (FY2022)

28

40
12–19%On stepping down

*1: In determining the amount of performance-linked remuneration, the Remuneration Advisory Committee deliberates on adjusted evaluations, taking into account thedividend situation and other factors as necessary*2: Since taxes such as income tax are levied when the stock is received, an amount equivalent to the tax amount is also paid in cash
*3: Each reference period is three fiscal years, and evaluations are based on the final day of each reference period

27

26

30
20

25
35.1

10

36.1

35.4

38.8

2020

2021

2022

26.3

0
2018

2019

Value of shares held (based on market value)*

20
(FY)

Number of issues held

* The increase in the value of shares held is due to rising share prices

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

80

Strengthening Governance

Overview of the Dialogue between External Directors and Investors
Aiming to engage in constructive dialogue with our investors, we
held a dialogue between external directors and investors during
the ESG Small Meeting in December 2022.
This was our second dialogue, with the first held the previous
fiscal year, and we strove to improve it further by having two
outside directors attend and dividing dialogue participants into
groups.

Junji Tsuda

Kazuko Fujita

External Director

External Director,
Audit & Supervisory Committee Member

Profile Special Advisor at Yaskawa Electric Corporation
since 2022 (current position). External Director of Kyushu
EP since June 2021. Former Chairman and President of
Yaskawa Electric Corporation and drove its globalization
with over a decade of experience in the U.S.

Profile Founder of Fujita Certified Public Accountants(current position). Possesses extensive knowledge offinance and accounting from many years of experience
as a CPA and certified public tax accountant. Served as
an auditor (part-time) at several educational institutions,
including Kyushu University.

Q1. What do you see as your basic roles as an outside
director?

plants and high ratio of renewable energy sources, its trust from the communityand employees’ dedication to contributing to the community, and its knowledge ofa variety of power generation methods. These strengths are the solid foundation
underpinning its major policies: providing a stable electricity supply and advanced
services, co-creation with the community, and growing earnings through new
businesses.
On the other hand, its challenge is improving profitability. The company isworking on ROIC-based management andoperational reforms through digital transformation so that it can invest its resources ingrowth projects that will lead to the company’s growth, while continuing to improve its
equity ratio.
Ms. Fujita Kyuden Group’s sustainability
management is based on human capital and governance. When I visit thecompany’s worksites, I notice that the people in charge exercise leadershipand hold the sites together through active communication, even with its
affiliates, and this leads to strong governance. The challenge lies in balancing the conflicting needs of “stability, safety, and low cost” with the needto secure profits. This is very difficult to do, which is why it leads to trustfrom society. Going forward, it will be important for the company to firststabilize its profits from the electricity business, then ensure a balance
between investments and earnings, strengthen its financial structure, andstrengthen its earnings from sources other than the electricity businessover the medium to long term.

think it would be better for the Board of Directors to take on the role of thinking
about the big picture, such as the structure of the organization and its strategies. Rather than having the external directors be involved in detailed management, providing their opinions on each individual project, I would like to expand
our role as advisors on the management of the organization, with increased
involvement in decisions regarding the overall direction of management.

Mr. Tsuda I see my basic roles as an outside director as 1) participating inshaping the direction of strategy, 2) creating an environment that allows forrisk-taking in order to grow, and 3) raising corporate value over the medium
to long term through objective supervision. Regarding 2) in particular, Kyushu
EP’s “defensive” governance is functioning well, for example, in the way theyexamine risks from various perspectives for all kinds of projects. On the other
hand, in new businesses and other areas, it is also important to take risks,bring in knowledge, and connect that to growth. By creating an environment
conducive to risk-taking, I hope to broaden the scope of their strategies andtactics.
Ms. Fujita Part of my basic role as an outside director is to convey my opinions to the executive side from an independent standpoint. From my perspective as an accountant, I try to judge the financial impact of a proposal byconsidering factors such as how it relates to the company’s strengths andmedium-term plan, and whether or not it will lead to an increase in corporate
value.
In addition, as a member of the Audit & Supervisory Committee, I also visit
worksites and talk with the employees to check not only compliance, but also
whether the employees fully understand and are implementing the Management Vision and policies.

Q2. What are Kyushu EP’s
strengths and challenges?
Mr. Tsuda Kyushu EP’s strengths are its
contribution as a leader in decarbonization
through the operation of four nuclear power

Q3. How effective is the Board of Directors, andwhat is its ideal state?
Mr. Tsuda For a company with a solid internal structure like Kyushu EP, I

Q4. How is ROIC-based management being promoted?
Ms. Fujita When we discussed ROIC at the Directors Roundtable, I expressed
my opinion on the importance of adopting ROIC-based management early on,
and I believe that the implementation of it has sped up. When the results become available in the future, I would like to thoroughly check the causes of any
deviations from targets and offer my opinions on how to improve the situation.

Q5. How can Kyushu EP improve its market valuation and PBR?
Mr. Tsuda The key to improving PBR is to keep improving profitability whileraising investor confidence in the Company’s goals. Kyushu EP has a strong
foundation for growing new businesses based on its Domestic Electricity
Business. I believe that communicating more specific and detailed goals andinitiatives to the market, including its growth businesses, will lead to a higher
valuation.

Feedback from investors after the dialogue
・ I highly appreciate the fact that dialogues with external directors are held
regularly, as doing so is very rare, even among companies in the same ordifferent industries
・ It was helpful to hear the honest opinions of external directors throughdirect interactions with them

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

Strengthening GovernanceMembers of the Board of Directors (Kyushu Electric Power)
Common stock in the company held: 86,111 shares

Overview of career, positions, and responsibilities

1975
2009

1981
2017

1982
2018

2012
2018

Joined Kyushu EP
Member of the Board of Directors, Senior Managing Executive
Officer, Director of Thermal Power Division
Member of the Board of Directors, Vice-Presidential Executive
Officer, Director of Thermal Power Division
Member of the Board of Directors, Vice-Presidential Executive
OfficerMember of the Board of Directors, President & Chief Executive
OfficerMember of the Board of Directors, Chairperson (current position)

Important concurrent positions
External Director, Audit & Supervisory Committee Member, The Nishi-Nippon
City Bank, Ltd.
External Director, RKB Mainichi Holdings Corporation

2018

2022

Joined Kyushu EP
Member of the Board of Directors, Senior Managing Executive
Officer, Director of Nuclear Power Division
Member of the Board of Directors, Vice-Presidential Executive
Officer, Executive Director of Nuclear Power Division (current
position)

Kazuhiro Ikebe

Naoyuki Toyoshima

Member of the Boardof Directors,
President & Chief
Executive Officer

Member of the Boardof Directors,
Vice-Presidential
Executive Officer

Common stock in the company held: 28,301 shares

Common stock in the company held: 34,399 shares

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

1984
2017
2020

1985
2018
2020

1984
2018

2022
2023

Joined Kyushu EP
Executive Officer, General Manager of Kumamoto Branch Office
Managing Executive Officer, Director of Urban Development
Business Division
Senior Managing Executive Officer, Director of Urban Development
Business Division
Member of the Board of Directors, Vice-Presidential Executive
Officer, Executive Director of Business Solution Headquarters(current position)

2020
2022
2023

Noboru Hashimoto

Atsushi Soda

Member of the Boardof Directors,
Vice-Presidential
Executive Officer

Member of the Boardof Directors,
Vice-Presidential
Executive Officer

Common stock in the company held: 23,037 shares

Joined Kyushu EP
Executive Officer, General Manager of Oita Branch Office
Executive Officer, seconded to the Federation of Electric Power
Companies of Japan
Managing Executive Officer, seconded to the Federation of ElectricPower Companies of Japan
Senior Managing Executive Officer, seconded to the Federation ofElectric Power Companies of Japan
Member of the Board of Directors, Vice-Presidential Executive
Officer, Crisis Management Officer and ESG matters (current
position)

Overview of career, positions, and responsibilities

1985
2018
2021

1986
2017

2023

2019
2020
2022

Yoshiharu Senda

Joined Kyushu EP
Executive Officer, Director of Civil & Architectural Engineering
Division, Technical Solution Headquarters
Managing Executive Officer, Director of Civil & ArchitecturalEngineering Division, Technical Solution Headquarters
Senior Managing Executive Officer, Executive Director of Technical
Solution Headquarters
Member of the Board of Directors, Senior Managing Executive
Officer, Executive Director of Technical Solution Headquarters(current position)

Member of the Board
Important concurrent positionsof Directors,
External Director, FUJI P.S CORPORATION
Senior Managing
Executive Officer

Common stock in the company held: 20,311 shares

Overview of career, positions, and responsibilities

2022

Member of the Boardof Directors,
Senior Managing
Executive Officer

Joined Kyushu EP
Member of the Board of Directors, Senior Managing Executive
Officer, Executive Director of Corporate Strategy Division
Member of the Board of Directors, President & Chief Executive
Officer (current position)

Important concurrent positions
Chairperson, The Federation of Electric Power Companies of Japan

Common stock in the company held: 30,679 shares

Takashi Nakano

Common stock in the company held: 47,867 shares

Overview of career, positions, and responsibilities

2012

Michiaki Uriu

Common stock in the company held: 85,511 shares

Overview of career, positions, and responsibilities

2011

Member of theBoard of Directors,
Chairperson(As of July 1, 2023)

Joined Kyushu EP
Executive Officer, General Manager of Kagoshima Branch Office
Managing Executive Officer,Director of Operation Division, Business
Solution Headquarters
Senior Managing Executive Officer, Director of Operation Division,
Business Solution Headquarters
Member of the Board of Directors, Senior Managing Executive
Officer, Director of Operation Division, Business Solution
Headquarters (current position)

2019
2021
2022
2023

Masaru Nishiyama

Joined Kyushu EP
General Manager, Corporate Strategy Division
(Group Management Strategy)
Executive Officer, General Manager of International Business Office
Managing Executive Officer, Executive Director of Corporate
Strategy Division
Senior Managing Executive Officer, Executive Director of Corporate
Strategy Division
Member of the Board of Directors, Senior Managing Executive
Officer, Executive Director of Energy Service Headquarters (current
position)

Member of the Boardof Directors,
Important concurrent positions
Senior Managing
External Director, Nippon Tungsten Co., Ltd.
Executive Officer

Notes: 1. Common stock in the company held as of March 31, 2023
2. Including the individual’s equity in the Board Benefit Trust (BBT), a stock remuneration system

81

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

82

Strengthening GovernanceCommon stock in the company held: 6,100 shares

Sakie Tachibana
FukushimaCommon stock in the company held: 14,700 shares

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

1980
1984
1987
1990
1991
1995

1976

1980
2018

2000
2001
2007
2009

Member of the Boardof Directors (External) 2010
2010

2011
2016
2020
2022

Joined Blackstone International, Ltd.
Left Blackstone International, Ltd.
Joined Bain & Company, Inc.
Left Bain & Company, Inc.
Joined Korn Ferry International-Japan (now Korn Ferry Japan)
Member of the Board of Directors, Korn Ferry International U.S.
Headquarters
President, Korn Ferry International-Japan
President and Representative Director, Korn Ferry International-Japan
Retired as Member of the Board of Directors, Korn Ferry
International U.S. Headquarters
Chairperson and Representative Director, Korn Ferry InternationalJapan
Retired as Chairperson and Representative Director
President and Representative Director, G&S Global Advisors, Inc.
(current position)
Vice Chairperson, Japan Association of Corporate Executives(through 2015)
Member of the Board of Directors, Ushio, Inc. (part-time, current
position)
Member of the Board of Directors, Kyushu EP (current position)
Member of the Board of Directors, Aozora Bank, Ltd. (part-time,current position)

1998
2003
2005
2009
2010
2013

Junji Tsuda

2016

Member of the Board 2017of Directors (External)
2018
2021
2022
2022
2022

2019
2021

Joined Kyushu EP
Managing Executive Officer, Director of District Symbiosis Division,
Business Solution Headquarters
Senior Managing Executive Officer, Director of District Symbiosis
Division, Business Solution Headquarters
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu EP (current position)

Yasuaki Endo
Member of the Boardof Directors,
Audit & Supervisory
Committee Member

Special Advisor, Yaskawa Electric Corporation
Chairman, board of directors, the University of Kitakyushu
External Director, TOTO Ltd.
External Director, NSK Ltd.

Common stock in the company held: 4,000 shares

Common stock in the company held: 900 shares

Common stock in the company held: 900 shares

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

1971

1990

1999

1975
1983
1989

Kazuko Fujita

Joined Yaskawa Electric Mfg. Co. Ltd. (now Yaskawa Electric
Corporation)
Vice President, Yaskawa America, Inc.
Retired as Vice President, Yaskawa America, Inc.
Member of the Board of Directors, Yaskawa Electric Corporation
Managing Director of the Board, Yaskawa Electric Corporation
President (Representative Director), Yaskawa Electric Corporation
Representative Director, Chairman of the Board, and President,
Yaskawa Electric Corporation
Representative Director, Chairman of the Board, Yaskawa Electric
Corporation
Chairman, board of directors, the University of Kitakyushu (current
position)
External Director, TOTO Ltd. (part-time, current position)
Member of the Board of Directors, Kyushu EP (current position)
Member of the Board of Directors, Yaskawa Electric Corporation
Special Advisor, Yaskawa Electric Corporation (current position)
Member of the Board of Directors, NSK Ltd. (part-time, current
position)

Important concurrent positions

Important concurrent positions
President and Representative Director, G&S Global Advisors, Inc.
External Director, Ushio, Inc.
External Director, Aozora Bank, Ltd.

Member of theBoard of Directors,
Audit & Supervisory
Committee Member(External)

Common stock in the company held: 25,569 shares

Overview of career, positions, and responsibilities

2007
2007
2009
2009
2010
2020

Joined Chuo Accounting Office (Auditing Corporation, subsequently
Misuzu Audit Corporation)
Registered Certified Public Accountant (to present)
Member, Chuo Accounting Office
Representative Member, Chuo Shinko Audit Corporation(subsequently Misuzu Audit Corporation)
Left Misuzu Audit Corporation
Partner, Tohmatsu Auditing (now Deloitte Touche Tohmatsu LLC)
Retired as Partner
Established Fujita Certified Public Accountants
Registered Tax Accountant (to present)
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu EP (current position)

Important concurrent positions
Certified Public Accountant, Tax Accountant (Fujita Certified Public
Accountants)

1995
1997
2008
2009

Yuji Oie
Member of theBoard of Directors,
Audit & Supervisory
Committee Member(External)

2010
2016
2022
2022

Associate Professor, School of Computer Science and Systems
Engineering, Kyushu Institute of Technology
Professor, Information Initiative Center, Nara Institute of Science andTechnology
Professor, School of Computer Science and Systems Engineering,
KyushuResearch Professor, Graduate School of Computer Science andSystems Engineering, Kyushu Institute of Technology
President, Graduate School of Computer Science and Systems
Engineering, Kyushu Institute of Technology
Director, Vice President, Kyushu Institute of Technology
President, Kyushu Institute of Technology
Resigned from Kyushu Institute of Technology
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu EP (current position)

2007
2020
2022

Tomoka Sugihara
Member of theBoard of Directors,
Audit & Supervisory
Committee Member(External)

Registered as an attorney (current position)
Joined Miura Okuda Iwamoto Law Office (now Miura Okuda
Sugihara Law Office)Partner, Miura Okuda Sugihara Law Office (current position)
Director, Audit & Supervisory Committee Member, Nippon Tungsten
Co., Ltd. (part-time, current position)
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu EP (current position)

Important concurrent positions
Attorney (Partner, Miura Okuda Sugihara Law Office)External Director, Audit & Supervisory Committee Member, Nippon
Tungsten Co., Ltd.

Notes: 1. Common stock in the company held as of March 31, 2023
2. Not eligible for the Board Benefit Trust (BBT), a stock remuneration system; no individual equity

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

83

Strengthening Governance

Ensuring Compliance
Based on the recognition that “the Group’s survival depends on the trust of all members of society,”
we promote compliance management to ensure that each and every member of the Group operates
the business with integrity and fairness. In light of the administrative penalties imposed by the Japan
Fair Trade Commission and the incident involving the improper handling of customer data of otherretail electricity companies in FY2022, we will take measures to prevent recurrence and strive as
one Group to ensure that our business activities once again make compliance our top priority.

■ Compliance Promotion Framework
At Kyushu EP, under the Compliance Committee, which handles issues delegated by and is monitored by the
Board of Directors, we have designated the heads of different business execution units as compliance officers
who formulate and implement action plans. We have also created a framework, which included establishingconsultation desks both within and outside the company. In these ways, we are promoting compliance, including
corruption prevention.
For Group companies, we have a Group General Affairs Subcommittee, which includes members from eachcompany. The subcommittee shares information relating to compliance and acts as a forum where members
can exchange ideas. As well as promoting a Group-wide, unified approach, the subcommittee clearly defines theroles of the management departments that guide and support the Group companies, and strengthens the Kyuden
Group’s compliance promotion framework.
■ Compliance promotion framework

ReportCompliance Committee

LiaiseStructure Chairperson : President
Members : Relevant executive officers, head of labor unioncommittee, and external experts
ReportFormulate and execute action plan

President(Group companies)(ultimately responsible for compliance)
Formulate and execute action plans(Branch ofﬁces)(Head ofﬁce)

Area compliance promoters andbranch ofﬁce compliance ofﬁcers(Branch ofﬁce general managers)

Respective divisions, etc.

Area compliance promotersand branch ofﬁce
compliance ofﬁcers

President (Compliance Committee, etc.)

ReportCompliancebranch areaofﬁcerComplianceofﬁcers (head ofrespective
divisions, etc.)
Compliance ofﬁcers

LiaiseGroup company
management
departments

Compliancepromoters(Senior managing
ofﬁcer level)

ReportComplianceconsultation desks

Consult
Consult
Business
partners
Consult

Compliance ofﬁcers
Compliance ofﬁcers(internal and external)

Executives/
Employees

Promote integrated initiatives atthe branch ofﬁce level(Head of organization, etc.)

Communicate

Complianceconsultation desks

Manage activities and offer guidance/support■ Overview of the Compliance Committee
Roles

Structure
Frequency of
Meetings○Propose and deliberate on compliance-related policies and measures, etc., and monitor
implementation○Provide advice, etc., from external experts in the Compliance Committee in the event of ascandal with significant social impact[Chairperson] President[Members] External experts (3), head of the labor union committee, relevant executive officers
Twice a year, in principle■ Record of FY2022 activities■ Committee meeting in session

Major items for deliberation/reporting by the Compliance
Committee■ Compliance Consultation DesksGroup General Affairs Subcommittee
Suggest and monitor

We have established a Compliance Committee chaired by the President, regularly provide advice and monitor
compliance, and obtain suggestions and other forms of support from outside experts in the event of a scandal
with significant social impact. Advice provided by the Committee is also shared with Group companies andreflected in initiatives throughout the Group.

・Status of initiatives at each site
・Operational status of compliance consultation desks
・Causes of compliance violations and measures to prevent
recurrence

Board of Directors (Kyushu EP)
Delegate■ Compliance Committee

Compliance educationofﬁcers

Executives/
Employees

Business
partners

To prevent actions that violate laws, regulations, and corporate ethics and detect such violations at an earlystage, we have established compliance consultation desks at Kyushu EP and Kyushu T&D. Officers, employees,
and business partners (contractors, etc.) of the Kyuden Group can consult with these desks when they havedoubts about the legality or ethics of our business operations or the behavior of other officers and employees.
We have also established an external consultation desk at a legal office to provide consultation services.
The privacy of users of these services is strictly protected in ac- ■ Consultations and reports over timecordance with laws, regulations, and internal rules, and users will
Kyushu EP
Kyushu T&Dofnot be subjected to any disadvantageous treatment as a result of (No.
cases)
40
consulting with or reporting to these desks.
33
In addition, to create an environment conducive to such con30
26
sultations, we are encouraging employees to use the consulta17
tion desks through documents and on the Intranet. In FY2022, 26 20
20
consultations and reports were received. Appropriate action was
1216
taken in response to the consultations we received, including nec- 10
106essary investigations and consideration of measures to prevent0
2
recurrence.
2020
2021
2022
(FY)

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

84

6 Data Section

Strengthening Governance■ Initiatives to Ensure Compliance
We regret the significant inconvenience and concern caused to our stakeholders as a result of serious complianceviolations, including the administrative penalties imposed by the Japan Fair Trade Commission and the improper
handling of customer data of other retail electricity companies. In order to prevent such situations from everoccurring again, all of our officers and employees will make a concerted effort to ensure thorough complianceand restore the public’s trust.

■ Structure for periodic, multi-tiered verification of compliance with laws and regulations

Give
opinionBoard of Directors
ReportMeasures to prevent recurrence of improper handling of new electricity customer
information, etc.

Compliance Committee (legal compliance system)

Overview

Give
opinion
ReportReportGive
opinionCompliance Sub-committee(special assembly for conduct
regulations)Sub-committee chairperson: External Director
Vice sub-committee chairperson: Vice President
Sub-committee members: people appointed by the sub-committee chairperson** Including external experts

Matters implemented include • Validations of reoccurrence countermeasures• Evaluations of effectiveness, taking into account the progressof reoccurrence countermeasures• Suggestions for improvement in the case that reoccurrence
countermeasures are insufficientetc.

ReportEfforts to Prevent Recurrence

Business execution

Execute in accordance with decisions

Cause(1) Measures for information systems that “prevent” and “do not allow” inappropriate behavior to occur
・Ensure strict management of login IDs, passwords, and terminals(Relevant internal rules were also revised)・Further reinforce system-based measures such as access restrictions on communication channels(2) Developing systems and mechanisms that “prohibit” the behavior and an organizational culture that“discourages” it・Build and reinforce a structure for periodic, multi-tiered verification of compliance with laws andregulations(See diagram on the right for the structure)
・Communicate messages from senior management
・Enhance training and education on conduct restrictions
・Create an environment conducive to the detection of misconduct, including developing an internalreporting system
・Reduce risks in all operations by conducting a comprehensive review of operations, with a focus on
conduct restrictions
・Clarify responsibility for compliance, including conduct restrictions, and rules for disciplinary actions

ReportAudit & Supervisory
Committee

Chairperson: President Vice chairperson: Vice President
Committee members: External experts, external directors (excluding Audit & Supervisory
Committee members), Director of the District Symbiosis Division, Directorof the Human Resource Vitalization Division, Director of the Corporate
Strategy Division (*newly added), President of Kyushu T&D, etc.

Kyushu EP was found to have been using a system owned by Kyushu T&D in business operations otherthan the handling of emergency disasters and incidents, which Kyushu T&D had contracted it to perform, toaccess the customer data of other retail electricity utilities (this was announced in press releases between
January and March 2023). There were no cases in which the accessed information was used in customer
acquisition activities.
To prevent such a situation from happening again, all employees are working together to prevent recurrence
under the leadership of senior management, led by the President, and with the help of external knowledge.
・Lack of sensitivity (literacy) with respect to non-public information (non-publicly disclosed information
regarding operations such as wheeling services that could affect competition in the retail electricity
business, etc.)
・Failure to consider the specific legal risks and business norms that would arise as a result of the spin-off
・Failure to create an organizational climate conductive to consultation

Receive suggestion

Internal system

Second lineof defense

First line ofdefenseManagement departments at the head office
ReportHead office, branch offices, and worksites

ReportReportInternal Auditing Body*(audits conduct regulations)* Directly controlled by
the President
Third line ofdefenseInternal Auditing Body

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value85

6 Data Section

Strengthening Governance

Measures to prevent recurrence in light of administrative penalties imposed by theJapan Fair Trade Commission

Overview

Kyushu EP and Kyuden Mirai Energy received cease and desist orders and a surcharge payment order(Kyuden Mirai Energy received the cease and desist order only) from the Japan Fair Trade Commission
on March 30, 2023, for violating the Antimonopoly Act in connection with the supply of extra highvoltage power and high voltage power.
Due to a difference of opinion with the Commission regarding the facts of the case, Kyushu EP filed alawsuit seeking the revocation of each order. However, to prevent such allegations in the future, we are
implementing measures to ensure compliance with laws and regulations, including the AntimonopolyAct.
To compile these measures, the Compliance Committee, which includes external experts and external
directors, deliberated on the issues while obtaining knowledge from attorneys and other experts.

Cause・W e conducted meetings with a competitor without having a sufficient understanding of the
Antimonopoly Act, including that there was a risk of being suspected of violating the Antimonopoly
Act simply by making contact with a competitor, etc.
(1) Commitment by top management to prevent recurrence and Group-wide attitude andcorporate culture reforms[Measures that “discourage” the behavior]・Issue a declaration by top management
Issued the “President’s Commitment,” which expresses our strong determination not to repeat situations that could
be suspected of violating the Antimonopoly Act・Foster awareness of compliance as our top priority
・Foster an organizational climate that encourages members to point out to each other risks of legal violations
regardless of department or position■ Structure for auditing compliance with the Antimonopoly Act and verifying efforts

Board of Directors
ReportEfforts to Prevent Recurrence(3) Establishment of an Antimonopoly Act compliance structure and reinforcement of checks inthe structure[Measures to “prohibit” the behavior](See diagram on the right for the structure)・Establishment of “Antimonopoly Act Compliance Rules”
Established rules that stipulate initiatives and structures for compliance with the Antimonopoly Act
・Establishment of the “Unreasonable Restraint of Trade (Cartels and Bid Rigging) Prevention Manual”
Established a manual that specifies precautions to be taken when contacting competitors in order to avoid
suspicions of forming a cartel, etc.
・Audits of compliance with the Antimonopoly Act and external verification of efforts to prevent recurrence－ Implemented periodic audits by the legal division and outside counsel
－ Established a Compliance Subcommittee consisting of a majority of external personnel to monitor efforts toprevent recurrence

ReportCompliance Committee (legal compliance system)

Audit & Supervisory
CommitteeGiveopinion
ReportReportCompliance Sub-committee

Sub-committee chairperson: External Director, Audit & Supervisory Committee
Vice sub-committee chairperson: Vice President
Sub-committee members: Executive Officer in Charge of Legal Affairs, Executive
Officer in Charge of Internal Audits, Anti-Monopoly Act experts, etc.
*Structured such that external personnel make up the majority

GiveopinionMatters implemented include • Confirmation of the extent to which compliance awarenesshas permeated throughout the Company• Audits related to the progress of compliance with the AntiMonopoly Act, etc.
• Verifications of initiatives to prevent reoccurrence

ReportReportSecond lineof defense

Audit and verify

District Symbiosis
Division(legal affairs)(2) Improving understanding and awareness of the Antimonopoly Act[Measures that “discourage” the behavior]・Revise Compliance Action Guidelines, etc.
Enhanced the list of points to bear in mind regarding contact with competitors, in order to comply with the
Antimonopoly Act
・Conduct education and trainingImplemented regular training on problematic actions that could constitute cartel behavior and specific standards ofconduct to avoid suspicion

Give
opinionConsult
First line ofdefenseLiaiseLawyers outside
the Company
Support, as well as audit and verify
through surveys

Compliance officers at each of our sites
LiaiseHead office, branch offices, and worksites

Third line ofdefenseInternal
Auditing
Body

Internal Auditing
Body**Directly controlled
by the President

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

86

Strengthening Governance

Strengthening Risk Management System
To manage risk, Kyushu EP identifies, categorizes and assesses risks every year based on its risk management
rules, clarifying company-wide and division-specific threats that could affect Kyuden Group management.
Individual divisions and business offices incorporate measures to address significant risks into business planand manage them appropriately.
With regard to risks that relate to multiple departments and risks for which concerns of manifestation are
high, we share information among related departments, clarify response structures, and address these risks
appropriately. For nuclear power in particular, we take external knowledge and opinions into consideration as
we work to identify a broad range of risks, share this information with members of the Board of Directors andexecutive officers, and reduce the risks thoroughly and on an ongoing basis.
In addition, to respond rapidly and appropriately to emergencies and disasters, we have established rules, inadvance, covering response structures and procedures, and we conduct regular drills.
To ensure the adequacy of this risk management system, the Internal Audit Division, which is independent
from business operations, audits the implementation of risk management at individual divisions and Group
companies.

■ Crisis Management System
As the risks that the Kyuden Group faces grow more diverse and complex at an unprecedented scale and speed,
we have created a crisis management system and strive to minimize the impact if they materialize. Specifically,
having installed not only an officer in charge of crisis management (Vice-Presidential Executive Officer, KyushuEP) and the respective division manager responsible for crisis management but also crisis management staff at
such locations as the head office of Kyushu EP and Kyushu T&D, we share information and collaborate in the caseof a crisis. In addition to having established a Risk & Crisis Management Countermeasures Committee, we havebuilt a support system based on outside experts with specialized and advanced knowledge to continually improveand strengthen crisis management functions.

President of
Kyushu EP
Report /Consult

Kyushu EP Vice President(Crisis Management Officer)■ Risk management process (framework)
Commitment

CompileClarify major risks

Commitment

Examine risk
countermeasure• Change in risk awareness

Risk assessmentchanges• Events thatexpectedoccurredin thein thelastbusinessyear
environment
in theconsideration
medium to long-term• Identify risks
taking into
expectedchanges in the business environment in the medium
to long-term• Share information on state of response
to risk with related parties and senior

management• Share information
on state of response to risk
with related parties and senior management

Low

Probability ofmaterialization

Probability of materialization• Identify risks taking into consideration

Examine risk countermeasure

High
Risk assessment
High

Low

Impact Impact

Legalaffairs
Publicrelations

Risk & Crisis Management
Countermeasures
Committee• Clarify major risks through management
discussion• Individual divisions incorporate risk
countermeasures
into businessplans incorporate risk
• Individual
divisionsthen implement
countermeasures into business plans thenOffer guidance oncrisis countermeasuresand support fortraining, etc.

Undertakes supervisory deliberations on
subjects related to risk and crisis
management

Head office departments at Kyushu EP andKyushu T&D

CrisisManagement
Supervisor

CrisisManagement
Supervisor(alongsideother duties)(alongsideother duties)

CrisisManagement
Supervisor …

Execute• Assess risks based on their probabilityof materialization and potential impact• Clarify majorrisks through• Assessrisksmanagement
based on their probability of
discussion materialization and potential impact

implement

District Symbiosis
Division

External experts(think tanks)Power System
Operation &Engineering
Division• Newly materialized risks• Change in risk awareness

ExecuteExecuteGeneralaffairs

・Installed as a general manager dedicated tocrisis management
・During emergencies, helps enhance speedof response under the direct control of theVice President (after the establishment of
the Headquarters Division, acts as asupervisory team leader to assist the Chief ofHeadquarters and Crisis Management Officer)

Information andCommunication
DivisionGroupcompanies

Examine risk
countermeasure・Installed as the executive in charge of crisis
management
・During emergencies, supervises operations as aproxy for the Chief of the Headquarters(President of Kyushu EP)

Marketing
Division

Examine risk countermeasure• Newly materialized risks• Change in risk awareness• Newly materialized risks• Change in risk awareness• Events that occurredin the last year
process■Risk management

CompileExecuteInternal Auditing Body

Individual
divisions• Newlymaterializedrisks risks
Identify,
categorize,
assessMonitorInternal Auditing Organizations(Internal Audit Office & Nuclear Power Audit Office)

Risk
Management
Division

Risk Management
Division divisions
Group companies
Senior management
Individual

Identify, categorize,
and assess risks

MonitorReportSeniormanagement

Clarify major risks

Crisis Management
Supervisor Group

Crisis Management
Administrator(alongsideother duties)…

Appointed to oversee
crisis management ineach head office
department (alongsideother duties) andstrengthen cooperation

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

87

Strengthening Governance

Strengthening Supply Chain Management■ Business risks announced by Kyushu EP
The main risks that have the potential to affect the Group’s business performance, financial situation, etc.,
include, but are not limited to, the following.
Risk Category

Content

Countermeasures

Changes in the competitive environment
Domestic Electricity Business

Other businesses(Overseas Business, etc.)

Impact of temperature rises, economic trends, etc.
Fiercer competition due to full deregulation of retail electricity
sectorTrends in the fuel market and wholesale electricity
transactions
Country risk
Fiercer competition
Changes in systems
Changes in prices, interest rates, and exchange rates

Provide competitive products and services
Secure supply capacity and reduce costs
Assess potential profitability and risks
Establish a risk management framework
Optimize our business portfolio
Reduce costs and implement initiatives related to new technology

Status of the situation surrounding nuclear power
Stable operation of nuclear
power
Atomic fuel cyclic and backend of nuclear operations

Restrictions on operations due to new regulatory standards
Unsuccessful litigation over nuclear power

Respond to new regulatory standards (bolster safety)
Implement appropriate countermeasures to such litigation

Uncertainty accompanying extremely long-term projects

Alleviate impact through government measures

Fluctuations in market prices
Fluctuations in fuel prices
Interest rate fluctuations
Wholesale electricity market
pricesChanging conditions in international fuel markets andfluctuations in foreign currency rates
Changes in procurement conditions (difficulties meeting
demand)Macroeconomic conditions
Dramatic price increase due to gap in supply and demand
Increase in cost of purchasing renewable energy linked tothe market

Procure capital through long-term borrowings with fixed interest
Optimize our energy source portfolio
Use derivatives

Changes in systems related to energy policy
Development of the energy market

Gather information on the system and respond appropriately

Environmental regulations
Procurement needs from decarbonized power sources
Changes in actions by investors concerning ESG
Insufficient initiatives and information disclosures

Promote electrification and low- or zero-carbon energy sources
Establish an ESG promotion framework
Disclose information on low-carbon and decarbonization initiatives(information disclosure and dialogue, etc., based on TCFD
recommendations)

Climate change
Climate change

Facility accidents/failures and system failures
Large-scale natural disasters
Breakdown of equipment due to age
System failures
Cyber-attacks

Formulate business continuity plans (BCP)
Cooperate with relevant organizations and local governments
Carry out priority inspections and repairs, improve maintenanceefforts, etc.
Constantly monitor system operations and update systematically
Maintain and raise our information security level

Professional negligence(employee accidents, etc.)

Personal injury such as electric shock
Large-scale or long-term blackouts

Establish detailed plans in advance and put in place a work task
management framework
Conduct job training and drills
Put in place an in-house safety promotion framework

Violation of laws andregulations

Violations resulting from insufficient understanding of laws
and regulations
Inadequate response to system changes
Dishonest practices

Thoroughly implement compliance with laws and regulations(education, cultural awareness, systems)
Establish a compliance promotion framework

Lack of human capital andskillsInability to secure and train human capital or exodus ofexisting personnel

Systematically hire human capital
Educate and train personnel so as to develop human capital
Put in place a better working environment

Natural disasters
System failures, etc.

■ Sustainable Procurement Guidelines■ Basic Policy for Procuring Materials

Diversify procurement sources and ensure we remain flexible
Make use of foreign exchange forwards and fuel price swaps

Changes in systems related to the power industry
Basic Energy Plan
Electricity system reforms

To provide products and services that are valuable to customers, it is necessary to procure safe, quality materials
and parts in an economic and safe manner. In the process of procurement, we recognize the importance of contributing to the realization of a sustainable society by fulfilling our social responsibilities throughout the supply chains
involved.
At Kyushu EP and Kyushu T&D, we have established a Basic Policy for Procuring Materials, which outlines ourbasic approach to procurement, and the Sustainable Procurement Guidelines, which summarizes our “requests
to suppliers,” a list of matters that we would like our suppliers to comply and cooperate with in order to conduct
procurement activities based on the aforementioned policy. We will continue striving to promote understanding ofthese guidelines among all stakeholders in the supply chain, and also plan to conduct in-house training to deepen
employee understanding of these guidelines.
In order to continue our efforts to realize a sustainable society throughout the supply chain in the future, we willrevise these guidelines as necessary to keep up with changes in social conditions and new insights.

Operational risks

１
2
3
4
5
6

Open procurement
Fair and equitable business activities
Adhering to laws, regulations, and social norms
Rejection of all relations with antisocial forces
Taking into consideration the environment
Ensuring safety

7
8
9
10
11

Ensuring information security and protecting personal information
Adhering to and faithfully executing contracts
Promotion of communication to establish mutual trust
Creation of value
Contribution to society and the regional community

7
8
9
10
11
12

Fair and equitable transactions and ethics
Quality and safety
Information security
Business continuity plan
Establishment of a management structure
Promoting good communication■ Requests to suppliers
１
2
3
4
5
6

Adhering to laws, regulations, and social norms
Adhering to and faithfully executing contracts
Reduced procurement costs and stable delivery
Human rights and labor
Safety and healthPreserving the environment and biodiversity■ Conducting Questionnaires Targeting Business Partners
We conduct a questionnaire on sustainability initiatives targeting our major suppliers* and survey the extent
to which they are addressing social issues such as the SDGs and carbon neutrality. From the results of thequestionnaire, we summarize examples of initiatives that help to improve sustainability, and strive to share thefindings with our suppliers through briefings and other opportunities.
* Suppliers with whom we place consistent orders, etc.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

88

Strengthening Governance

Ensuring Information Security
We are working to ensure appropriate information security and protect personal information by
setting a fundamental approach to information security and the protection of personal informationand ensuring officers and employees are well aware of the approach. In addition, we will strive
to strengthen information security measures across our entire supply chain, including suppliers
outside of the Group, to improve the overall level of information security.

■ Promotion Framework
Kyushu EP has created a framework under which the President is ultimately responsible and where thedirector of the IT and Telecommunications Division acts as the Chief Information Security Officer (CICO). The
Cyber Security Control Office, which is part of the framework, is the heart of Group-wide efforts to promote
the security PDCA cycle and works to guarantee information security.

■Information Security Promotion Framework

PDCA for entire Kyuden Group

Organizational measures
Under the framework detailed above, we promote the use of the PDCA cycle throughout the entire Group, checkon progress in implementing information security efforts at each workplace, and make continuous improvements.
Human resource measures
All employees undergo information security training and take part in drills related to targeted cyber-attacks via
email. Through this and other types of training, we raise awareness and understanding of information security
and improving employees’ ability to respond.
Physical measures
As well as introducing security gates and electronic locks, we implement necessary measures at facilities tocontrol who can enter our buildings and offices.
Technical measures
In preparation for cyber-attacks, which are growing more sophisticated and ingenious, we are strengthening
our security countermeasures by utilizing antivirus software and introducing security firewalls.
Examples of recent information security measures[Measures related to the use of generative AI (promotion of DX)]
When we began using generative AI in July 2023, we prepared a secure environment to protect our information
assets, summarized the important precautions to keep in mind, and informed all employees of those precautions.

President of Kyushu EP
Chief Information Security Officer (CICO)(Director of the IT and Telecommunications Division)

Deputy Chief Information Security Officer (Director of the District Symbiosis Division)

Information security promotion manager(General Manager of Cyber Security Control Office, IT and Telecommunications Division)■ Protecting Personal Information

Deputy information security promotion manager (General Manager of the District Symbiosis Division (responsible for crisis management))

We have put in place various internal regulations, and strive to use and manage personal information appropriately
within the scope of specific usage purposes. However, in FY2022, improper viewing and handling of new electricity
customer information was discovered and reported to the Personal Information Protection Committee.
In order to prevent such a situation from happening again in the future, we will strive to prevent recurrence andproperly and strictly manage personal information in accordance with relevant laws and regulations.

Individual headquarters,
business offices, etc.

Kyushu Transmission
and Distribution

Kyuden Group
companies

PDCA

PDCA

PDCA

■ Information Security Measures
To prevent information security incidents, we implement multi-faceted initiatives that include
organizational, human resource, physical, and technical measures. These efforts are centered on the
Cyber Security Control Office, and involve cooperation among those responsible for information security
at each of our sites, including Group companies.

■ Individual Number (My Number) System
In accordance with the purposes and requirements of relevant laws and regulations, we make sure to confirm
individuals’ identities when we are required to submit their personal individual number. When it is no longer
necessary, we handle the information appropriately by promptly disposing of or deleting it or taking other steps.
Moreover, when a customer contracts with us for electricity, we do not require them to provide their personal
individual number.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

89

Strengthening Governance

Enhancing Stakeholder Engagement
The Kyuden Group has relations with a wide range of stakeholders through its business activities.
To build better relationships with our stakeholders, we engage in two-way communication such as
dialogue activities, and conduct community and social coexistence activities.

■ Promoting Two-way Communication with Stakeholders
The Kyuden Group utilizes a variety of opportunities to promote two-way communication, including dialogue activities
in which we explain our business activities to stakeholders and listen to their opinions and requests, press releases andother channels through which we actively disclose and disseminate information, and visiting lectures and facility tours.

Face-to-face dialogue activities
We utilize various opportunities for communication to promote face-to-facedialogue with stakeholders, such as onsite visits and dialogue sessions. To further
promote these activities, we actively undertake initiatives such as preparing original
explanatory materials and conducting activities via our dialogue promotion teams.
Onsite visits for local residents

Active disclosure and dissemination of information
In order to gain the understanding and trust of our customers and the local community by increasing the transparencyof our corporate activities, we have established the Disclosure Commitment*, which outlines our basic stance on thedisclosure of information.
Based on this commitment, we proactively disclose and disseminate information on all aspects of our corporate
activities, including management information, problems at power stations, safety measures at nuclear power plants,
and corporate PR. To do so, we utilize various media, such as press releases, websites, social media, and pamphlets.

■ Promotion of Community and Social Coexistence Activities
The Kyuden Group conducts a variety of community and social coexistence activities under our Basic Policy for
Community and Social Coexistence*, with the aim of fulfilling our role as a member of the local community anddeepening communication with local residents to build strong relationships of trust. In FY2022, a cumulative
total of about 34,000 employees participated in volunteer activities such as Korabora-Q-den and various othercommunity initiatives.
* Posted on Kyushu EP’s website

Korabora-Q-den
In collaboration with NPOs and other community members, we are rolling out
Korabora-Q-den (collaboration + volunteer) activities across the Kyushu region,
aiming to find solutions to local issues.
Korabora-Q-den activities in the environmental arena, such as efforts to protect
biodiversity and preserve natural landscapes, are called Korabora-Q-den Eco
initiatives. Through these initiatives, we are working together with community
members across the Kyushu region to protect the environment.
Kyuden Play Forest
We host Kyuden Play Forest events, which are experiential learning events forelementary school students held in forests throughout the Kyushu region, withthe aim of nurturing children’s respect for the environment.

* Published in the Kyuden Group ESG Data Book 2023 (p. 45)

Utilization of diverse opportunities for communication

Activities to create a society that is friendly to elderly people and children
We are working with local communities to create a societythat is friendly to elderly people and children through various
activities, such as the inspection of wiring in the homes of
elderly people living alone, food drives*, and the provision ofsites to hold children’s cafeterias.

Besides onsite visits, we utilize diverse opportunities for communication,such as visiting lectures and facilities tours. To complement existing face-toface activities, we are expanding communication opportunities through theuse of digital technology, such as online classes and virtual power station
tours that make use of VR, computer graphics, video, and other technologies.
Virtual power station tour

■ Business Operations That Value Stakeholder Feedback
In FY2022, Kyushu EP and Kyushu T&D received about 2,000 pieces of feedback from stakeholders throughday-to-day business activities, dialogues, and other activities. Using internal systems and other means, weshare the feedback we receive from stakeholders with the entire company, including those at the top levelof management. We also examine suggested countermeasures from a cross-divisional perspective andreflect them in the operating plans of each division, branch, office, etc., to lead to better management. We
will continue to listen carefully to stakeholder feedback and strive to respond promptly to their needs.

Releasing salmon fry (Iizuka Power Distribution
Office)* Food that cannot be consumed by the best before date is brought to food bank organizations
to be donated to welfare facilities

A walk rally activity held during the Kyuden
Play Forest at the Saga Prefectural Hokuzan
Youth Retreat (Saga Branch)

Indoor wiring inspection (Kumage
Distribution Office)

Food drive (Kumamoto Branch)Participation in local festivals
Employees from various offices and Group companies participate in and help
to run local festivals to revitalize the local community and deepen ties withlocal residents.
Satsumasendai Hanya Festival(Sendai Nuclear Power Plant)

KYUDEN
GROUP REPORTINTEGRATEDKYUDEN GROUPINTEGRATED
2023 REPORT 2023

Chapter

6

Data Section

CONTENTS
Consolidated Eleven-year Financial Summary . . . . . . . . . . . . . . . . . 91
Non-financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Financial and Non-financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . 94
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SASB INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Frequently Asked Questions (IR FAQ) . . . . . . . . . . . . . . . . . . . . . . . . . 135
External Assessments and Participation in Initiatives, etc. . . . 136
Corporate Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

91

6 Data Section
Consolidated Eleven-year
Financial Summary

Consolidated Eleven-year Financial Summary

Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31

Millions of Yen

Thousands of U.S. Dollars

For the Year:

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2022

Operating revenues:¥1,545,919

1,791,152

1,873,467

1,835,692

1,827,524

1,960,359

2,017,181

2,013,050

1,521,977

1,743,310

2,221,300$16,633,973

Electric

1,406,218

1,633,023

1,719,570

1,688,328

1,681,066

1,804,418

1,844,850

1,800,189

1,284,207

1,486,155

1,946,737

14,577,936

Other139,700

158,129

153,897

147,364

146,458

155,940

172,331

212,860

237,770

257,154274,563

2,056,036

Operating income (loss)(299,428)(95,821)(43,314)120,256

122,640

103,123

86,57563,81376,894

48,624(72,998)(546,638)

Ordinary income (loss)(331,206)(131,449)(73,693)

90,916

94,23473,67852,54440,052

55,17932,384(86,634)(648,751)

Net income (loss) attributable to owners of the parent(332,470)(96,096)(114,695)

73,49979,27086,65730,970(419)

31,835

6,873(56,429)(422,563)

Capital expenditure

181,295

257,004

272,880

323,858

310,096358,953

369,816

421,731355,894

312,138

306,592

2,295,881

Depreciation and amortization

212,735

202,856

193,972

203,060

215,342

210,455

238,189

261,369

205,749

225,293

221,013

1,655,034

Research and development expenses

8,175

6,423

7,343

6,499

5,817

5,651

5,459

5,525

5,101

4,823

4,798

35,930Cash flows from operating activities(135,130)(5,922)

88,736

329,491

188,016355,995

283,020226,852

253,459

257,81130,504228,431

Cash flows from investing activities(176,546)(184,963)(268,413)(288,321)(275,047)(321,751)(364,341)(424,623)(330,587)(320,879)(328,874)(2,462,742)

Free cash flows(311,676)(190,886)(179,676)

41,169(87,030)

34,243(81,321)(197,770)(77,127)(63,068)(298,369)(2,234,310)

Cash flows from financing activities

412,248

196,397

310,807(126,184)

78,380(90,334)(40,716)

157,999

95,54979,428324,770

2,432,011

Dividends paid

9,464

−

−

−

9,523

17,09915,34918,88417,50519,872

10,52878,840Total equity

557,799494,232

450,990499,903

574,577

653,963665,250

637,957

681,470

676,337

617,230

4,622,064

Total assets

4,526,513

4,549,852

4,784,735

4,748,237

4,587,541

4,710,073

4,794,039

4,948,063

5,128,563

5,342,350

5,603,678

41,962,548

Outstanding interest-bearing debt

2,910,724

3,116,717

3,337,982

3,224,888

3,313,957

3,243,817

3,223,166

3,406,273

3,522,649

3,638,084

3,991,507

29,889,977

37,40739,42940,14839,31736,00833,416

31,39728,99026,25825,04327,936

209,202

Interest charges

Per Share:

Yen

U.S. Dollars

Basic net income (loss)¥(702.98)(203.19)(242.38)

155.17159.97175.5658.05(6.05)

62.86

10.09

(123.81)$(0.92)

Net assets

1,141.13

1,005.42

692.52787.01

944.69

1,113.43

1,136.82

1,077.38

1,165.39

1,151.73

1,015.22

7.60

Cash dividends applicable to the year (common share)*1

−

−

−

−

15.00

20.00

30.00

35.00

35.00

40.00

−

−

*1

−

−

−

−

3,500,000.00

3,500,000.00

3,500,000.00

1,599,452.00

2,100,000.00

2,100,000.00−−

Cash dividends applicable to the year (class A preferred share)*1: The cash dividends per share listed are the amounts attributable to recorded earnings for each fiscal year. In addition, the following appropriation funded from other capital surplus as of March 31, 2016 was approved at the General Meeting of Stockholders on June 28, 2016. Dividends per share: Common stock: ¥5.00; Class A preferred shares:¥7,153,703.00*2*2: Including cumulative unpaid Class A preferred shares, each single share equates to ¥7,153,763.00.
Note 1: U.S. dollar amounts have been converted from yen for the reader’s convenience at the rate of ¥133.54 = U.S.$1, the prevailing rate of exchange as of March 31, 2023.
Note 2: Yen figures have been rounded down to the nearest million.
Note 3: The Revised Accounting Standard for Revenue Recognition, etc. and the revised Electricity Business Accounting Regulations have been applied from the beginning of Fiscal 2021, and the figures for Fiscal 2020 have been retroactively adjusted to reflect the said accounting standards.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Consolidated Eleven-year
Financial Summary

Key Metrics:

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

ROE (%)(47.16)(18.93)(25.29)

16.13

15.38

14.69

4.88

(0.07)

5.04

1.06(9.19)ROIC (%)

(6.2)

(1.8)

(0.6)

2.6

2.5

2.0

1.5

1.3

1.5

1.0

(0.9)

Equity ratio (%)

11.92

10.46

9.02

10.11

12.01

13.36

13.34

12.34

12.72

12.08

10.39

Net D/E ratio (%)

539.34655.42773.53671.95601.48515.59504.06557.82540.03563.61685.75

Dividend payout ratio (%)

−

−

−

3.22

9.38

11.39

51.68

−

55.68

396.43−Year-end stock price (yen)977.001,262.00

1,165.00

1,071.00

1,186.00

1,268.00

1,307.00

869.001,092.00

817.00757.00

PER

−

−

−

6.90

7.41

7.22

22.52

−

17.37

80.97

−

PBR

0.86

1.26

1.68

1.36

1.26

1.14

1.15

0.81

0.94

0.71

0.75

−

−

−

0.47

1.27

1.58

2.30

4.03

3.21

4.90

−

83,78784,45081,27979,21082,36682,74080,59180,71185,823

97,27595,967

−

−

−

20.7

31.9

36.7

73.1

82.0

62.4

91.4

57.7

Dividend yield (%)

Reference Data:
Electricity sales volume (million kWh)
Nuclear power plant utilization rate (%)

92

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

93

6 Data Section
Non-financial Data

Non-financial Data

(For results with breakdowns, the breakdown figures and totals may not match due to rounding)
Environment
Ratio of energy fromzero-emission or FIT energy
sources

Greenhouse gases

Unit

2018

2019

2020

Scope of
Aggregation

2022

2021

（FY）

Ratio of zero-emission or FIT electricity* in theDomestic Electricity Business (total)

%

55

58

49

55

43

Renewable energy (excl. FIT)

%

9

9

7

6

6

FIT electricity

%

12

14

16

14

14

Nuclear power

%

34

35

26

35

23

See the “Kyuden Group ESG Data Book 2023” for details.
Society
Number of employees

Kyushu EP

Average years of service

Supply chain GHG emissions (Scopes 1, 2, and3 total) (market basis)

Million t-CO2

33.56

35.92

42.29

39.72

45.10

Scope 1Million t-CO2

17.56

19.04

22.11

17.49

23.69

Scope 2 (market basis)

Million t-CO2

0.00009

0.00008

0.00005

0.00005

0.00005(location basis)

Million t-CO2

0.00010.00008

0.00005

0.00005

0.00005

Scope 3

Million t-CO2

15.99

16.88

20.18

22.23

21.40

CO2 emissions (basic emissions)

Million t-CO2

22.80

23.9

25.00

21.80

29.20

Kyushu EP

CO2 emissions per kWh of electricity sold(basic emissions coefficient)

kg-CO2/kWh

0.319

0.344

0.365

0.296

0.399

Kyushu EP

CO2 emissions per kWh of electricity sold(post-adjustment emissions coefficient)

kg-CO2/kWh

0.347

0.370

0.479

0.382

0.453

Kyushu EP

Kyushu EP andconsolidated
subsidiaries

Renewable energy developed(Japan and overseas)

Million kW

-

-

2.3

2.55

2.61

Kyuden Group

Energy(amount of raw materials used)

Energy consumption (crude oil equivalent)Million kl

6.35

6.22

7.69

6.12

8.22

Kyuden Group

Water

Clean water consumption

m3/person

32

28

27

24

27

Kyushu EP

Water withdrawal for power generation(at thermal, nuclear and internal
combustion power plants)

Million t

5.20

Water discharge from power generation(at thermal, nuclear and internal
combustion power plants)

Million t

Industrial waste

Air

6.01

6.14

5.24

6.09

2022

2021

（FY）

12,82912,717

12,543

12,339Male

People11,904

11,791

11,660

11,481

11,267

FemalePeople

1,043

1,038

1,057

1,062

1,072

Average years of service (general)

Years

24.0

24.2

24.2

24.4

24.5

Male

Years

24.5

24.7

24.8

25.0

25.1

Female

Years

18.2

18.1

17.8

17.8

17.6

Employees took childcare leave

Rate of employees withdisabilities
Creation of a better working
environment

People (%)

2.58

2.62

2.36

2.57

Kyushu EP

Generatedt

715,525

917,166

880,177

782,307

1,037,934

Kyuden Group

Recycled

t712,720

915,146877,737

776,846

1,013,576

Kyuden Group

Recycling rate%

Approx.100

Approx.100

Approx.100

Approx.100

98

Kyuden GroupSOx emissions by thermal power plants

t

3,686

3,549

4,532

3,747

4,618

Kyushu EP

NOx emissions by thermal power plants

t

5,008

4,941

6,081

5,358

6,769

Kyushu EP

Electric vehicles (EVs)

EVs introduced (cumulative)

Vehicles

175

192

199

259

349

Kyushu EP

Energy and environmental
education

Eco-mother classes

Times

Approx.200

Approx.200

Approx.110

Approx.110

Approx.130

Kyushu EP

Visiting lectures

Times

Approx.560

Approx.440

Approx.190

Approx.290

460

Kyushu EP

Environmental classes
using digital contents

Times

-

-

-

15

23

Kyushu EP

Scope of
Aggregation

Kyushu EP andKyushu T&D

Kyushu EP andKyushu T&D108（2.3%） 117（2.5%） 123（2.6%） 127（2.7%） 136（2.9%）

Kyushu EP andKyushu T&D

People

33

61

68

73

279

Kyushu EP andKyushu T&D

Employees with disabilities

%

2.26

2.34

2.32

2.29

2.46

Kyushu EP andKyushu T&D

Days of paid leave utilized annually per person

Days

16.7

16.2

16.6

16.6

17.4

Kyushu EP andKyushu T&D

Receiving regular health exams

%

-

100

100

100

100

Kyushu EP andKyushu T&D

Participation in stress check program

%

-

95.5

94.5

94.8

94.8

Smokers

%

-

28.0

26.7

24.1

23.8

Days of volunteer leave taken

Days

225

224

117

66

70.0

Kyushu EP andKyushu T&D

Employees received awards forcontributing to local communities

People

39

28

28

11

18

Kyushu EP andKyushu T&D

KYUDEN i-PROJECT
participants(total)

People

600

760

910

1,030

1,200

Kyuden GroupKyushu EP andKyushu T&D
Kyushu EP andKyushu T&D

Human resource development

Training hours per employee(average)

Hours

-

-

21.8

76.4

51.0

Kyushu EP andKyushu T&D

Rate of labor union members

Percentage of all employees

%

70.5

68.8

67.4

66.7

54.5

Kyushu EP andKyushu T&D

Employees excluding special managers, etc.

%

100.0

100.0

100.0

100.0

100.0

Kyushu EP andKyushu T&D

Kyushu EP

2.47

Governance
Composition of Board of
Directors

Board of Directors’ activities* Ratio of electricity generated and received by Kyushu EP, before trading of non-fossil certificates.
If a non-fossil certificate is unavailable, FIT power is considered neither as a renewable energy nor as a source of zero carbon-emission energy,
but is treated as an electricity with an emission amount of Japan's national average level, including among others thermal power generation.

2020

12,947

Number of employees who tookchildcare leave

Innovation2019

PeopleFemale managers

Health and productivity
management

2018

Employees (total)

Number of female managers

Community
Renewable energy

Unit

Unit

2018

2019

2020

2022

2021

(End of FY)

Scope of
Aggregation

People

19

16

15

15

15

Kyushu EP

Percentage of external directors

%

26.3

31.3

33.3

33.3

33.3

Kyushu EP

Male

%

89.5

87.5

80.0

80.0

80.0

Kyushu EP

Female

%

10.5

12.5

20.0

20.0

20.0

Kyushu EP

Board of Directors meetings held

Times

19

17

19

15

23

Kyushu EP

Attendance rate of all directors

%

97.6

97.4

98.6

99.6

97.1

Kyushu EP

Number of directors

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

94

6 Data Section
Financial and Nonfinancial Highlights

Financial and Non-financial Highlights
Operating Revenues(Consolidated)¥

2,221.3 billion(FY2022)

Operating Income (Loss)(Consolidated)-¥

72.9 billion(FY2022)

Ordinary Income (Loss)(Consolidated)¥2,221.3 billion
2,013

86.5

1,743.3

86.6 billion(FY2022)

Ordinary income (loss) (excluding the delayed effects offuel cost adjustments)
Target:¥150 billion
Mid-term target:
Over ¥125 billion

Ordinary income (loss)

2,017.1

-¥

101.3

76.8
63.8

1,521.9

68.5

48.6

52.5

55.1
40

46.1

26
2022
2018

2019

2020

32.3
2022

(FY)
2018

2021

2019

2020

2021

2025

2030

(FY)

-¥25.6 billion
2018

2019

2020

2021

2022

(FY)
-¥86.6 billion-¥72.9 billion
Note: The Revised Accounting Standard for Revenue Recognition, etc. and the revised Electricity BusinessAccounting Regulations have been applied from the beginning of Fiscal 2021, and the figures for Fiscal
2020 have been retroactively adjusted to reflect the said accounting standards.

12.2%

*

Equity Ratio(Consolidated)(End of FY2022)

Note: The Revised Accounting Standard for Revenue Recognition, etc. and the revised Electricity BusinessAccounting Regulations have been applied from the beginning of Fiscal 2021, and the figures for Fiscal
2020 have been retroactively adjusted to reflect the said accounting standards.

Growth Investments(Cumulative)(Consolidated)

Approx.¥165 billion(FY2021–2022)

Note: The Revised Accounting Standard for Revenue Recognition, etc. and the revised Electricity BusinessAccounting Regulations have been applied from the beginning of Fiscal 2021, and the figures for Fiscal
2020 have been retroactively adjusted to reflect the said accounting standards.

Dividends(Per Share of Common Stock)(Kyushu EP)
Interim¥(FY2022)

Fiscal year-end
40¥500 billion
ICT
services
Urban
development

Mid-term target: approx. 20%

35

Building a sustainablecommunity together
200

12.3

14.7 *〔12.7〕

14.0*〔12.1〕

165
12.2*〔10.4〕

Renewableenergy
250

79

35

30
15

20
17.5

15

Overseasbusiness
13.3

0 per share

Energy service
business
300

20
15

17.5

20
¥0 per share

2018

2019

2020

2021

2022

* Includes amount (approx. 2%) recognized as capital from hybrid corporate bonds(issued October 2020). Figures in parentheses do not include this amount.

2025 (End of FY)

2021

2022

2025

(FY)

2018

2019

2020

2021

2022

(FY)

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

95

6 Data Section
Financial and Nonfinancial Highlights

Supply Chain GHG Emissions
Reduction Rate* 1(Scopes 1-3) (Kyuden Group*2)
Scope 1

Scope 2

26 %

0.453
0.399

CO2 Emissions per kWh ofElectricity Sold (Kyushu EP)(FY2022)

Scope 3

(Post-adjustment emissions coefficient)

kg-CO2/kWh(Basic emissions coefficient)

kg-CO2/kWh(FY2022)

Total Electric Power Sales(Retail, Wholesale, Overseas)(Kyuden Group)
RetailCO2 emissions (basic emissions in million t-CO2)

Wholesale

Approx.

110 billion kWh(FY2022)

Overseas

CO2 emissions per kWh of electricity sold (post-adjustment emissions coefficient in kg-CO2/kWh)

Target: 120
billion kWh

CO2 emissions per kWh of electricity sold (basic emissions coefficient in kg-CO2/kWh)
61.66
0.617

26%
reduction
24.71

42.29

39.72
21.4

20.18

0.00013

2013

0.347
51.8

23.69

17.49

2020

2021

2022

2030

(FY)

*1: Compared to FY2013*2: Calculated for Kyushu EP and its consolidated subsidiaries (excl. those with negligible emissions)

57.7%

Nuclear Power Plant Utilization
Rate (Kyushu EP)
Kyushu Electric Power

91.4

0.0

2.5

5.0

2016

25

21.8

2018

2019

2020

2021

73

75

2018

2019

2020

11

18

19

79

77

2021

2022

Mid-term target:
105

29.2

2022 (FY)(FY2022)2030 (FY)2025

Note 1: Retail Electricity sales volume represents those for Kyushu EP as well as its consolidated subsidiaries(Kyushu T&D, Kyuden Mirai Energy)
Note 2: The breakdowns and totals may not match due to rounding

Total Number of KYUDEN
i-PROJECT* Participants(Kyuden Group)81%

1,200 people(FY2018–2022)

81%

1,200 people
1,030
910

36

57.7%

760
600

16

6

24.4

20.6

19.3%
13.4

9.1

2017

73

12

14

279 people

61

68

73

2019

2020

2021

33
2018

2015

23.9

Number of employees who took childcare leave (men and women)*

0.0
2014

22.8

21

19.3

0.296

Note: Post-adjustment values reflect CO2 emission credits and adjustments associated with the renewable energy feed-in-tariff (FIT) system. (Tentative figures for FY2022. Finalized figures are expected to be released by the government in December.)

36.7

20.7

91
10
8

0.399

0.365

0.344

43%
reduction

98

89
9
8

110

13

Percentage of male employees who took childcare leave

73.1

62.4

31.9

2013

0.319

0.382

0.370

Percentage of Male Employees
Who Took Childcare Leave(Kyushu EP and Kyushu T&D)

(FY2022)82.0

National average

0.453

0.479

0.00005
0.00005

22.11

0.613

26 million t
-CO2

22.23

0.00005

36.95

Target:60%
reduction

45.10

110

2018

2019

2020

2021

2022

(FY)

2022

(FY)

Note: Applicable period is until the end of April after the child reaches the age of two* The percentage of male employees who took childcare leave out of all male employees with newborn iscalculated based on the provisions of the Ordinance for Enforcement of the Act on Childcare Leave,
Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family
Members (Ordinance of the Ministry of Labour No. 25 of 1991). In FY2022, the spousal maternity leavesystem was abolished and childcare leave was made partially paid.

2018

2019

2020

2021

2022 (FY)* A project to promote innovation throughout the Kyuden Group and thereby create new businesses and services

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Consolidated Financial
Statements

Consolidated Financial Statements■ Consolidated Balance Sheet

Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
March 31, 2023
Millions of Yen
ASSETSPROPERTY (Note 5):
Plant and equipment
Construction in progress
Total
Less:
Contributions in aid of construction
Accumulated depreciation
Total
Net property
NUCLEAR FUEL

Thousands of U.S.
Dollars (Note 1)

2023

2022

2023

¥ 11,577,785
248,184
11,825,970¥ 11,118,905
538,837
11,657,743$ 86,699,010
1,858,504
88,557,514

241,929
7,883,479
8,125,409

238,9677,770,903
8,009,870

1,811,662
59,034,595
60,846,258

3,700,561

3,647,872

27,711,256

224,372

222,399

1,680,186

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 3, 6 and 20)
Investments in and advances to nonconsolidated
subsidiaries and affiliated companies (Notes 3 and 20)
Assets for retirement benefits (Note 9)
Deferred tax assets (Notes 3 and 12)
Special account related to nuclear power
decommissioning (Note 2.h)Special account related to reprocessing of spent
nuclear fuel (Note 2.o)Other (Note 3)

113,306

103,802

848,482

209,352

184,479

1,567,715

12,537
172,337

26,623
140,727

93,886
1,290,529

35,041

39,544262,402116,295

94,874

870,869

158,113

149,837

1,184,014

816,984

739,889

6,117,901

CURRENT ASSETS:
Cash and cash equivalents (Note 20)
Receivables (Notes 14 and 20)
Allowance for doubtful accounts
Inventories, principally fuelPrepaid expenses and other270,651
369,244(3,581)
159,420
66,026

241,756
331,089(4,977)
101,699
62,6212,026,743
2,765,047(26,818)
1,193,802
494,430

Total current assets

861,761

732,189

6,453,205¥ 5,603,678¥ 5,342,350$ 41,962,548

Total investments and other assets

TOTAL
See notes to consolidated financial statements.

Thousands of U.S.
Dollars (Note 1)

Millions of Yen
LIABILITIES AND EQUITYLONG-TERM LIABILITIES:Long-term debt, less current portion (Notes 8 and 20)
Liability for retirement benefits (Note 9)
Asset retirement obligations (Note 10)
Other
Total long-term liabilities
CURRENT LIABILITIES:Current portion of long-term debt (Notes 8 and 20)
Short-term borrowings (Notes 11 and 20)
Commercial paper (Note 20)
Notes and accounts payable (Notes 18 and 20)
Accrued income taxes
Provision for loss on the Antimonopoly Act (Note 2.s)
Other
Total current liabilities
RESERVE FOR FLUCTUATIONS IN WATER LEVEL (Note 2.t)

2023

2022

2023

¥ 3,405,775
80,761
297,367
62,016¥ 3,149,232
85,946289,10358,690$ 25,503,788
604,774
2,226,808
464,4023,845,921

3,582,972

28,799,773

437,071
124,530
40,000210,872
3,301
2,762
319,467

384,285
120,810

342,800

3,272,963
932,536
299,535
1,579,098
24,725
20,684
2,392,295

1,138,006

1,075,425

8,521,840

2,519

7,613

18,869237,304

237,304

1,777,032

120,006
209,734

120,006
277,382

898,653
1,570,571(1,651)(1,706)(12,365)

5,828
11,1506,455(6,765)582,064
35,166

4,104
4,723(1,383)
5,066
645,497
30,84043,64983,50048,344(50,660)
4,358,724
263,340

617,230

676,337

4,622,064¥ 5,603,678¥ 5,342,350$ 41,962,548

224,255
3,274

COMMITMENTS AND CONTINGENCIES (Note 22)
EQUITY (Note 13):
Common stock—authorized, 1,000,000,000 shares;
issued,474,183,951 sharesClass A preferred stock—authorized, 1,000 shares; issued, 1,000 shares
Capital surplus
Retained earnings
Treasury stock—at cost, 1,416,422 shares in 2023
and 1,463,267 shares in 2022
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Noncontrolling interests
Total equity
TOTAL

96

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Consolidated Financial
Statements■ Consolidated Statement of Operations■ Consolidated Statement of Comprehensive Income

Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2023

Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2023
Thousands of U.S.
Dollars (Note 1)

Millions of Yen
OPERATING REVENUES (Note 14):
Electric
Other
Total operating revenues

2023

2022

2023

¥ 1,946,737
274,5632,221,300¥ 1,486,155
257,154
1,743,310$ 14,577,936
2,056,036
16,633,973

OPERATING EXPENSES (Note 15):
Electric
Other
Total operating expenses
OPERATING (LOSS) INCOME

2,041,909
252,389
2,294,299

1,452,544
242,141
1,694,685

15,290,618
1,889,993
17,180,612(72,998)

48,624(546,638)

2023
NET (LOSS) INCOME¥

OTHER COMPREHENSIVE INCOME (LOSS) (Note 23):
Unrealized gain on available for sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive income in nonconsolidated
subsidiaries and affiliated companies
Total other comprehensive income

OTHER EXPENSES (INCOME):Interest charges
Gain on sales of investment securities (Note 6)
Loss on impairment of fixed assets (Note 16)
Loss on reimbursement of electric imbalance revenues (Note 17)
Loss on the Antimonopoly Act (Note 2.s)
Share of profit of entities accounted for using
the equity method (Note 18)
Other —net
Other expenses—net

27,936(11,280)

25,043

209,202(84,469)(391,408)
15,585

See notes to consolidated financial statements.

(73,022)

25,546(546,821)

INCOME TAXES (Note 12):Current
Deferred
Total income taxes

6,180(24,716)(18,535)

8,842
7,935
16,77846,282(185,086)(138,803)

NET (LOSS) INCOME(54,486)

8,768(408,018)

See notes to consolidated financial statements.

(123.81)¥

14,545(422,563)
U.S. Dollars

10.09

40.00
2,100,000.00

2023$

32,195$(LOSS) INCOME BEFORE INCOME TAXES

¥

6,637

13,314
2,091

38,144

PER SHARE OF COMMON STOCK (Note 2.w):
Basic net (loss) income
Cash dividends applicable to the year:
Common share
Class A preferred share

4,299

¥

654

2022

45,284(52,268)
2,081

5,093

Yen

1,584

¥

(584,966)

2023

6,047

20,68424,892$

7,875
20,54249,600(91,108)

TOTAL COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests(78,116)

1,895
6,873

1,145
264
3,109
533

(375,822)(38,970)
38,327

¥

1,051
2,743
6,623
(12,166)$(68,119)

1,942(56,429)(408,018)

15,405(1,186)23,731¥$¥(7,617)NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
NET (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

8,768(50,187)(5,204)
5,118

RREVERSAL OF RESERVE FOR FLUCTUATIONS IN WATER LEVEL

¥

2023

¥

(9,096)(LOSS) INCOME BEFORE INCOME TAXES AND REVERSAL OF RESERVEFOR FLUCTUATIONS IN WATER LEVEL(54,486)2022

COMPREHENSIVE (LOSS) INCOME

3,536
3,955
2,762

Thousands of U.S.
Dollars (Note 1)

Millions of Yen(0.92)97

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

98

6 Data Section
Consolidated Financial
Statements■ Consolidated Statement of Changes in Equity
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2023
Thousands of Shares / Millions of Yen
Common Stock

BALANCE AT APRIL 1, 2021

Class A
Preferred Stock

SharesAmountShares474,183¥237,304

1

AmountTreasury Stock

Accumulated Other Comprehensive Income

CapitalSurplusRetained
Earnings

SharesAmountUnrealized
Gain onAvailablefor-Sale
Securities¥120,007¥290,381

1,158¥(1,454)¥3,704

DeferredGain onForeign
Derivatives
Currency
under Hedge Translation
Accounting Adjustments¥3,495¥(5,169)

DefinedRetirement
Benefit
Plans

Total

Noncontrolling
Interests

Total
Equity¥4,037¥652,307¥29,162¥681,470

Cash dividends, ¥37.5 per common share(17,772)(17,772)(17,772)

Cash dividends, ¥2,100,000 per Class A preferred share(2,100)(2,100)(2,100)Net income attributable to owners of the parent

6,873

6,873

6,873

(299)

(299)

Purchase of treasury stock(0)

Disposal of treasury stock

342

(299)

(37)

47

Net change in the year

BALANCE AT MARCH 31, 2022

474,183

237,304

1

120,006

277,382

1,463(1,706)

46

46

400

1,227

3,785

1,028

6,441

1,677

8,119

4,104

4,723

(1,383)

5,066

645,497

30,840676,337

Cash dividends, ¥20.0 per common share(9,478)(9,478)(9,478)Cash dividends, ¥1,050,000 per Class A preferred share(1,050)(1,050)(1,050)Net loss attributable to owners of the parent(56,429)(56,429)(56,429)

Purchase of treasury stock(0)

Disposal of treasury stock
Adjustment of retained earnings for inclusion of companies
accounted for by the equity method

8

(7)

(7)

(7)

(55)

62

61

61

(690)

(690)

(690)

Net change in the year

BALANCE AT MARCH 31, 2023

474,183¥237,304

1¥120,006¥209,734

1,416¥(1,651)

1,724

6,427

7,839

(11,831)

4,160

4,325

8,486

¥5,828¥11,150¥6,455¥(6,765)¥582,064¥35,166¥617,230(Continued)

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

99

6 Data Section
Consolidated Financial
Statements■ Consolidated Statement of Changes in Equity
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2023
Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income

CommonStock

BALANCE AT MARCH 31, 2022

$ 1,777,032

Class A
Preferred
Stock

CapitalSurplusRetained
Earnings

TreasuryStock$ 898,659$ 2,077,146$ (12,779)

Unrealized
Gain onAvailable
for Sale
Securities$

30,735$

DeferredGain onDerivatives
under Hedge
Accounting

Foreign
Currency
Translation
Adjustments

35,368$ (10,363)

DefinedRetirement
BenefitPlans$

37,936

Total

Noncontrolling
Interests

Total
Equity$ 4,833,736$ 230,947$ 5,064,684

Cash dividends, $0.14 per common share(70,977)(70,977)(70,977)

Cash dividends, $7,862.81 per Class A preferredshare(7,862)(7,862)(7,862)(422,563)(422,563)(422,563)

(52)

(52)

(52)

466

460

460

(5,170)(5,170)Net loss attributable to owners of the parent
Purchase of treasury stock(5)

Disposal of treasury stock
Adjustment of retained earnings for inclusionof companies accounted for by the equity
method(5,170)12,913

Net change in the year

BALANCE AT MARCH 31, 2023
See notes to consolidated financial statements.

$1,777,032$ 898,653$ 1,570,571$ (12,365)$

43,64948,131$

83,500$58,707(88,596)

31,15532,39263,54848,344$ (50,660)$4,358,724$ 263,340$4,622,064

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Consolidated Financial
Statements■ Consolidated Statement of Cash Flows
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2023
Thousands of U.S.
Dollars (Note 1)

Millions of Yen

2023
CASH FLOWS FROM OPERATING ACTIVITIES:(Loss) income before income taxes¥
Adjustments for:
Income taxes paid
Depreciation and amortization
Loss on impairment of fixed assets
Decommissioning costs of nuclear power units
Amortization of special account related to nuclear
power decommissioning
Loss on disposal of plant and equipment
Reversal of reserve for fluctuation in water level
Share of profit of entities accounted for using the equity method
Gain on sales of investment securities
Loss on reimbursement of electric imbalance revenues
Loss on the Antimonopoly Act
Changes in assets and liabilities:
Increase in trade receivables
Increase in inventories, principally fuel(Decrease) increase in trade payables
Decrease in liability for retirement benefits
Decrease (increase) in other receivables
Increase or decrease in consumption taxes payables or receivables(Decrease) increase in accrued expenses
Other—net
Total adjustments
Net cash provided by operating activities(73,022)

2022

2023

25,546$ (546,821)(58,742)
1,655,034

12,859(15,131)225,293
3,536
11,431

4,503

2,381

33,725

5,725(5,093)(9,096)(11,280)

7,188
(654)
(7,617)42,878(38,144)(68,119)(84,469)(7,844)
221,013¥

96,298

3,955
2,762

20,684(18,203)(57,587)(238)(3,509)12,432(28,927)(19,829)
5,839
103,527(30,070)(31,252)
66,058(3,002)(20,080)(703)
14,695
6,235
232,264(136,318)(431,237)(1,782)(26,279)
93,102(216,618)(148,489)
43,730775,253

30,504

257,811

228,431

Thousands of U.S.
Dollars (Note 1)

Millions of Yen

2023

2022

2023

(337,465)
23,810(26,975)(318,067)
28,128(26,816)(2,527,074)
178,305(202,002)

15,1895,258

113,747(3,434)(328,874)(9,382)(320,879)(25,717)(2,462,742)

259,423(160,000)
395,545(199,381)
3,716
40,000(10,554)(3,979)259,162(145,000)
280,196(246,547)(2,298)(40,000)(19,821)(6,263)

1,942,661(1,198,142)
2,962,003(1,493,045)
27,832299,535(79,032)(29,800)

324,770

79,4282,432,011

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS

2,002

1,430

14,994NET INCREASE IN CASH AND CASH EQUIVALENTS

28,403

17,790212,696

CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures including nuclear fuelProceeds from contribution in aid of construction
Payments for investments and advances
Proceeds from sales of investment securities and collections of advances
Other—net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of bonds
Repayments of bonds
Proceeds from long-term loans
Repayments of long-term loans
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial paper
Cash dividends paid
Other—net
Net cash provided by financing activities

CASH AND CASH EQUIVALENTS OF A NEWLY CONSOLIDATED SUBSIDIARY,
BEGINNING OF YEAR

63

CASH AND CASH EQUIVALENTS OF A NONCONSOLIDATED SUBSIDIARYMERGED WITH A CONSOLIDATED SUBSIDIARY

491
241,756

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
See notes to consolidated financial statements.

3,683

¥

270,651¥

223,901

1,810,363

241,756$ 2,026,743

100

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

101

Notes to Consolidated
Financial Statements■ Notes to Consolidated Financial Statements
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2023

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
Kyushu Electric Power Company, Incorporated (the "Company") has prepared the accompanying
consolidated financial statements in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Act, the Electricity Business Act and its related accounting regulations and inaccordance with accounting principles generally accepted in Japan, which are different in certain respects
as to application and disclosure requirements of International Financial Reporting Standards. Especially, theaccounting related to the nuclear power generation is regulated by the above accounting regulations, which
are dependent on a governmental long-term nuclear energy policy.
In preparing these consolidated financial statements, certain reclassifications and rearrangements havebeen made to the consolidated financial statements issued domestically in order to present them in a form
which is more familiar to readers outside Japan. In addition, certain reclassifications have been made to
the consolidated financial statements for the year ended March 31, 2022, to conform to the classifications
used in the consolidated financial statements for the year ended March 31, 2023.
The U.S. dollar amounts included herein are provided solely for the convenience of readers outside Japanand are stated at the rate of ¥133.54 = U.S.$1, the approximate exchange rate prevailing on March 31,
2023. The translations should not be construed as representations that the Japanese yen amounts could
be converted into U.S. dollars at that or any other rate.
Japanese yen figures less than a million yen are rounded down to the nearest million yen, except for per
share data. As a result, the totals shown in the accompanying consolidated financial statements (both inyen and U.S. dollars) do not necessarily agree with the sum of the individual amounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation and Application of the Equity Method—The consolidated financial statements as ofMarch 31, 2023, include the accounts of the Company and its 51 (48 for 2022) subsidiaries (together, the"Group"). All significant intercompany transactions and balances have been eliminated in consolidation.
Investments in 19 (19 for 2022) nonconsolidated subsidiaries and 28 (26 for 2022) affiliated companies
are accounted for by the equity method.
The Company adopts the control and influence concepts. Under these concepts, those companies in which
the Company, directly or indirectly, is able to exercise control over operations are treated as subsidiaries
and those companies over which the Group has the ability to exercise significant influence are treated asaffiliated companies.
Consolidation of the remaining subsidiaries and the application of the equity method to the remaining
affiliated companies would not have a material effect on the accompanying consolidated financial
statements.
The fiscal year-end of 12 (11 for 2022) consolidated subsidiaries and several nonconsolidated subsidiaries
and affiliated companies is December 31. The Company consolidates such consolidated subsidiaries'
financial statements and accounts for investments in such nonconsolidated subsidiaries and affiliatedcompanies by the equity method using their financial results for the year ended December 31. The effects
of any significant transactions during the period between the subsidiaries' and affiliated companies' fiscal
year-end and the Company's fiscal year-end are reflected in the consolidated financial statements.
b. Business Combination—Business combinations are accounted for using the purchase method.
Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses in the
periods in which the costs are incurred. If the initial accounting for a business combination is incompleteby the end of the reporting period in which the business combination occurs, an acquirer shall report in its
financial statements provisional amounts for the items for which the accounting is incomplete. During themeasurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively
adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about
facts and circumstances that existed as of the acquisition date and that would have affected the measurementof the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting forthe business combination had been completed at the acquisition date. A parent's ownership interest in a
subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying
amount of noncontrolling interest is adjusted to reflect the change in the parent's ownership interest in its
subsidiary while the parent retains its controlling interest in its subsidiary. Any difference between the fairvalue of the consideration received or paid and the amount by which the noncontrolling interest is adjusted isaccounted for as capital surplus as long as the parent retains control over its subsidiary.
c. Property and Depreciation—Property is stated at cost. Contributions in aid of construction including
those made by customers are deducted from the cost of the related assets.
Depreciation is principally computed using the straight-line method based on the estimated useful livesof the assets. Depreciation of easements related to transmission lines is computed using the straight-line

KYUDEN GROUP INTEGRATED REPORT 2023

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

102

Notes to Consolidated
Financial Statements

method based on the estimated useful lives of the transmission lines.
Under the accounting regulations applicable to electric utility providers in Japan, properties, which are requiredfor decommissioning of nuclear power units or which need maintenance and management even after nuclear
power units have been in the process of decommissioning, are to be included in "Plant and equipment."

and applies to the Minister of Ministry of Economy, Trade and Industry ("METI") for adopting the above special
account. Because the carrying amount of special account related to nuclear power decommissioning aresupposed to be collected through regulated wheeling fees, the special account is amortized in proportion to theamounts of future regulated wheeling fees collected, after approval of the Minister of METI.

d. Leases—Finance lease transactions are capitalized to recognize lease assets and lease obligations in
the balance sheet. All other leases are accounted for as operating leases.

i. Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash
and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits andmutual fund investments in bonds that represent short-term investments, all of which mature or becomedue within three months of the date of acquisition.

e. Impairment of Fixed Assets—The Group reviews its fixed assets for impairment whenever events orchanges in circumstance indicate the carrying amount of an asset or asset group may not be recoverable.
An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sumof the undiscounted future cash flows expected to result from the continued use and eventual dispositionof the asset or asset group. The impairment loss would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows fromthe continued use and eventual disposition of the asset or the net selling price at disposition.
f. Amortization of Nuclear Fuel—Amortization of nuclear fuel is computed based on the proportion of current
heat produced to the estimated total potential heat production over the estimated useful life of the nuclear fuel.
g. Investment Securities—Investment securities are classified and accounted for, depending on
management's intent, as follows: (a) held-to-maturity debt securities are stated at cost with discounts or
premiums amortized throughout the holding periods; and (b) available-for-sale securities, which are notclassified as the aforementioned securities and investment securities in nonconsolidated subsidiaries andaffiliated companies, are stated at market value; and nonmarketable securities are stated at cost.
The Group records unrealized gains or losses on available-for-sale securities, net of deferred taxes, inequity presented as "Unrealized gain on available-for-sale securities."
For other-than-temporary declines in fair value, investment securities are written down to net realizablevalue by a charge to income.
h. Special Account Related to Nuclear Power Decommissioning—Under the accounting regulation applicableto electric utility providers in Japan, in case the Company decides to decommission nuclear power units due tofactors such as a change of the government's energy policy, the Company is permitted to transfer the carrying
amounts related to nuclear power units and costs related to nuclear power decommissioning to "special accountrelated to nuclear power decommissioning" when the Company decides to decommission nuclear power units

j. Inventories—Inventories are stated at the lower of cost, principally determined by the average method, or
net selling value.
k. Foreign Currency Transactions—Receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the rates in effect as of each balance sheet date.
l. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries,
and nonconsolidated foreign subsidiaries and foreign affiliated companies which are accounted for by the equity
method, are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity,which is translated at the historical rate. Differences arising from such translation are shown as "Foreign currencytranslation adjustments" under accumulated other comprehensive income in a separate component of equity.
Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at the averageexchange rate.
m. Derivatives and Hedging Activities—Derivative financial instruments are classified and accounted for
as follows: (a) all derivatives are recognized as either assets or liabilities and measured at fair value, andgains or losses on derivative transactions are recognized in the consolidated statement of operations and (b)for such derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of highcorrelation and effectiveness between the hedging instruments and the hedged items, gains or losses onderivatives are deferred until maturity of the hedged transactions.
Liabilities denominated in foreign currencies for which foreign exchange forward contracts are used to hedge
the foreign currency fluctuations are translated at the contracted rate if the forward contracts qualify for hedge
accounting. Forward contracts applied for committed transactions are measured at fair value and the unrealized
gains/losses are deferred until the underlying transactions are completed.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

103

Notes to Consolidated
Financial Statements

The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are notremeasured at market value, but the differential paid or received under the swap agreements is recognized
and included in interest charges.
n. Severance Payments and Pension Plans—The Group has unfunded retirement plans for most of its
employees and the Company and most of the consolidated subsidiaries also have contributory funded
defined benefit pension plans covering substantially all of their employees.
Under the Accounting Standards Board of Japan ("ASBJ") Statement No. 26, "Accounting Standard for
Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on Accounting Standard for Retirement
Benefits," the Group accounted for the liability for retirement benefits based on the projected benefit
obligations and plan assets at the balance sheet date.
The projected benefit obligations are attributed to periods on a benefit formula basis. Actuarial gains andlosses and past service costs that are yet to be recognized in profit or loss are recognized within equity(accumulated other comprehensive income), after adjusting for tax effects and are recognized in profit or loss
over five years, which is no longer than the expected average remaining service period of the employees.
o. Accounting for Contributions Concerning Reprocessing of Spent Nuclear Fuel and Concerning
Processing of Nuclear Fuel Material Separated in Reprocessing—The Act for Partial Revision of the Spent Nuclear
Fuel Reprocessing Implementation Act was enforced on October 1, 2016. The act aims to secure the funds stably
for reprocessing costs without being influenced by the financial position of nuclear operators under the competitiveenvironment on or after April 1, 2016, when full liberalization of participation in retail electricity sales began.
The Nuclear Reprocessing Organization of Japan (the "NuRO") was established on October 3, 2016, under
the act. Nuclear operators including the Company are obliged to contribute the funds for reprocessing
nuclear fuel to the NuRO every year. Nuclear operators fulfill the obligation to bear the reprocessing costs
when they pay contributions to the NuRO, and the funds belong to the NuRO.
Contributions to NuRO consist of two parts. One is concerning reprocessing of spent nuclear fuel (part "A"),the other is concerning processing of nuclear fuel material separated in reprocessing (part "B").
In accordance with the accounting regulations applicable to electric utility providers in Japan, the Company
records the part A of the contributions to the NuRO, the amount of which is calculated based on quantities
of irradiated nuclear fuel resulting from operation of nuclear power plants, as operating expenses. On theother hand, the Company records part B of the contributions to the NuRO as assets and presents them as"Special account related to reprocessing of spent nuclear fuel" in the consolidated balance sheet.
p. Accounting for Contributions Concerning Final Disposal of High‑Level Radioactive Waste—The DesignatedRadioactive Waste Final Disposal Act was enforced on June 7, 2000. The act aims to disposal of high-level
radioactive wastes, which are unavoidably generated through nuclear power generation, in stable geologicalstrata at a depth of 300 meters or greater. Under the act, the Nuclear Waste Management Organization ofJapan (the "NUMO") was established in December 2000 which is responsible for the disposal of high-level
radioactive wastes. Nuclear operators including the Company are obliged to contribute the fund to NUMO for the
disposal of high-level radioactive wastes every year. Nuclear operators fulfill the obligation to bear the disposal
costs when they pay contributions to the NUMO, and the funds belong to the NUMO.
The Company records the disposal costs of high-level radioactive wastes, the amount of which is calculated basedon quantities of irradiated nuclear fuel resulting from the operation of nuclear power plant, as operating expenses.
q. Asset Retirement Obligations—Under ASBJ Statement No. 18, "Accounting Standard for Asset Retirement
Obligations," an asset retirement obligation is defined as a legal obligation imposed either by law or contract that
results from the acquisition, construction, development and the normal operation of a tangible fixed asset and isassociated with the retirement of such tangible fixed asset. The asset retirement obligation is recognized as thesum of the discounted cash flows required for the future asset retirement. The Company recognizes the asset
retirement obligation as the sum of the future decommissioning costs of nuclear power plant which is calculated
based on a formula using the quantities by type of waste generated from decommissioning of nuclear power plantin accordance with the ordinance set forth by the METI, discounted at 2.3%.
In accordance with the accounting regulations applicable to electric utility providers in Japan, asset retirement
costs are allocated to expense over the remaining useful lives of nuclear power units through depreciation
based on the straight-line method, except for asset retirement costs of nuclear power units decommissioned
due to factors such as a change of a government energy policy which are continuously allocated to expense
over 10 years from the month that includes the date of decommissioning of the nuclear power unit.
r. Income Taxes—The provision for income taxes is computed based on the pretax income included in the
consolidated statement of operations. The Company and its wholly owned domestic subsidiaries adopted
the group tax sharing system from the fiscal year ending March 31, 2023.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts and the tax bases of assets andliabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

104

Notes to Consolidated
Financial Statements

s. Provision for Loss on the Antimonopoly Act—On March 30, 2023, the Company received a cease anda desist order and surcharge payment order by the Japan Fair Trade Commission (the "JFTC") under the
Antimonopoly Act of Japan.
The allegation is that "the Company is suspected of jointly restricting the acquisition of customers of each other in
Kansai and Kyushu areas, regarding services of supplying extra high voltage power and high voltage power."
Since there is a possibility of future surcharge payment, the Company recorded provision for loss on
Antimonopoly Act based on surcharge payment ordered by JFTC.
t. Reserve for Fluctuations in Water Level—This reserve is provided to stabilize the Company's income
level based on the Electricity Business Act and related accounting regulations. This reserve is recorded
when the volume of water for generating hydroelectric power is abundant and available for future power
generation, and reversed in years when there is an insufficient volume of water. Also, this reserve must be
shown as a liability under the act and regulations.

(the "Company's Shares, etc.") will be provided to the Directors through the Trust, pursuant to the "Rules on
Provision of Shares to Officers" set forth by the Company. The Company's Shares, etc. will be provided to
the Directors at the time of retirement of the Directors, in principle.
(b) Shares of the Company held by the Trust
The Company records shares of the Company in the Trust as treasury stock at cost (excluding
acquisition-related costs). As of March 31, 2023, the number of shares was 842 thousand.
w. Net Income and Cash Dividends per Share—Basic earnings per share ("EPS") are computed by dividing
net income available to common shareholders by the weighted-average number of common shares
outstanding during the year, and diluted EPS reflects the potential dilution that could occur if securities
were exercised or converted into common stock.
Diluted EPS is not disclosed because it is anti-dilutive due to the Company's net loss position.

Based on the Electricity Business Act, the Company submitted an application for reversal of reservefor fluctuations in water level by special reasons to the Minister of Economy, Trade and Industry, andpermission was obtained on March 22, 2023.

The weighted-average number of common stock used in the computation of basic EPS during the year
excludes treasury stock held by the Trust established based on BBT (861 thousand shares and 772
thousand shares for the years ended March 31, 2023 and 2022, respectively).

Accordingly, a part of the reserve has been reversed for the year ended March 31, 2023.

Cash dividends per share represent actual amounts applicable to earnings of the respective years.

u. Treasury Stock—The accounting standard for treasury stock requires that where an affiliated company
holds a parent company's stock, a portion which is equivalent to the parent company's interest in suchstock should be presented as treasury stock as a separate component of equity and the carrying value ofthe investment in the affiliated company should be reduced by the same amount.

x. Research and Development Costs—Research and development costs are charged to income as incurred.
y. New Accounting Pronouncements
Accounting Standard for Current Income Taxes, etc.

v. Board Benefit Trust (BBT)—The Company has a performance-based stock compensation plan called"Board Benefit Trust (BBT)," (the "Plan") for directors (excluding outside directors) and executive officers(together, the "Directors").
(a) Overview of the Plan
The Plan is a stock compensation plan under which shares of the Company will be acquired through a trust(the "Trust" refers to a trust established based on the Plan) using funds contributed by the Company. The
shares of the Company and cash equivalent to the value of the Company's shares converted at market value

On October 28, 2022, the ASBJ issued the revised ASBJ Statement No. 27 (revised 2022), "AccountingStandard for Current Income Taxes," ASBJ Statement No. 25 (revised 2022), "Accounting Standard for
Presentation of Comprehensive Income" and ASBJ Guidance No. 28 (revised 2022), "Guidance on AccountingStandard for Tax Effect Accounting." The revised accounting standards and revised implementation guidance
defines the classification of income taxes when taxable on other comprehensive income and the treatment oftax effects on the sale of subsidiary stock when the group taxation regime is applied.
The revised guidance is effective for the annual periods beginning on or after April 1, 2024. Earlier

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

105

Notes to Consolidated
Financial Statements

application is permitted for annual periods beginning on or after April 1, 2023. The revised guidance shallbe applied prospectively.
The Group expects to apply the revised guidance for annual periods beginning on or after April 1, 2024,
and is in the process of measuring the effects of applying the revised guidance in future applicable periods.
3. SIGNIFICANT ACCOUNTING ESTIMATE
Deferred Tax Assets
Thousands of U.S.
Dollars

Millions of Yen(1) Carrying amounts
Deferred tax assets
Deferred tax assets relating to tax loss
carryforwards included in above

2023

2022

2023

¥ 172,337¥ 140,727$ 1,290,529

67,02325,321

501,896(2) Information on the significant accounting estimate(a) The calculation method of the carrying amountIn accordance with the "Implementation Guidance on Recoverability of Deferred Tax Assets" ("ASBJ
Guidance No. 26") ("Guidance No. 26"), the Group records deferred tax assets that were expected
to be recovered based on the classification of the Group defined in Guidance No. 26, Guidance No.
26 requires the entity to be classified according to certain criteria and to determine the amount ofdeferred tax assets expected to be recovered depending on the classification. The Group determinedthe classification of Group in accordance with Guidance No. 26, taking into account the future taxable
income, tax losses and the business plan.
Also, the deferred tax assets were calculated by estimating the future taxable income based on thebusiness plan approved by the Board of Directors of the Company.
(b) The primary assumption used for the calculation
The Group made the best estimation based on available information at preparation of the consolidated
financial statements, such as outlooks of electricity sales volume and unit price and projections
regarding nuclear power plant operation.

(c) The possible effects within the next financial year
The Group's financial performance may be affected when deferred tax assets were reversed bydecreasing the future taxable income. Decreasing the future taxable income will occur by such as
decline of electricity sales volume and unit price which are influenced by external environment, suchas changes in temperature, climate and economic trend, and unscheduled shutdown of nuclear power
plants.
Investments in the Overseas Power Generation Business and a Financial Asset Related toConstruction Services for the Overseas Power Generation Facilities
Millions of Yen(1) Carrying amounts
Investments in the overseas power generation
business and a financial asset related toconstruction services for overseas power
generation facilities

Thousands of U.S.
Dollars

2023

2022

2023

¥ 161,696¥ 140,419$ 1,210,850(2) Information on the significant accounting estimate(a) The calculation method of the carrying amountFor the investments in the overseas power generation business, the equity method is applied toinvestments in nonconsolidated subsidiaries and affiliated companies. Others are nonmarketable
equity securities. These securities are classified as available-for-sale securities and are stated at cost.
If the realizable value of these securities declines significantly, these securities are written down to net
realizable value, unless the recoverability of the securities is supported by sufficient evidence.
For the investments in nonconsolidated subsidiaries and affiliated companies, if the carrying amountof the investees' power generation facilities exceeds its recoverable amount which is the sum of the
future cash flows based on the investees' business plan, the power generation facilities are written
down to the recoverable amount. Thereafter, the equity method is applied to the investees' financial
statements.
On the other hand, for nonmarketable equity securities, the Group evaluates whether securities need
to be written down to net realizable value based on the recoverable amount of the power generation
facilities.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

A financial asset related to the contractual right to receive consideration from the grantor forthe construction services is stated based on the transaction price determined by contracts withcustomers. If the transaction price declines due to changes of assumptions such as future outputs ofthe power generation facilities on which the transaction price is based will be changed, the financial
asset would be written down.
(b) The primary assumption used for the calculation

5. PROPERTY
The breakdown of property at March 31, 2023 and 2022, was as follows:

2023

2023

Electric power production facilities:
Hydroelectric power¥

842,842¥

827,794$

6,311,536

Thermal power

1,439,020

1,438,046

10,775,948

Nuclear power

2,380,670

2,128,022

17,827,394

Internal-combustion engine power

133,234

132,661

997,708

Renewable power

124,847

124,024

934,910

4,920,614

4,650,549

36,847,497

Transmission facilities

2,073,699

1,941,510

15,528,673

Transformation facilities

1,137,622

1,120,957

8,518,963

Distribution facilities

1,540,278

1,526,937

11,534,206

General facilities

432,532

429,325

3,238,975

Other electricity-related facilities

57,86457,863433,313

Other plant and equipment

1,415,174

1,391,760

10,597,380

Construction in progress

248,184

538,837

1,858,504

11,825,970

11,657,743

88,557,514

241,929

238,967

1,811,662

7,883,479

7,770,903

59,034,595¥ 3,700,561¥ 3,647,872$ 27,711,256(c) The possible effects within the next financial year

4. ACCOUNTING CHANGE
Accounting Standard for Fair Value Measurement
Effective April 1, 2022, the Group adopted ASBJ Guidance No. 31, "Implementation Guidance on AccountingStandard for Fair Value Measurement."

2022

Costs:For estimation of the future cash flows, the Group made the best estimation based on available
information at preparation of the consolidated financial statements, such as outlooks of electricity
sales volume and unit price, operational projections and future outputs for the investees' power
generation facilities, and projections for international fuel market prices.

When decreasing the future cash flows occurs by a change of external environments such as therealization of investees' country risk and fluctuations in prices, interest rates and foreign exchange,
and review of energy and environment policy, the Group's financial performance may be affected as
the share of loss of entities accounted for using the equity method is recorded, nonmarketable equity
securities are written down to net realizable value or the financial asset is written down.

Thousands of
U.S. Dollars

Millions of Yen

Total

Total

The Group adopted new accounting policies prescribed in this accounting guidance prospectively inaccordance with the article 27-2 of ASBJ Guidance No. 31.
Less:

There are immaterial effects from these accounting changes on the consolidated financial statements.
In addition, as describe in Note 20, investment trusts related to financial instruments categorized by fair value
hierarchy as of March 31, 2022, was not disclosed in accordance with the article 27-3 of ASBJ Guidance No.
31.

Contributions in aid of construction
Accumulated depreciation

Carrying amount106

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

107

6 Data Section
Notes to Consolidated
Financial Statements

6. INVESTMENT SECURITIESThe costs and aggregate fair values of investment securities at March 31, 2023 and 2022, were as follows:

The information for available-for-sale securities which were sold during the year ended March 31, 2023, was
as follows:
Millions of Yen

Millions of Yen
March 31, 2023

Cost

Unrealized
Gains

Unrealized
LossesSecurities classified as:
Available-for-sale:
Equity securities

¥

1,770

Debt securities

152

Other securities

636

Held-to-maturity

235

¥

4,473

¥

30

¥

19
254

15

875

17

217

Available-for-sale:
¥

1,719

¥

3,895

309

41

Other securities

635

103

Held-to-maturity

¥

123

¥

5,491
351

235

4

734

10

224

Cost

Unrealized
Gains

Unrealized
LossesAvailable-for-sale:$ 13,259

Debt securities

1,138

Other securities

4,766

Held-to-maturity

1,759$ 33,498
1,903

$

224

11,682¥

11,281

¥

0

Total

¥

11,682¥

11,281¥0

Thousands of U.S. Dollars
Realized
Gains

Proceeds

Realized
LossesAvailable-for-sale—Equity securities$

87,480$84,483

$

1

Total

$

87,480$84,483$

1

7. PLEDGED ASSETS
All of the Company's assets amounting to ¥4,834,743 million ($36,204,462 thousand) are subject to certain
statutory preferential rights established to secure a portion of bonds and a portion of loans borrowed from theDevelopment Bank of Japan Inc. The carrying amount of bonds and loans borrowed from the Development
Bank of Japan Inc. secured by the assets for the year ended March 31, 2023, were ¥1,460,000 million($10,933,053 thousand) and ¥118,816 million ($889,740 thousand), respectively.

Fair Value

Securities classified as:
Equity securities¥

Certain assets of the consolidated subsidiaries, amounting to ¥55,930 million ($418,826 thousand), arepledged as collateral for a portion of their long-term debt at March 31, 2023.

Thousands of U.S. Dollars
March 31, 2023

Available-for-sale—Equity securities

132

Securities classified as:
Equity securities

Realized
Losses6,214March 31, 2022

Debt securities

Realized
Gains

Proceeds

Fair Value$ 46,533

148

990

113

6,556

129

1,630

Investments in affiliated companies held by consolidated subsidiaries, amounting to ¥14,016 million ($104,963
thousand), are pledged as collateral for bank loans and derivatives, mainly interest rate swaps of the affiliatedcompanies and the subsidiary of the affiliated companies at March 31, 2023.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

8. LONG-TERM DEBT
Long-term debt at March 31, 2023 and 2022, consisted of the following:

The annual maturities of long-term debt outstanding at March 31, 2023, were as follows:Year Ending March 31
Thousands of
U.S. Dollars

Millions of Yen

Yen bonds, 0.01% to 1.766%, due serially to 2052
First series of subordinated unsecured
yen bonds with interest deferral option
and early redemption option, 0.99%,
due serially to 2080 (Notes a and d)

2023

2022

2023

¥ 1,459,999¥ 1,359,899$ 10,933,052

70,00070,000524,187

30,00030,000224,651

Third series of subordinated unsecured
yen bonds with interest deferral option
and early redemption option, 1.30%,
due serially to 2080 (Notes c and f)

100,000

100,000

748,839

Loans from the Development Bank of Japan
Inc., 0.32% to 2.05%, due serially to 2040

267,782

246,974

2,005,261

Loans, principally from banks and insurancecompanies, 0.03% to 6.051%, due seriallyto 2043:
Collateralized

74,25573,375556,054

Unsecured

1,824,938

1,637,024

13,665,857

15,870

16,245

118,847

Total

3,842,847

3,533,518

28,776,751

Less current portion

437,071384,285

3,272,963¥ 3,405,775¥ 3,149,232$ 25,503,788

Long-term debt, less current portion¥

437,071$

3,272,963

2025

386,517

2,894,392

2026

320,845

2,402,620

2027

393,2932,945,136

2028

381,898

2,859,802

1,923,221

14,401,835

2029 and thereafter
Total

Second series of subordinated unsecured
yen bonds with interest deferral option
and early redemption option, 1.09%,
due serially to 2080 (Notes b and e)

Obligations under finance leases

2024

Thousands of
U.S. Dollars

Millions of Yen¥

3,842,847$

28,776,751

Notes:
a. The fixed interest rate has been applied since the day after October 15, 2020, and will be applied until October 15, 2025, and a variable interest rate
will be applied from the day after October 15, 2025 ("Step-up interest rates" will be applied from the day after October 15, 2030, and the day after
October 15, 2045.)
b. The fixed interest rate has been applied since the day after October 15, 2020, and will be applied until October 15, 2027, and a variable interest rate
will be applied from the day after October 15, 2027 ("Step-up interest rates" will be applied from the day after October 15, 2030, and the day after
October 15, 2047.)
c. The fixed interest rate has been applied since the day after October 15, 2020, and will be applied until October 15, 2030, and a variable interest rate
will be applied from the day after October 15, 2030 ("Step-up interest rates" will be applied from the day after October 15, 2030, and the day after
October 15, 2050.)
d. The Company may redeem the hybrid corporate bonds at its discretion on each interest payment date from and including October 15, 2025.
e. The Company may redeem the hybrid corporate bonds at its discretion on each interest payment date from and including October 15, 2027.
f. The Company may redeem the hybrid corporate bonds at its discretion on each interest payment date from and including October 15, 2030.

9. SEVERANCE PAYMENTS AND PENSION PLANS
Employees terminating their employment with the Group, either voluntarily or upon reaching mandatory
retirement age, are entitled, under most circumstances, to severance payments based on credits earnedin each year of service, length of service and certain other factors. As for the Company and a part of theconsolidated subsidiaries, if the termination is made voluntarily at one of a number of specified ages, theemployee is entitled to certain additional payments.
Additionally, the Company and most of the consolidated subsidiaries have contributory funded defined benefit
pension plans covering substantially all of their employees. In general, eligible employees retiring at the
mandatory retirement age receive pension payments for the fixed term selected by them. As for the Company
and one of the consolidated subsidiaries, Kyushu Electric Power Transmission and Distribution Co., Inc.,eligible employees retiring after at least 20 years of service but before the mandatory retirement age, receive
a lump-sum payment upon retirement and an annuity. The Company and Kyushu Electric Power Transmission
and Distribution Co., Inc. have established retirement benefit trusts for their defined retirement benefit plan.
Certain consolidated subsidiaries calculate liability for retirement benefits and periodic benefit costs related

108

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

to defined retirement benefit plans by the simplified method. Under the simplified method, projected benefit
obligations are principally stated at the necessary payment amounts for voluntary retirement as of the end of the
fiscal year. The simplified method for accounting for defined retirement benefit plans is allowed for a specified
small-sized entity under accounting principles generally accepted in Japan.

(3) Reconciliation between the liability and asset recorded in the consolidated balance sheet and the balances ofdefined benefit obligation and plan assets as of March 31, 2023 and 2022, was as follows:

Defined Retirement Benefit Plans (excluding Plans Applying the Simplified Method)(1) The changes in defined benefit obligation for the years ended March 31, 2023 and 2022, were as follows:

2023

Funded defined benefit obligation¥

Plan assets
Thousands of
U.S. Dollars

Millions of Yen
2023

Balance at beginning of year

¥

2022

391,299¥2023

397,653$

2,930,206

Unfunded defined benefit obligation
Net liability for defined benefit obligation

Current service cost

13,03813,364

97,640Interest cost

2,943

3,024

22,039Actuarial losses

3,270

416

24,492

Benefits paid

(24,178)(22,925)(181,054)

(978)

(233)

(7,330)Liability for retirement benefits

(1)

0

(13)

Assets for retirement benefits

Prior service cost
Other
Balance at end of year¥

385,393¥391,299$

2,885,978(2) The changes in plan assets for the years ended March 31, 2023 and 2022, were as follows:

2023

Balance at beginning of year¥

Expected return on plan assets
Actuarial (losses) gains
Contributions from the employer
Benefits paid

334,5702022¥¥

334,642¥

383,351$

Net liability for defined benefit obligation¥(334,570)(2,395,346)

57,494

48,781

430,537

8,025

7,947

60,09465,519¥56,729$77,454¥65,5192023

82,653$(25,924)¥490,632
Thousands of
U.S. Dollars

2022(11,935)¥

2,825,884(319,874)

2023

56,729580,008(89,375)$

490,632(4) The components of net periodic benefit costs for the years ended March 31, 2023 and 2022, were as follows:

2,505,396

Thousands of
U.S. Dollars

Millions of Yen
2023

Current service cost

¥

2022

13,038¥2023

13,364$

97,640

7,230

7,139

54,143

Interest cost

2,943

3,024

22,039(12,309)

2,039(92,175)

Expected return on plan assets(7,230)(7,139)(54,143)

6,337

6,737

47,458

Recognized actuarial gains(1,255)(1,068)(9,404)(15,955)(15,988)(119,477)

Amortization of prior service cost

(1,063)(40)(7,963)

422

355

3,160

OthersBalance at end of year

¥

2023

Millions of Yen

2023
$

2022

377,368

Thousands of
U.S. Dollars

Millions of Yen

Thousands of
U.S. Dollars

Millions of Yen

319,874¥

334,570$

2,395,346

Net periodic benefit costs

¥

6,854

¥

8,496

$

51,327109

KYUDEN GROUP INTEGRATED REPORT 2023

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

110

Notes to Consolidated
Financial Statements(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement
benefit plans for the years ended March 31, 2023 and 2022, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2023

Prior service cost

¥

(84)

¥

¥

(16,919)2023
193(16,835)

Actuarial (losses) gains
Total

2022
$

554
¥

747

(633)

$

¥

¥

(8,852)

Unrecognized actuarial (losses) gains
¥

Total

2022
91

(8,760)(126,703)

2023
176

$

7,982
¥

2022

Discount rates

Mainly 1.0%

Mainly 1.0%

Expected rates of return on plan assets

Mainly 2.0%

Mainly 2.0%

Defined Retirement Benefit Plans Applying the Simplified Method(1) The changes in the net carrying amount of liabilities and assets for the years ended March 31, 2023 and 2022,
were as follows:

8,159(66,290)$2023

Balance at beginning of year688

(65,602)(7) Plan assets as of March 31, 2023 and 2022
a. Components of plan assets

Thousands of
U.S. Dollars

Millions of Yen

Thousands of
U.S. Dollars

Millions of Yen

Unrecognized prior service cost2023

(126,069)(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect ofdefined retirement benefit plans as of March 31, 2023 and 2022, were as follows:

2023(8) Assumptions used for the years ended March 31, 2023 and 2022, were set forth as follows:

¥

2022

2,594

¥

2023

2,603

$

19,424

Periodic benefit costs

546

488

4,091

Benefits paid

(190)

(246)

(1,428)Contributions from the employer

(244)

(251)

(1,832)

Balance at end of year

¥

2,704

¥

2,594

$

20,255(2) Reconciliation between the liability and asset recorded in the consolidated balance sheet and the balances ofdefined benefit obligation and plan assets as of March 31, 2023 and 2022, were as follows:

Plan assets consisted of the following:
2023

2022

Debt investments

34%

40%

Equity investments

29

28

Funded defined benefit obligation

General account of life insurance companies

21

20

Plan assets

Others

16

12

Total

100%

100%

b. Method of determining the expected rate of return on plan assets

2023
¥

2022

5,232

¥

2023

5,235

$

39,184(4,823)(4,907)(36,121)

409

327

3,062

2,295

Unfunded defined benefit obligation

2,266

17,192

Net carrying amount of liabilities and assets

¥

2,704

¥

2,594

$

20,255

Liability for retirement benefits

¥

3,307

¥

3,293

$

24,766(602)

Asset for retirement benefits

The expected rate of return on plan assets is determined considering distribution of plan assets currently
and in the future and the long-term rates of return which are expected currently and in the future from thevarious components of the plan assets.

Thousands of
U.S. Dollars

Millions of Yen

Net carrying amount of liabilities and assets

¥

2,704

(699)
¥

2,594

(4,510)$20,255KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements(3) Periodic benefit costs
Millions of Yen
2023

Periodic benefit costs calculated under
the simplified method

¥

2022
546

¥

2023
488

$

4,091

Defined Contribution Plans
The required contribution to defined contribution plans by the Company and its certain consolidated
subsidiaries for the years ended March 31, 2023 and 2022, was ¥2,005 million ($15,020 thousand) and¥2,114 million, respectively.

10. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2023 and 2022, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2023

Balance at beginning of year

¥

¥

8,207

Net change in the year
Balance at end of year

289,1902022¥

297,397

278,031$

11,159¥289,190$2023

Tax loss carryforwards¥

68,927$571,303

53,632405,815

32,59434,093244,083

Asset retirement obligations

29,53430,248221,166

Other

88,42893,297662,186

Total of tax loss carryforwards and temporary
differences

281,042

280,199

2,104,554

Less valuation allowance for tax loss
carryforwards(9,268)(43,605)(69,407)

Less valuation allowance for temporary
differences(59,465)(56,344)(445,303)

Total valuation allowance(68,734)(99,949)(514,710)

212,307180,249

1,589,843

Amortization in foreign subsidiary

10,6594,151

79,820Accrued income of foreign subsidiary

9,751

7,869

73,020Capitalized assets retirement costs

8,231

9,715

61,638Gain on contributions of securities toretirement benefit trust

5,578

5,599

41,772

Deferred gain on derivatives under hedge
accounting

5,211

5,455

39,024

Assets for retirement benefits

3,448

7,414

25,826

Other

13,528

12,215

101,305

56,40852,421

422,408

Deferred tax liabilities

The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at March 31, 2023 and 2022, were as follows:

76,291
54,192

Deferred tax liabilities:

12. INCOME TAXESThe Group is subject to national and local income taxes. The aggregate normal statutory tax rate for theCompany approximated 27.9% for the years ended March 31, 2023 and 2022.

¥

Liability for retirement benefits

2,165,569

11. SHORT-TERM BORROWINGS
Short-term borrowings were generally represented by bank loans, bearing interest at rates ranging from 0.17%
to 0.49% for the years ended March 31, 2023 and 2022, respectively.

2023

Depreciation

Deferred tax assets

2,227,032

2022

Deferred tax assets:

2023
61,462Thousands of
U.S. Dollars

Millions of Yen

Thousands of
U.S. Dollars

Net deferred tax assets¥

155,899¥

127,827$

1,167,435

111

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

The expiration of tax loss carryforwards, the related valuation allowance and the resulting net deferred tax assets as of March 31, 2023 and 2022, were as follows:
Millions of Yen
March 31, 2023
Deferred tax assets relating to tax loss carryforwards (Note a)

1 Year or Less

After 1 Yearthrough 2 Years

After 2 Years
through 3 Years

After 3 Years
through 4 Years

After 4 Years
through 5 Years

After 5 Years

¥

¥

¥

¥

¥

¥

25,106

991

425

154

Less valuation allowances for tax loss carryforwards

8,459

565

13

8

Net deferred tax assets relating to tax loss carryforwards

16,646

426

412

145

235

235

49,378

Total¥

76,291

221

9,268

49,15667,023(Note b)March 31, 2022
Deferred tax assets relating to tax loss carryforwards (Note a)¥

32,682¥

32,682Less valuation allowances for tax loss carryforwards
Net deferred tax assets relating to tax loss carryforwards

25,043

¥

916

¥

389

¥

196

¥

9,698

¥

68,927

10,233

249

22

54

364

43,60514,809

667

367

142

9,334

25,321(Note c)Thousands of U.S. Dollars
March 31, 2023
Deferred tax assets relating to tax loss carryforwards (Note a)

1 Year or Less

After 1 Yearthrough 2 Years

After 2 Years
through 3 Years

After 3 Years
through 4 Years

After 4 Years
through 5 Years

After 5 Years

$

$

$

$

$

$

188,009

7,427

3,185

1,153

Less valuation allowances for tax loss carryforwards

63,351

4,232

100

62

Net deferred tax assets relating to tax loss carryforwards

124,658

3,194

3,085

1,091

1,760

1,760

369,766

Total$

571,303

1,660

69,407368,105

501,896(Note b)

Notes: a. The tax loss carryforwards were the amount multiplied by the normal effective statutory tax rate.
b. Tax loss carryforwards mainly resulted from the decline in the operation of nuclear power plants, as well as soaring fuel and wholesale electricity prices. Deferred tax assets relating to tax loss carryforwards were recognized at amounts the Company judged those were recoverable from expectations of future taxable
income based on the business plan approved by the Board of Directors.
c. Tax loss carryforwards mainly resulted from the long-term shutdown of nuclear power plants of the Company in past years. Deferred tax assets relating to tax loss carryforwards were recognized at amounts the Company judged those were recoverable from expectations of future taxable income based on the businessplan approved by the Board of Directors.

112

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

113

Notes to Consolidated
Financial Statements

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in
the accompanying consolidated statement of income for the years ended March 31, 2023 and 2022, was asfollows:
2023

2022

Normal effective statutory tax rate

27.9%

Non-deductible expenses such as entertainment expenses

(3.5)

6.2

Other—net

1.0

31.6

Actual effective tax rate

25.4%

65.7%

27.9%

The Company and its wholly owned domestic subsidiaries adopted the group tax sharing system from thefiscal year ended March 31, 2023.
In addition, in accordance with the ASBJ Practical Solution No. 42, "Practical Solution on the Accounting andDisclosure Under the Group Tax Sharing System," the Company accounts for corporate and local corporate
taxes or accounts and discloses tax effect accounting relating to them.

13. EQUITY
Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the general shareholders' meeting. For companies that meet certain
criteria, the Board of Directors may declare dividends (except for dividends-in-kind) at any time during the
fiscal year if the Company has prescribed so in its articles of incorporation. However, the Company cannot do
so because it does not meet all the criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders
subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained
at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus) dependingon the equity account that was charged upon the payment of such dividends until the aggregate amount of legal
reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total
amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also
provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings
can be transferred among the accounts under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock byresolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for
distribution to the shareholders, which is determined by specific formula. Under the Companies Act, stock acquisitionrights are presented as a separate component of equity. The Companies Act also provides that companies canpurchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights arepresented as a separate component of equity or deducted directly from stock acquisition rights.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

114

Notes to Consolidated
Financial Statements

Acquisition and Disposal of Class A Preferred Stock
The Company acquired the previous Class A preferred stock based on the articles of incorporation and has
issued the new Class A preferred stock. The information of the new Class A preferred stock is as follows:(1) Way of offering

The preferred stock has a provision for acquisition allowing the Company to acquire this preferred stockin exchange for cash the day after the payment date or thereafter. Furthermore, the preferred stock will
provide the preferred shareholders with the right to request acquisition of this preferred stock in exchange
for cash of the Company the day after the payment date or thereafter if the preferred shareholders follow
the prescribed procedures, but the exercise of this right by the preferred shareholders is limited by theagreement to underwriting of the preferred stock.

Third-party allotment to the Mizuho Bank, Ltd., Development Bank of Japan Inc. and MUFG Bank, Ltd.
(2) Class and number of new shares to be issued
1,000 shares of Class A preferred stock

Annual preferred dividend for the preferred stock is ¥2,100,000 per share. (Annual preferred dividend as of
the record date of March 31, 2020, is ¥1,599,452 per share.)
14. REVENUE(1) Disaggregation of revenue(3) Issue price¥100 million per share(4) Total amount of the issue price¥100,000 million

Disaggregation of revenue from contracts with customers is presented in "Information about sales, profit,
assets and other items" in Note 24.
(2) Contract balances
Receivables from contract with customers, contract assets and contract liabilities at the beginning and endof the year were as follows:(5) Issue dateJune 28, 2019(6) Uses of proceeds

2023(7) Characteristics of the preferred stock
The preferred stock provides no provision for acquisition or right to request acquisition using common stock
as consideration that will not dilute common stock. These stocks also do not provide any voting rights at
the general shareholders' meeting.

2022

2023

Receivables from contracts with customers:
143,321$ 1,334,263

182,138

178,177

1,363,924

Balance at beginning of year

8,896

5,262

66,620

Balance at end of year

6,845

8,896

51,258

Balance at beginning of year

5,062

4,453

37,912

Balance at end of year

7,313

5,062

54,766

Balance at beginning of year
Balance at end of year

The proceeds from the issuance of new Class A preferred stock will be used to repay a part of a bank loan
the Company borrowed for the acquisition of current Class A preferred stock.

Thousands of
U.S. Dollars

Millions of Yen¥

178,177¥

Contract assets:

Contract liabilities:

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

115

Notes to Consolidated
Financial Statements(3) Transaction Prices Allocated Remaining Performance Obligations
The Group has applied the simplified method as a practical expedient, and has not included information
related to either of the following:

16. LOSS ON IMPAIRMENT OF FIXED ASSETSAs the Group decided to decommission No. 1 and No. 2 units of Sendai thermal power plant and No. 4 unit ofShin Kokura thermal power plant and others for the year ended March 31, 2022, the carrying amount of theseassets was written down to the recoverable amount. As a result, the Group recognized an impairment loss of¥3,536 million for these assets as other expenses.

(a) the performance obligation is part of a contract that has an original expected duration of one year or less; or(b) the Group has a right to consideration from a customer in an amount that corresponds directly with thevalue to the customer.
For significant transactions in the contracts that have an original expected durations of more than one year, thefollowing table shows the summary of the transaction prices allocated to remaining performance obligations
that are unsatisfied as of March 31, 2023:
Thousands of
U.S. Dollars

Millions of Yen
2023

Within one year¥

112,8522023$

845,086

136,200

1,019,919

After two to three years

84,947636,120After three years

105,471789,814After one to two years

Total

¥

439,472$

3,290,942

15. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥4,798 million ($35,930 thousand) and ¥4,823
million for the years ended March 31, 2023 and 2022, respectively.

The recoverable amount of these assets was mainly measured by the respective net selling prices which werebased on appraisal valuation and assessed value of fixed assets.
17. LOSS ON REIMBURSEMENT OF ELECTRIC IMBALANCE REVENUES
In January 2021, the imbalance revenue of general electricity transmission and distribution business providers,
including Kyushu Electric Power Transmission and Distribution Co., Inc., increased significantly because of theprice hikes in the wholesale electricity market caused by the tight supply and demand of electricity in Japan.
Relating to the situation, on December 27, 2021, the Electricity and Gas Industry Committee of the Advisory
Committee for Natural Resources and Energy has decided that a part of the imbalance revenue paid by retailelectricity providers would be reimbursed by deducting from their future wheeling fees. Under this decision,
the Group recorded the estimated amount of reimbursement as liabilities and other expenses for the year
ended March 31, 2022.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

18. RELATED PARTY DISCLOSURES
a. Significant transactions of the Company with its related parties for the years ended March 31, 2023 and 2022
No matters to report

19. LEASESThe minimum rental commitments under noncancelable operating leases at March 31, 2023 and 2022, wereas follows:b. Significant transactions of a consolidated subsidiary with an affiliated company for the years ended March
31, 2023 and 2022, were as follows:(1) Lessee

Millions of Yen
2023

Kyudenko Corporation:
Transactions—purchase of construction works
on distribution facilities and other
Balances at year-end—payables for construction works

¥

2022

36,834¥

39,462

3,971

4,085

$

2023

Thousands of
U.S. Dollars

Due within one year2023

Due after one year

275,830
29,739

Total

¥

2022

1,514

¥

17,681¥

19,195

2023

1,484

$

18,784¥

20,268$2023¥

Millions of Yen
2023¥

238,445

2022
¥

2023

181,419$ 1,785,574

Total noncurrent assets

157,911

155,533

1,182,504

Total current liabilities

148,596

132,724

1,112,748

Total noncurrent liabilities

32,9205,051

246,524

Total equity

214,839

199,176

1,608,805

Operating revenues

333,007322,568

2,493,692

Income before income taxes

31,951

28,712

239,263

Net income

22,18920,690166,162

Total

1,001

Thousands of
U.S. Dollars
2022

¥

8,684

Due after one year

Thousands of
U.S. Dollars

143,746(2) Lessor

Due within one year

For the years ended March 31, 2023 and 2022, Kyudenko Corporation was an important affiliate. The
financial summary of its financial statements was as follows:

11,339132,407

Millions of Yen

Notes Concerning the Parent Company or Important Affiliates
Important affiliates' financial summary

Total current assets

Thousands of
U.S. Dollars

Millions of Yen

¥

9,685

2023
522

$

3,887
¥

4,410

7,500
65,030$72,531116

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

20. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Items Pertaining to Financial Instruments(a) The Group's policy for financial instruments
The Group uses mainly long-term debt, including bonds and loans, to raise funds required for investments
in electric utility plant and equipment and repayments of bonds and loans. Cash surpluses, if any, areinvested in low-risk financial assets. Derivatives are used not for speculative purposes, but to manage
exposure to financial risks as described in (b) below.
(b) Nature and extent of risks arising from financial instruments and risk control system
Investment securities, mainly held-to-maturity debt securities and equity securities issued by companies
related through business, and investments in and advances to nonconsolidated subsidiaries and affiliatedcompanies which have a quoted market price in an active market are exposed to the risk of market pricefluctuations. Such market risk is managed by monitoring market values and financial position of the issuers
on a regular basis. Investment securities and investments in and advances to nonconsolidated subsidiaries
and affiliated companies which do not have a quoted market price in an active market are managedby monitoring financial position of the issuers on a regular basis. In addition, the Company requires its
nonconsolidated subsidiaries and affiliated companies to submit business plans and performance reports,
and to consult in advance on any items that could have a significant impact on the Group's businessactivities.
Receivables are exposed to customer credit risk. Payment terms are set forth in specific retail electricity
power supply provisions and so on. The Group manages its credit risk from receivables by monitoring
payment terms and balances of each customer and identifying and reducing the default risk of customers
at an early stage. Receivables from wholesale electric power sales outside of the Kyushu area are exposedto the risk of electricity price area differentials. Such risk is mitigated by using the financial transmission
rights as necessary.
Bonds and loans are mainly used to raise funds for investments in plant and equipment. Foreign currency
denominated debt is exposed to the market risk of fluctuations in foreign exchange. Such risk is mitigatedby using currency swaps. Financial liabilities with variable interest rate are exposed to interest rate
fluctuation risk. Such risk is mitigated by using interest rate swaps as necessary.

Payment terms of notes and accounts payable are less than one year. Accounts payable to purchase fuelin foreign currencies is exposed to the market risk of fluctuations in foreign exchange and fuel price. Suchrisks are mitigated by using foreign exchange forward contracts and financial energy swaps as necessary.
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity
dates. The Group manages its liquidity risk by holding an adequate volume of liquid assets based onmonthly financial planning and diversifying sources of its financing.

117

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Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

Fair Values of Financial Instruments
The carrying amounts and aggregate fair values of financial instruments at March 31, 2023 and 2022, wereas follows: Investments in equity instruments that do not have a quoted market price in an active market andinvestments in partnerships and others are not included in the following table. The fair values of cash and cash
equivalents, receivables, short-term borrowings, commercial paper, notes and accounts payable, and accrued
income taxes are not disclosed because their maturities are short and the carrying values approximate fairvalue.
Millions of Yen

March 31, 2023
Investment securities:
Held-to-maturity debt securities
Available-for-sale securities
Investments in and advances to nonconsolidated
subsidiaries and affiliated companies

Carrying
Amount
¥

235
7,221

Fair
Value
¥

50,730Total
Long-term debt:
Bonds
Loans

¥

¥

54,178

3,447
¥

3,430

¥ 1,659,999
2,166,976¥ 1,612,271
2,153,988¥(47,728)(12,987)

Total¥ 3,826,976¥ 3,766,259¥(60,716)

Derivatives

¥

¥

¥

8,526

235
6,577

¥

(17)

61,617

March 31, 2022
Investment securities:
Held-to-maturity debt securities
Available-for-sale securities
Investments in and advances to nonconsolidated
subsidiaries and affiliated companies

58,187217
7,221

UnrecognizedGain (Loss)¥

47,022Total
Long-term debt:
Bonds
Loans

¥

53,834

8,526

224
6,577

¥

(10)
(878)

52,945¥(889)¥ 1,559,899
1,957,373¥ 1,556,795
1,973,856¥(3,103)
16,482

Total¥ 3,517,273¥ 3,530,651¥

13,378Derivatives

¥

¥

6,037

6,037

$

Thousands of U.S. Dollars
Fair
Unrecognized
Value
Gain (Loss)

1,759
54,079$379,889435,728

1,630
54,079$405,706
461,417

25,817Total
Long-term debt:
Bonds
Loans

$

$ 12,430,731
16,227,172$ 12,073,320
16,129,913$ (357,410)(97,258)

Total$ 28,657,904$ 28,203,234$ (454,669)

Derivatives$$

63,852

$

(129)

$

25,68863,852

Advances are excluded from investments in and advances to nonconsolidated subsidiaries and affiliatedcompanies because they are immaterial.
Long-term debt contains its current portion, and obligations under finance leases are excluded because they
are immaterial.
Derivatives are stated at the net amount.

46,143¥

March 31, 2023
Investment securities:
Held-to-maturity debt securities
Available-for-sale securities
Investments in and advances to nonconsolidated
subsidiaries and affiliated companies

Carrying
AmountCarrying amount of investments in equity instruments that do not have a quoted market price in an active
market and investments in partnerships and others
Millions of Yen
2023
2022

Investment securities—Available-for-sale:
Equity securities
Investments in partnership and others
Other securities
Investments in and advances tononconsolidated subsidiaries andaffiliated companies:
Equity securities
Other securities
Total

¥

68,496
10,443
26,909¥111,877
32,264¥249,991¥

67,4497,641
21,894

Thousands of
U.S. Dollars
2023$

512,932
78,204
201,506

98,83528,220837,779
241,610224,041$ 1,872,033

118

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen

March 31, 2023

Due in 1 Yearor Less

Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 YearsInvestment securities:¥

Held-to-maturity debt securities
Available-for-sale securities with
contractual maturities
Cash and cash equivalents

¥
¥

¥

14

199
132

270,651¥

639,895

¥

14

¥

36

¥

331

¥

36

¥

199

March 31, 2022
Investment securities:
Held-to-maturity debt securities
Available-for-sale securities with
contractual maturities
Cash and cash equivalents

¥

¥

14

¥

14

351

241,756
331,089

Receivables
Total

¥

March 31, 2023

Due in 1 Yearor Less

572,845

¥

36

¥

550

Thousands of U.S. Dollars
Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 YearsInvestment securities:$

Held-to-maturity debt securities
Available-for-sale securities with
contractual maturities
Cash and cash equivalents
Receivables
Total

Level 1: Fair values measured by using quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Fair values measured by using inputs other than quoted prices included within Level 1 that are
observable for the assets or liabilities, either directly or indirectly.
Level 3: Fair values measured by using unobservable inputs for the assets or liabilities.

369,244

Receivables
Total

36

Financial Instruments Categorized by Fair Value Hierarchy
The fair value of financial instruments is categorized into the following three levels, depending on theobservability and significance of the inputs used in making fair value measurements:

$

109

$

109

269

$

1,490
990

$ 2,026,743
2,765,047$ 4,791,791

Please see Note 8 for annual maturities of long-term debt.

$

269

$

2,480

If multiple inputs are used that have a significant impact on the measurement of fair value, fair value isclassified at the lowest level in the fair value measurement among the levels to which each of these inputs
belongs.

119

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

120

6 Data Section
Notes to Consolidated
Financial Statements(a) Financial instruments recorded at fair value in the consolidated balance sheet(b) Financial instruments other than financial instruments recorded at fair value in the consolidated balance
sheetMillions of Yen

Millions of Yen

Fair Value

March 31, 2023

Level 1

Level 2

Level 3

Fair Value

Total

March 31, 2023

Investment securities—
Available-for-sale securities:
Equity securities

¥

6,214

¥
¥

Debt securities

6,214

132

132

390

Other securities

390
8,526

Derivatives

8,526

March 31, 2022

Level 2

Level 3

Total

Investment securities—
Held-to-maturity debt securities:¥

Local government bonds

35
88

Corporate bonds
Investments in and advances tononconsolidated subsidiaries andaffiliated companies

¥

¥
¥

35

94

182

54,17854,178Long-term debt:

Investment securities—
Available-for-sale securities:
Equity securities

Level 1

¥

5,491

¥
¥

Debt securities
Derivatives

5,491

351

351

6,037

6,037

Bonds

1,612,271

1,612,271

Loans

2,153,988

2,153,988

Millions of Yen
Fair Value

March 31, 2022

Thousands of U.S. Dollars
Level 1

Level 2

Level 3Total

Equity securities
Other securities
Derivatives¥

Local government bonds

Investment securities—
Available-for-sale securities:$

46,533$$

46,533990

990

63,852

63,852

2,927

Level 3

Total

2,927

Note: Investment trusts that the net asset value is regarded as fair value are not included in above table inaccordance with the article 24-9 of ASBJ Guidance No. 31, "Implementation Guidance on AccountingStandard for Fair Value Measurement." The carrying amount of the investment trusts in the consolidatedbalance sheet is ¥484 million ($3,628 thousand).

Investments in and advances tononconsolidated subsidiaries andaffiliated companies

35
95

Corporate bonds

Debt securities

Level 2

Investment securities—
Held-to-maturity debt securities:

Fair Value

March 31, 2023

Level 1¥

46,143

¥
¥

93

35
188
46,143Long-term debt:
Bonds

1,556,795

1,556,795

Loans

1,973,856

1,973,856

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

121

Notes to Consolidated
Financial Statements

The following is a description of valuation methodologies and inputs used for measurement of the fair value of
assets and liabilities:

Thousands of U.S. Dollars
Fair Value

March 31, 2023

Level 1

Level 2

Level 3

Total

Investment securities—
Held-to-maturity debt securities:$

Local government bonds
Investments in and advances tononconsolidated subsidiaries andaffiliated companies

265
660

Corporate bonds$

405,706

$
$

704

265
1,364
405,706

Long-term debt:
Bonds

12,073,320

12,073,320

Loans

16,129,913

16,129,913

Investment Securities and Investments in and Advances to Nonconsolidated Subsidiaries and AffiliatedCompanies
The fair values of listed equity securities are measured at the quoted market price. Since listed equity
securities are traded in active markets, the fair values of listed equity securities are categorized as Level 1.
As the fair values of the debt securities (include local government bonds, exclude private placement bonds)
are measured principally at the quoted price obtained from financial institutions, the fair values of the debt
securities are categorized as Level 2. The fair values of private placement bonds are measured by discounting
the total amount of principal and interest at interest rates based on the discount rate reflecting credit risk
factors and others, and are categorized as Level 3 since the discount rate is unobservable. The fair valuesof investment trusts are measured at the disclosed net asset value and others, and those (excluding those
applied the article 24-9 of ASBJ Guidance No. 31) are categorized as Level 1.
Derivatives
The fair values of derivatives are measured principally at the quoted price obtained from financial institutions
and are categorized as Level 2 based on the level of inputs of the derivatives. The interest rate swaps, which
qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but thedifferential paid or received under the swap agreements is recognized and included in interest charges. As aresult, the fair values of interest rate swaps are included in those of hedged items (i.e., long-term loans).
Bonds
The fair values of bonds are based on market price and are categorized as Level 2.
Long-Term Loans
The fair values of long-term loans at fixed interest rates are determined by discounting the cash flows related
to the loans at the Company's assumed corporate borrowing rate, and are categorized as Level 2. Becauseloans at variable interest rates reflect short-term movements in market interest rates and there has been no
substantial change in the Company's credit position since the loans were implemented, the carrying amounts
approximate fair values. A part of loans is subjected to interest rate swaps, which qualify for hedge accounting
and meet specific matching criteria, and the fair values are determined by discounting the cash flows related
to the loans with the interest rate swaps at the Company's assumed corporate borrowing rate, and are
categorized as Level 2.

KYUDEN GROUP INTEGRATED REPORT 2023

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

122

6 Data Section
Notes to Consolidated
Financial Statements

21. DERIVATIVESThe Company enters into foreign exchange forward contracts, currency swaps, interest rate swaps, financial
energy swaps and financial transmission rights to manage its exposures to fluctuations in foreign exchanges,
interest rates, fuel price, and electricity market price area differentials, respectively.
Consolidated subsidiaries of the Company enter into foreign exchange forward contracts, interest rate swaps
and financial transmission rights to manage their exposures to fluctuations in foreign exchanges, interest
rates, and electricity market price area differentials, respectively.

Derivative Transactions to Which Hedge Accounting Is Applied
Millions of Yen

March 31, 2023
Foreign currency forward contracts:
Buying U.S. dollars
Buying Canadian dollars
Selling U.S. dollars

The Group does not enter into derivatives for trading or speculative purposes.
Foreign exchange forward contracts, currency swaps, interest rate swaps, financial energy swaps andfinancial transmission rights are not subject to any market risk except for abandoning potential income bymarket fluctuations in hedged items.
The Group does not anticipate any losses arising from credit risk, which is the possibility that a loss may result
from counterparties' failure to perform according to the terms and conditions of the contract, because thecounterparties to those derivatives have high credit ratings.

Interest rate swaps:
Principle treatment—pay fixed / receive floating
Special treatment (Note a)—pay fixed / receive
floating
Financial energy swaps— Principle treatment:
Receive fixed / pay floating
Pay fixed / receive floating

Contract
AmountContract
Amount Dueafter One Year

Fair Value

Accounts
payableAccounts
payableReceivables¥ 51,238¥ 47,248¥ 11,597

21,777

20,100

3,923

Long-term loans

56,01851,646Long-term loans

1,455

1,238

Receivables
Accounts
payable

3,223

216

14,251(6,572)Hedged Item

2,883

(26)

(612)

¥

Total

The derivative transactions are executed by specific sections, and the administrative section monitors thembased on internal policies.

8,526

Millions of Yen

March 31, 2022
Foreign currency forward contracts:
Buying U.S. dollars
Buying Canadian dollars
Interest rate swaps:
Principle treatment—pay fixed / receive floating
Special treatment (Note a)—pay fixed / receive
floating
Financial energy swaps— Principle treatment:
Receive fixed / pay floating
Pay fixed / receive floating
Total

Contract
AmountContract
Amount Dueafter One Year

Fair Value

Accounts
payableAccounts
payable¥ 54,412¥ 50,913¥

22,81821,472

3,354

Long-term loans

57,56553,213(2,815)Long-term loans

1,672

1,455

Receivables
Accounts
payable

7,619(9,852)

14,7395,979

Hedged Item

¥

9,371

6,037

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

Thousands of U.S. Dollars

March 31, 2023

Hedged Item

Contract
AmountContract
Amount Dueafter One Year

Fair Value$ 383,693$ 353,818$ 86,849

163,078

150,519

29,384Foreign currency forward contracts:
Buying U.S. dollars
Buying Canadian dollars
Selling U.S. dollars

Accounts
payableAccounts
payableReceivables

Co-guarantees of loans, mainly in connection with procurement of fuelThousands of
U.S. Dollars¥

78,043$ 584,421

Guarantees of employees’ loans

36,442272,892

Other

45,793342,919

24,136

1,623

b. Loan Commitments
The Company has entered into the Shareholder Loan Agreement with Fukuoka International Airport Co.,
Ltd., and Kyuden International Corporation, a consolidated subsidiary of the Company, has entered into the
Shareholder Loan Agreement with Senoko Energy Pte Ltd., respectively. The unexercised portion of loan
commitments under each agreement as of March 31, 2023, was as follows:

106,722(49,216)Long-term loans

419,492

386,745

Special treatment (Note a)—pay fixed / receive floating

Long-term loans

10,898

9,274

Receivables
Accounts
payableFinancial energy swaps—
Principle treatment:

Total

Millions of Yen(4,586)

Principle treatment—
pay fixed / receive floating

Pay fixed / receive floatinga. Contingent Liabilities
Contingent liabilities at March 31, 2023, were as follows:(201)

21,593

Interest rate swaps:

Receive fixed / pay floating

22. COMMITMENTS AND CONTINGENCIESAt March 31, 2023, the Group had a number of fuel purchase commitments, most of which specify quantities
and dates for fuel deliveries. However, most of purchase prices are contingent upon fluctuations in market
prices.

$ 63,852

Notes: a. The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are
not remeasured at market value, but the differential paid or received under the swap agreements is
recognized and included in interest charges. As a result, the fair values of interest rate swaps areincluded in those of hedged items (i.e., long-term loans) in Note 20.
b. The contract or notional amounts of derivatives, which are shown in the above table, do not
represent the amounts exchanged by the parties and do not measure the Group's exposure tomarket risk.

Total loan limits

Millions of Yen

Thousands of
U.S. Dollars

¥

$

2,173

16,275

Loan executed
Unexercised portion of loan commitments

2,173

16,275123

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

23. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2023 and 2022, were as
follows:
Thousands of U.S.
Dollars

Millions of Yen
2023

2022

2023

Defined retirement benefit plans:(Losses) gains arising during the year

¥

¥

1,780

$ (116,885)

Reclassification adjustments to profit or loss

(1,311)(1,032)(9,818)Amount before income tax effect(16,919)

747(126,703)

4,753

(214)

35,594

Income tax effect

Other comprehensive income:(15,608)

Unrealized gain on available-for-sale securities:
Gains arising during the year

¥

1,424

¥

1,669

$

10,666

13

(88)

97

Amount before income tax effect

1,437

1,580

10,764

Income tax effect

(385)

(435)

(2,888)

Reclassification adjustments to profit or loss

Total

¥

1,051

¥

1,145

$

7,875

¥

4,641

¥

(1,885)$34,754

Deferred gain on derivatives under hedge accounting:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss

3,571

4,887

26,743Adjustments for amounts transferred to the initialcarrying amounts of hedged items(4,282)(2,838)(32,067)

Amount before income tax effect

3,930

163

29,430

Income tax effect(1,186)101(8,887)

Total

¥

2,743

¥

264

$

20,542

¥

5,686

¥

2,381

$

42,585

Foreign currency translation adjustments:
Gains arising during the year
Amount before income tax effect
Income tax effect

Total

¥

5,686

2,381

42,585

936

728

7,014

6,623

¥

3,109

$

49,600

Total¥(12,166)

¥

533

$

(91,108)

¥

5,593

¥

713

$

41,884

Share of other comprehensive income innonconsolidated subsidiaries and affiliatedcompanies:
Gains arising during the year

454

Reclassification adjustments to profit or loss

Total

Total other comprehensive income

871

3,400

¥

6,047

¥

1,584

$

45,284

¥

4,299

¥

6,637

$

32,195124

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

125

Notes to Consolidated
Financial Statements

24. SEGMENT INFORMATION(1) Description of reportable segments
The Group's reportable segments are those for which financial information is available separately and regular evaluation by the Company's management is being performed in order to decide how resources are allocated among theGroup. Therefore, the Group's reportable segments consist of power generation and sale, electricity transmission and distribution, overseas, other energy services, information and communication technology ("ICT") services, andurban development.
• Power Generation and Sale segment: This segment is engaged in the business of power generation and retail electricity in Japan.
• Electricity Transmission and Distribution segment: This segment is engaged in the business of general transmission and distribution in Kyushu region.
• Overseas segment: This segment is engaged in the business of overseas power generation, transmission and distribution business.
• Other Energy Services segment: This segment is engaged in the business that provides a stable supply of electric power, such as construction and maintenance of electricity-related facilities, selling gas and LNG, selling coal, and arenewable energy business.
• ICT Services segment: This segment is engaged in the data communication business, optical broadband business, construction and maintenance of telecommunications facilities, information system development business, and data
center business.
• Urban Development segment: This segment is engaged in the urban development business, real estate business and social infrastructure business.
(2) Methods of measurement for the amounts of sales, profit, assets and other items for each reportable segment The accounting policies of each reportable segment are consistent to those disclosed in Note 2, "Summary of Significant
Accounting Policies."

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements(3) Information about sales, profit, assets and other items at March 31, 2023 and 2022, was as follows:
Millions of Yen
2023
Reportable Segments
Energy Services
Domestic Electric Power
PowerElectricity Transmission
Generation and Sale and Distribution
Overseas

Other Energy
Services¥ 1,702,223
45,295
1,747,519
183,418¥ 230,883
22,949253,832
455,147

¥

2,712
3,532
6,245

¥ 108,208
417
108,626
152,513¥86,3091,070
87,37932,009¥Total¥ 1,930,937¥ 708,980

¥

6,245

¥ 261,140¥ 119,389

Segment profit (loss)
Segment assets
Other:
Depreciation
Interest income
Interest charges
Share of profit (loss) of entities accounted
for using the equity method
Increase in property and nuclear fuel¥ (143,558)
4,423,383

¥

¥

4,459
215,585¥¥

Sales:
Revenues from contracts with customers
Other revenue (Note d)Sales to external customers
Intersegment sales or transfers

14,1201,956,923

109,540
9,620
22,58473,36772
9,320

140,984

121,362

33
924
3,301

29,240475,478

ICT
Services

12,951
187
1,868

6,526
212,169

Urban
Development

Other(Note a)Subtotal

7,429
6,318
13,748
11,209¥ 2,137,767
79,5842,217,352
834,298¥¥

24,957¥ 3,051,650

¥

3,218
148,516¥

24,687
4
186

3,286
46
108

(85,994)
7,432,056

Reconciliations(Note b)Consolidated(Note c)

3,948
4,814

¥ 2,141,715
79,5842,221,300
839,113¥ (839,113)

¥

8,763

¥ 3,060,414¥ (839,113)¥ 2,221,300¥

496
15,230¥(85,497)
7,447,287¥ (1,130)(1,843,608)¥(86,634)
5,603,678

224,242
10,85637,438(3,228)(9,501)(9,501)

221,013
1,355
27,936

223,867
10,85637,370

3,948

Total

375
67

¥ 2,141,715
79,5842,221,300

4,620

4,759

92

14

9,486

(93)

9,392

(295)

9,096

28

12,637

28,7908,352

312,154233

312,388(5,796)306,592

Reconciliations(Note b)Consolidated(Note c)Millions of Yen
2022
Reportable Segments

Sales:
Revenues from contracts with customers
Other revenue (Note d)Sales to external customers
Intersegment sales or transfers

Energy Services
Domestic Electric Power
PowerElectricity Transmission
Generation and Sale and Distribution
Overseas¥ 1,382,809
847
1,383,657
133,919¥ 171,728
7,652
179,380
418,963¥

Total¥ 1,517,576¥ 598,343

Segment profit (loss)
Segment assets
Other:
Depreciation
Interest income
Interest charges
Share of profit (loss) of entities accounted
for using the equity method
Loss on impairment of fixed assets
Increase in property and nuclear fuel¥¥(2,977)4,250,212
115,008
9,488
21,834
3,404
155,4227,183
1,924,633
71,798229,209
131
117,934

Other Energy
Services

1,255
3,063
4,318
13

¥

¥

4,332

¥

2,448
177,006

77,125
92
77,217
117,096

ICT
Services
80,539565
81,10531,364¥¥ 194,314¥ 112,470¥¥

18,896436,341¥

Urban
Development

6,105
206,428

Other(Note a)Subtotal

8,169
5,569
13,738
11,176¥ 1,721,627
17,7901,739,418
712,533¥¥

24,915¥ 2,451,951

¥

3,275
138,854¥

34,931
7,133,476

3,892

Total

3,892
5,061

¥ 1,725,519
17,7901,743,310
717,595¥ 1,725,519
17,7901,743,310¥ (717,595)

¥

8,954

¥ 2,460,905¥ (717,595)¥ 1,743,310¥

986
15,378¥35,918
7,148,854¥(3,533)(1,816,504)¥(1,289)(9,397)(9,397)225,293829
25,04332,384
5,342,350

26
609
1,933

12,27676
1,114

24,079
3
169

3,056
25
122

226,245
10,22634,375338
65

226,583
10,22634,440

3,541

4,354

39

(122)

7,813

144

7,957

(340)

7,617

5,592

3,536
317,680

221

3,536
317,901(5,763)

3,536
312,138

79

11,38327,267126

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

127

Notes to Consolidated
Financial Statements

Thousands of U.S. Dollars
2023
Reportable Segments
Energy Services
Domestic Electric Power
PowerElectricity Transmission
Generation and Sale and Distribution
Overseas

Other Energy
Services

ICT
Services$12,746,919
339,190
13,086,110
1,373,507$ 1,728,945
171,855
1,900,801
3,408,326$

20,312
26,45546,767$ 810,309
3,129
813,438
1,142,082$ 646,320
8,013
654,333
239,700$

55,63447,318102,952
83,939$16,008,442
595,962
16,604,405
6,247,556

$

Total

$14,459,618$ 5,309,127$

46,767$ 1,955,521$ 894,033$ 186,892$22,851,961

Segment profit (loss)
Segment assets
Other:
Depreciation
Interest income
Interest charges
Share of profit (loss) of entities accounted
for using the equity method
Increase in property and nuclear fuel$(1,075,026)
33,124,032$ 105,738
14,654,211$

33,393
1,614,388$ 218,961
3,560,568$$

24,101
1,112,150$ (643,957)
55,654,161

820,282
72,045
169,123

549,405
540
69,798251
6,919
24,722

96,988
1,407
13,99324,608351
814

1,676,405
81,294
279,848

1,055,744

908,806

Sales:
Revenues from contracts with customers
Other revenue (Note d)Sales to external customers
Intersegment sales or transfers

48,873
1,588,810
184,868
30
1,395

Urban
Development

Other(Note a)Subtotal

29,558

Total

Reconciliations(Note b)Consolidated(Note c)29,56836,054$16,038,011
595,962
16,633,973
6,283,610$16,038,011
595,962
16,633,973$ (6,283,610)$

65,622$22,917,584$ (6,283,610)$16,633,973

$

3,719
114,054$ (640,238)
55,768,215$(8,512)(13,805,666)$ (648,751)
41,962,548

2,808
6
507

1,679,214
81,300280,355(24,179)(71,152)(71,152)

1,655,034
10,147
209,20234,60035,639690

105

71,035(703)

70,332(2,212)

68,119211

94,632

215,595

62,544

2,337,535

1,751

2,339,287(43,405)

2,295,881

Notes: a. "Other" is a business segment not included in the reportable segments and includes paid nursing home business, office work outsourcing business, personnel dispatch business, etc.
b. Reconciliations of segment profit (loss) and segment assets are intersegment transaction eliminations.
c. Segment profit (loss) is adjusted to reflect ordinary income.
Ordinary income is calculated by adding interest income, dividends, share of profit of entities accounted for using the equity method and other income to, and deducting interest charges and other expenses from operating
income.
d. Other revenue of power generation and sale, electricity transmission and distribution other energy services and ICT services include subsidies which is described in Note 27, and the amounts of subsidies are ¥44,777 million($335,307 thousand), ¥1,298 million ($9,719 thousand), ¥323 million ($2,418 thousand), and ¥27 million ($202 thousand), respectively.
Geographic segment information is not disclosed because the Group's overseas operations are immaterial.
Information for overseas sales is not disclosed due to overseas sales being immaterial compared with consolidated net sales.
(4) Change in reportable segments
The Group changed its policy for measurement of segment performance to monitor the achievement of the interim financial targets (2025) to realize the vision and business targets described in the "Kyuden Group Management Vision
2030." In accordance with this change, the Group changed its reportable segments from power generation and sale, electricity transmission and distribution, other energy services, ICT services and other to power generation and sale,
electricity transmission and distribution, overseas, other energy services, ICT services and urban development for the year ended March 31, 2023.
The segment information for the year ended March 31, 2022, is also disclosed using the new operating segments.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

25. SUBSEQUENT EVENTS
a. Appropriation of Surplus
At the Board of Directors' meeting held on April 28, 2023, the Company resolved to submit a proposal for thetransfer of surplus to the general shareholders' meeting held on June 28, 2023. It was approved and became
effective on the same date.
(1) Purpose of appropriation of surplus
The Company recorded a loss of ¥21,623 million ($161,925 thousand) in retained earnings in thenonconsolidated balance sheet as of March 31, 2023. In light of this situation and to adapt capital policy
flexibly to changes in the business environment, the Company will transfer a portion of other capitalsurplus to retained earnings in accordance wit Article 452 of the Companies Act.
(2) Overview of the appropriation of surplus(a) Account item and amount of decreasing surplus
Other capital surplus: ¥21,623 million ($161,925 thousand)(b) Account item and amount of increasing surplus
Retained earnings: ¥21,623 million ($161,925 thousand)(3) Schedule for the appropriation of surplus(a) April 28, 2023 Date of resolution for the Board of Directors(b) June 28, 2023 Date of resolution for the general meeting of shareholders(c) June 28, 2023 Effective date for the appropriationb. Issuance of Class B Preferred Stock by Third‑Party Allotment
At the Board of Directors' meeting held on April 28, 2023, the Company resolved to submit the issuanceof Class B preferred stock via a third-party allotment (hereinafter the "Class B Preferred Stock") for
consideration at the general shareholders' meeting held on June 28, 2023, where it was approved.
(1) Overview of the issuance of the Class B Preferred Stock(a) Payment date (issue date)August 1, 2023
(b) Class and number of new shares to be issued
2,000 shares of Class B Preferred Stock(c) Issue price¥100 million ($748 thousand) per share(d) Total amount of the issue price¥200,000 million ($1,497,678 thousand)(e) Preferred dividend¥2.9 million ($21 thousand) per share(f) Method of offering or allotment
Third-party allotment(g) Allottee
Mizuho Bank, Ltd. 800 shares
Development Bank of Japan Inc. 800 shares
MUFG Bank, Ltd. 400 shares(h) Amount of capital increase¥100,000 million ($748,839 thousand)(i) Amount of additional paid-in capital increase¥100,000 million ($748,839 thousand)(2) Uses of proceeds
A part of the proceeds from issuance of the Class B Preferred Stock are planned to be used in acquisitionof Class A preferred stock issued by the Company (hereinafter the "Class A Preferred Stock").
The other part of the proceeds is planned to be used to capital expenditures and investments in new
projects that will contribute to achieve carbon neutrality by 2050 and the sustainable growth of the Group.
(3) Other important matters
Shareholders holding the Class B Preferred Stock may receive dividends prior to common shareholders.
The Class B Preferred Stock will not dilute the common stock because it does not come with voting rights
for the general shareholders' meeting, nor does it come with call provisions or put options using common
stock as consideration.

128

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

129

Notes to Consolidated
Financial Statements

c. Reduction of Capital Stock and Additional Paid‑in Capital Concurrent with Class B Preferred
Stock IssuanceAt the Board of Directors' meeting held on April 28, 2023, the Company resolved that capital stock andadditional paid-in capital be reduced by the same amount as the issue price and transferred to other capitalsurplus at the same time as the issuance of Class B Preferred Stock.

d. Acquisition and Cancellation of Class A Preferred StockAt the Board of Directors' meeting held April 28, 2023, in connection with the issuance of the Class B
Preferred Stock, the Company resolved to acquire the Class A Preferred Stock in accordance with Article
12.8 of its articles of incorporation (provisions concerning acquisition for monetary consideration) and tocancel the Class A Preferred Stock.

(1) Purpose of reducing capital stock and additional paid-in capital
In order to secure an adequate distributable amount necessary for acquiring the Class A Preferred Stock,a decision was taken to reduce capital stock and additional paid-in capital at the same time as issuing theClass B Preferred Stock, and to transfer an amount equivalent to other capital surplus, which constitutes
the distributable amount.

(1) Details of matters concerning acquisition(2) Overview of capital stock and additional paid-in capital reduction(a) Amount of capital stock reduction¥100,000 million ($748,839 thousand)
Details: ¥100,000 million ($748,839 thousand), corresponding to the capital stock increase from theissuance of the Class B Preferred Stock(b) Amount of capital reserve reduction¥100,000 million ($748,839 thousand)
Details: ¥100,000 million ($748,839 thousand), corresponding to the additional paid-in capital increase
from the issuance of the Class B Preferred Stock(c) Method of capital stock and capital reserve reduction
The Company will reduce capital stock and additional paid-in capital as overviewed above in accordancewith the Companies Act, and will transfer the amounts equivalent to the reductions to other capitalsurplus.
(3) Schedule for capital stock and additional paid-in capital reduction
April 28, 2023
Resolution at the Board of Directors' meeting
June 30, 2023
Date of public notice for creditors to raise objections
July 31, 2023
Deadline for creditors to raise objections
August 1, 2023 (scheduled)
Effective date(4) Other important matters
The reduction of capital stock and additional paid-in capital will become effective on condition that theissuance of the Class B Preferred Stock takes effect. In addition, the capital stock and additional paid-in
capital reduction will not result in a reduction in the number of shares outstanding.

(a) Class of the target stock(b) Number of shares acquired(c) Acquisition priceClass A Preferred Stock issued by Kyushu Electric Power Co., Inc.
1,000 shares¥102 million ($769 thousand) per share
The acquisition price above has been calculated in accordance with thestipulations of the company articles of incorporation.
(Formula for base price)
Monetary consideration acquisition price per share = ¥100 million ($748
thousand) + Cumulative unpaid Class A preferred dividend amount +Previous business year unpaid Class A preferred dividend amount +Current business year unpaid Class A preferred dividend amount(d) Total acquisition price¥102,822 million ($769,975 thousand)(e) Buy-back from
Mizuho Bank, Ltd.
Development Bank of Japan Inc.
MUFG Bank, Ltd.
(f) Scheduled date of acquisition August 1, 2023

(2) Details of matters concerning cancellation(a) Class of the target stock(b) Number of shares canceled(c) Scheduled date of cancellation

Class A Preferred Stock issued by Kyushu Electric Power Co., Inc.
1,000 shares
August 1, 2023

(3) Other important matters
The acquisition and cancellation of the Class A Preferred Stock will become effective on condition thatthe issuance of the Class B Preferred Stock and the concurrent reduction of capital stock and additional
paid-in capital take effect.

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
Notes to Consolidated
Financial Statements

26. NET INCOME PER SHARE
Basic EPS for the years ended March 31, 2023 and 2022, were as follows:Year Ended March 31, 2023
Net loss attributable to ownersof the parent
Amount not attributable to commonshareholder—Preferred dividend
Basic EPS—Net loss available
to common shareholders
Year Ended March 31, 2022
Net income attributable to ownersof the parent
Amount not attributable to commonshareholder—Preferred dividend
Basic EPS—Net income available
to common shareholders

Millions of Yen

Thousands ofSharesNet Income (Loss)
Attributableto Owners of
the Parent

Weighted-Average
Shares¥Yen(56,429)

In response to this situation, the Group has discounted unit prices of electricity and city gas to the discountprices set by the government of Japan as a political measure to mitigate the economic burden on thepeople.

(2,100)The discount is funded by subsidies from the government of Japan.

¥(58,529)

¥

6,873

EPS

472,753¥(123.81)472,851¥

10.09(2,100)¥U.S. Dollars

27. ADDITIONAL INFORMATION
Rising electricity and city gas prices due to soaring energy prices against the background of global situation
have had a far-reaching impact on economy of Japan and society, and the economic burden on households
and entities is expected to be increased.

4,773

$

0.92

For the year ended March 31, 2023, the Group recorded such subsidies as "Revenues from Electricity
Business" and "Revenues from Other Business." These amounts are ¥45,093 million ($337,674 thousand)and ¥1,333 million ($9,982 thousand), respectively.

130

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

131

SASB INDEXSASB INDEXThe table below summarizes the Kyuden Group’s results based on the SASB Electric Utilities & Power Generators Standard provided by the International Sustainability Standards Board (ISSB), an arm of theInternational Financial Reporting Standards (IFRS) Foundation. The SASB Standards are primarily designed for U.S. companies and markets and therefore include items that are not applicable to the Kyuden Group, but
we strive to disclose as much information as possible according to the Standards.
Disclosure Topics

Accounting Metrics

Category

Unit

Code

Information Disclosed

Environment(1) Scope 1 emissions(2) Percentage of Scope
1 emissions underemissions-limiting
regulations(3) Percentage of Scope
1 emissions underemissions-reporting
regulations

Greenhouse gas (GHG)
emissions associated withpower deliveries

Quantitative

Quantitative

t-CO2
%

t-CO2

IF-EU-110a.1

IF-EU-110a.2

Greenhouse Gas
Emissions & Energy
Resource Planning
Discussion of long-term andshort-term strategy or plan to
manage Scope 1 emissions,emissions reduction
targets, and an analysis ofperformance against thosetargets(1) Number of customers
served in markets subject
to renewable portfolio
standards (RPS) and(2) percentage fulfillment of
RPS target by market

Discussion
and Analysis

̶Quantitative

Number%

IF-EU-110a.3

IF-EU-110a.4(1) 23,690,000 [t-CO2](2) 0 [%] (no regulated markets in Japan)(3) 100 [%]Note 1: Scope 1 emissions include direct emissions of greenhouse gases as defined in the Act on Promotion of Global Warming Countermeasures (CO2, N2O, SF6
and HFC)

29,200,000 [t-CO2] (33,200,000 [t-CO2])
Note 2: Provisional value
Note 3: Value in parentheses represents CO2 emissions generated by Kyushu Electric Power after adjustments were made in accordance with the FIT system forrenewable energy per the Act on Promotion of Global Warming Countermeasures.

In order to make a significant contribution to the realization of a carbon-neutral society as one of Japan’s industry leaders in low-carbon and carbon-free efforts,
the Kyuden Group has clarified its goals for 2050, set its management objectives (environmental objectives) for 2030 by backcasting, and formulated an Action Plan
containing specific strategies for achieving these targets.
〇 Reduction plan for emissions
・ Amount of renewable energy developed: 5,000 MW (2030)
・ Maximum use of nuclear power with safety as a top priority
・ Lowering the carbon intensity of thermal power・ Conversion of all company cars to 100% EVs*1 (2030)*1: Excl. special purpose vehicles〇 Emissions reduction targets
2050 goals:
・ We will reduce greenhouse gas (GHG) emissions from our business activities across the entire supply chain to net zero・W
 e will contribute to the reduction of GHG emissions in society by promoting a shift to electricity-based energy consumption to the maximum extent possible,
providing a stable supply of environmentally-friendly energy, etc. Through these efforts, the Kyuden Group will achieve “carbon negativity” as early as possible before 2050
2030 management (environmental) targets:・ We will reduce supply chain GHG emissions*2 by 60% (compared to FY2013 levels); andby 65% for our domestic business (compared to FY2013 levels).
*2: Total for Scopes 1, 2, and 3
・ We will contribute to the electrification of Kyushu (Household: 70%; Commercial: 60%)
〇 Analysis of achievement level
Supply chain GHG emissions for FY2022 was 45.10 million tons-CO2, about a 26% reduction from FY2013 levels.
This result is due to our active development and introduction of renewable energy and stable nuclear power operations.
The RPS Act, which defined RPS regulations in Japan, was abolished in 2012 and replaced with the FIT system
Note 4: We purchase electricity generated by renewable energy systems at a fixed priceNote 5: The Kyushu region makes up around 10% of Japan’s electric power demand, yet the introduction of renewable energy power generation facilities throughthe FIT system is approximately 20% of the national total.

Note: Quantitative data without a time point are actual results for FY2022.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
SASB INDEX

Disclosure Topics

Accounting Metrics

Category

Unit

Code

Information D isclosed

Environment

Air Quality

Air emissions of the following
pollutants: (1) NOx (excluding
N2O), (2) SOx, percentage
of each in or near densely
populated areas

IF-EU-120a.1(1) 6,769 [t], 100 [%](2) 4,618 [t], 100 [%]Note 1: Figures are based on results excluding island-based combustion power plants

Quantitative

1000 m3%

IF-EU-140a.1(1) 6,511 [1,000 m3], 0 [%]Note 2: Main applications: Water for thermal power generation and nuclear power generation (fresh water)
Note 3: The above does not include hydroelectric power water (fresh water) or indirect cooling water (seawater) for thermal power generation(2) 2,748 [1,000 m3], 0 [%]Quantitative

Number

IF-EU-140a.2

0Quantitativet%(1) Total water withdrawn,(2) total water consumed,
percentage of each in regionswith High or Extremely HighBaseline Water Stress
Number of incidents ofnoncompliance associatedwith water quantity and/or
quality permits, standards,
and regulations

Discussion
and Analysis

̶IF-EU-140a.3

Kyushu EP and Kyushu T&D manages the following risks regarding the use of water resources, which are essential for the power generation business.
To identify water risks, WRI Aqueduct 3.0 tools were used to verify water stress (current and future) in areas where Kyushu EP and Kyushu T&D facilities arelocated. The results are as follows:・ According to the Baseline Water Stress tool, maximum water stress is low-medium in the Kyushu region where Kyushu EP and Kyushu T&D has installed
power plants that use fresh water or seawater, and water-related risks such as droughts are assumed to occur less frequently there.
Water-related risks are low. In the hydroelectric power business, we use hydroelectric power plant dams and diversion weirs to release the water needed
to maintain our rivers. In addition, we abide by the set amounts of water that we have permission to take from rivers to produce electricity based on laws
and regulations. Where river levels are predicted to rise due to heavy rainfall, we release water from our dams in advance based on water governanceagreements with the national government or other authorities. We also cooperate to the fullest extent possible in local disaster prevention.
In our thermal power generation business, water for power generation is stored in a water storage tank once it is received, so in the event of drought or
flooding, there is no immediate output control or suspension of power generation. However, if water is cut off or the amount of water received is limited,
we will work to maintain our thermal power operations as much as possible by considering water-saving measures or ways to receive water. Further, as
our thermal power generation business and nuclear power generation business use seawater as indirect cooling water for power generation facilities, wemonitor the temperature difference between intake water and discharged water.
In addition, based on environmental conservation agreements we have entered into, we report on the status of the marine areas around our power plants (water
intake and discharge, etc.) to local governments and officials from fishery cooperatives, and exchange opinions with them.

Quantitativet%

IF-EU-150a.1

851,000 [t], 98.0 [%]Note 4: Amount of coal ash (fly ash and bottom ash)

Quantitative

Number

IF-EU-150a.2

Recycled approximately 98% of coal ash produced at thermal power plants

Water Management

Description of water
management risks anddiscussion of strategies andpractices to mitigate thoserisks

Amount of coal combustion
residuals (CCR) generated,
percentage recycled

Coal Ash Management

Total number of coal
combustion residual (CCR)
impoundments, broken
down by hazard potential
classification and structural
integrity assessment by the
U.S. Environmental Protection
AgencyNote: Quantitative data without a time point are actual results for FY2022.

132

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
SASB INDEX

Disclosure Topics

Accounting Metrics

Category

Unit

Code

Information Disclosed

Social Capital

Energy Affordability

Average retail electricrate for (1) residential, (2)commercial, and (3) industrial
customers (per kWh)

Quantitative

Yen/kWh

IF-EU-240a.1(1) 23.65 [Yen/kWh](2) (3) 18.10 [Yen/kWh]Note 1: (1) is the average cost of lighting. (2) and (3) are the average cost of electric power.

Typical monthly electric bill
for residential customers for(1) 500 kWh and (2) 1,000
kWh of electricity delivered
per month

Quantitative

Yen

IF-EU-240a.2(1) 14,151 [Yen](2) 29,480 [Yen](1) Number of residential
customer electric
disconnections for
nonpayment and(2) percentage reconnected
within 30 days

Quantitative

Number%

IF-EU-240a.3(1) 153,073
Note 2: Service stops resulting from non-payment of electricity fees based on the Specified Retail Supply Agreement(2) 81 [%]N ote 3: Percentage of resumptions of service within 7 days of service stop (unable to provide percentage for resumptions within 30 days)

Discussion of impact ofexternal factors on customer
affordability of electricity,
including the economic
conditions of the service
territory

Discussion
and Analysis

IF-EU-240a.4

The Electricity Business Act in Japan stipulates that general transmission and distribution operators shall not refuse wheeling service in their
supply areas without justifiable grounds. When we accept an application to supply electricity in areas handled by Kyushu T&D, in principle, we
supply to the designated area. We believe that there is no difference in the opportunities for consumers to obtain low-cost energy. With that,
we recognize that the factors affecting electricity prices include levies for renewable energy generation based on the national system and fuelcost adjustments due to price fluctuations of thermal fuel that affect electricity prices.

̶

Human Capital

Workforce Health &Safety(1) Total recordable incident
rate (TRIR) (no. of
accidents per 200,000
working hours)(2) fatality rate, and(3) near miss frequency rate
(NMFR) (no. of accidents
per 200,000 working
hours)

Quantitative%

IF-EU-320a.1(1) Employees: 0.01, contractors: outside management purview(2) Employees: 0, contractors: 1
Note 4: We report the number of deaths as the SASB standards do not provide a specific calculation formula for the percentage of deaths.
(3) Outside management purview
Note 5: This information cannot be disclosed because it was not obtained using the measurement method recommended by the SASB standards

Business Model & Innovation

End-Use Efficiency &DemandPercentage of electricutility revenues from rate
structures that
(1) are decoupled and(2) contain a lost revenue
adjustment mechanism(LRAM)

Quantitative%

IF-FU-420a.1

Decoupling and LRAM systems have not been introduced in Japan
Note 6: Sales increases will come from promoting electrification and offering various services that meet customer needs.

Percentage of electricload served by smart gridtechnology (MWh)Quantitative%

IF-EU-420a.2

Penetration of smart meters: 90 [%]Customer electricity savings
from efficiency measures, bymarketQuantitative

MWh

IF-EU-420a.3

We disclose the following quantitative data in lieu of electricity savings.
○ Number of electrification and energy-saving solution proposals: Approx. 4,800 (for the 5 years from FY2018 to FY2022)
Note 7: Kyushu Electric Power provides a variety of solutions to customers for electrification and energy conservation to achieve carbon neutrality by 2050
Note: Quantitative data without a time point are actual results for FY2022.

133

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section
SASB INDEX

Disclosure Topics

Accounting Metrics

Category

Unit

Code

Information Disclosed

Leadership & Governance

Nuclear Safety& Emergency
Management

Grid Resiliency

Total number of nuclear
power units, broken down
by U.S. Nuclear Regulatory
Commission (NRC) Action
Matrix Column

Quantitative

Number

IF-EU-540a.1

6 units (breakdown: 4 units at the Genkai Nuclear Power Plant, 2 units at the Sendai Nuclear Power Plant)
Note 1: Genkai Nuclear Power Plant Units 1 and 2 are currently being decommissioned
Note 2: Sendai Nuclear Power Plant Units 1 and 2 passed inspection under the Nuclear Regulation Authority new regulatory standards and restarted in2015Genkai Nuclear Power Plant Units 3 and 4 passed inspection under the Nuclear Regulation Authority new regulatory standards and restarted in 2018

Description of efforts tomanage nuclear safety andemergency preparedness

Discussion
and Analysis

̶IF-EU-540a.2

Kyushu Electric Power is working to maintain and improve the safety and reliability of nuclear power plants by accurately implementing safety activities basedon the quality management system for nuclear safety headed by the President and steadily making continuous improvements, including risk management toprevent abnormalities.
In addition, we are continuously working to foster and maintain a corporate culture in which each employee can raise their awareness of the various risks ofnuclear power, ask what can be done to improve safety, and demonstrate leadership to improve performance. We have also established the Nuclear Safety
and Reliability Improvement Committee comprised of outside experts as a mechanism to receive opinions on our efforts to improve the safety and reliability of
nuclear power from a third-party perspective, providing us with objective and specialist assessments and recommendations.

Number of incidents ofnoncompliance with physicaland/or cybersecurity standards
or regulations

Quantitative

Number

IF-EU-550a.1

Not disclosed
Note 3: Not disclosed in light of the risks associated with disclosure(1) System Average
Interruption Duration Index(SAIDI),(2) System Average
Interruption Frequency
Index (SAIFI), and(3) Customer Average
Interruption Duration Index(CAIDI)

Quantitative

MinutesOutages
Minutes/OutageIF-EU-550a.2(1) 115 [mins.] (excl. disasters such as typhoons: 3 mins.)(2) 0.15 [outages] (excl. disasters such as typhoons: 0.04 outages)(3) 782 [mins./outage] (excl. disasters such as typhoons: 56 mins./outage)

Note: Inclusive of major event days

Note: Quantitative data without a time point are actual results for FY2022.

Activity Metrics
Activity Metric

Unit

Code

Information Disclosed

Number of: (1) residential, (2) commercial, and(3) industrial customers served

Number

IF-EU-000.A(1) 7,120,000(2) (3) 720,000
Note 2: (1) is the number for lighting. (2) and (3) are the number for electric power Note 3: Non-consolidated results for Kyushu Electric Power

Total electricity delivered to:(1) residential, (2) commercial, (3) industrial, (4)all other retail customers, and (5) wholesalecustomers

MWh

IF-EU-000.B

The total for (1) to (4) is 76,546,000 [MWh] (retail electric power sales)(5) 19,420,000 [MWh] (wholesale electric power sales)

Length of transmission and distribution lineskm

IF-EU-000.C

・ Transmission lines: Overhead 17,013 [km], underground 1,420 [km] (line extensions)・ Distribution lines: Overhead 142,009 [km], underground 2,189 [km] (span)・ Total electricity generated
・ Percentage by major energy source
・ Percentage in regulated markets

MWh%

IF-EU-000.D

・ Total electricity generated: 60,192,771 [MWh]・ Percentage by major energy source: Hydroelectric power: 7.30 [%], Coal: 23.18 [%], LNG: 23.76 [%], Thermal power (other): 0 [%], Nuclear: 33.35 [%],
Geothermal: 1.87 [%], Biomass: 0.01 [%]・ Percentage in regulated markets: Not applicable (as no regulated markets in Japan)

Total wholesale electricity purchased

MWh

IF-EU-000.E

41,779,000 [MWh] (Total for electricity supplied by or purchased from other companies)
Note: Quantitative data without a time point are actual results for FY2022.

134

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Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

135

Frequently Asked
Questions

Frequently Asked Questions (IR FAQ)

Q1

What overall impact will the trend toward carbon neutrality have on
Kyushu Electric Power’s future performance?

Q3

What is the outlook for your future business performance?

In order to achieve carbon neutrality, it is crucial to promote both “lowering the carbon intensity of anddecarbonizing energy sources” on the supply side and “electrification” on the demand side. In terms ofsupply, we have been promoting the development of renewable energy to become the main source ofpower generation and maximizing use of nuclear power generation in an aim to achieve a low-carbon andsustainable society. In addition, to make the renewable energy business the core business of the Kyuden
Group, we will integrate the renewable energy business of Kyushu Electric Power and the subsidiary Kyuden
Mirai Energy to strengthen the business operation structure and thereby accelerate efforts to reach the 5,000
MW renewable energy development target for FY2030.
Renewable energy is expected to grow significantly as a growth business, and nuclear power is bothan environmentally friendly and economical source of power. We believe that they will both have a hugely
positive impact on our business performance.
In addition, on the demand side, we are also promoting efforts for electrification in all sectors, including
household, commercial, industrial, and transportation sectors, toward achieving our goal of contributing to
the electrification rate of Kyushu. We view the increase in total electric power sales due to the promotion ofelectrification as a positive contribution to our future business performance.

With regard to the financial forecast for FY2023, we expect consolidated ordinary income to be ¥120 billion.
This is due to a significant improvement in our income and expenditures, as four nuclear power plants will
be in operation following the completion of the Specific Safety Facilities, and the delayed effects of fuel costadjustments due to lower fuel prices will shift from the previous fiscal year’s losses to delayed gains.
In the medium term, we are working to achieve the ordinary income target of ¥125 billion in our FY2025
financial objectives.
In the Domestic Electricity Business, we aim for ordinary income of ¥75 billion through continued stable,
safe operation of four nuclear power plants and the expansion of total electricity sales volume with secured
optimal supply capacity.
With regard to growth businesses (renewable energy, overseas, ICT services, and urban development), we
aim to realize ¥50 billion overall through participation in geothermal and hydroelectric power development
and overseas renewable energy projects, which are the Group’s strengths, as well as participation in overseas
power generation and transmission projects that leverage the Group’s overall technologies and know-how.
This ¥50 billion target is expected to be achieved through projects we have already invested in or havedecided to invest in, and we are therefore confident that we will reach this target.

Q2

Q4

What is your vision for the future of your nuclear power business?

We recognize that nuclear power generation will continue to play a key role in achieving both carbon neutrality
and a stable supply of electricity, as it is a stable power source unaffected by weather or climate, and does
not emit CO2 during operation.
In addition, given the low weight of fuel costs in power generation costs and the carbon emission
regulations to be introduced in the future, such as carbon pricing, we believe that nuclear power generation
can be expected to contribute to our income and expenditures over the medium to long term.
In the Sixth Strategic Energy Plan, which forms the basis for energy policy, nuclear power generationis positioned as an important source of baseload power for achieving carbon neutrality in 2050. Moving
forward, we will continue to make maximum use of our nuclear power plants currently in operation as we
continuously work to improve their safety and reliability, based on the basic premise of prioritizing safety andgaining the understanding of local communities.

What is Kyushu Electric Power’s basic policy when it comes toshareholder returns?

Our basic policy on shareholder returns has historically been to maintain stable dividends, making decisions
based on a comprehensive review of our recent business performance, income and expenditures, andfinancial condition. Moving forward, we will first continue our efforts to restore our dividends to their preGreat East Japan Earthquake level of ¥50 per share as soon as possible during the current financial objective
period (until FY2025). Once accomplished, we will consider profit sharing based on our growth in areas otherthan our Domestic Electricity Business as we strive to further enhance shareholder returns while maintaining
stable dividend payments.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

6 Data Section

136

External Assessments
and Participation in
Initiatives, etc.

External Assessments and Participation in Initiatives, etc.
■ Major External Assessments and Awards Received● Received a leadership level of A- on climate change from the CDP● The only Japanese energy company to receive the highest rating
for the CDP Supplier Engagement Rating● Recognized as among the “White 500” corporations under the2023 Certified Health & Productivity Management Outstanding
Organizations Recognition Program (Kyushu Electric Power andKyushu Transmission and Distribution)■ Status of Inclusion in ESG Indices
Kyushu Electric Power has been included in the following five of the six ESG indices used by the Government Pension Investment Fund (GPIF) (as of October 2023).
● FTSE Blossom Japan Sector Relative Index● MSCI Japan ESG Select Leaders Index● MSCI Japan Empowering Women Index (WIN)● S&P/JPX Carbon Efficient Index● Morningstar Japan ex-REIT Gender Diversity Tilt Index (GenDi J)● Selected by one of the GPIF’s domestic asset managers for“Excellent Integrated Reports” and by two managers for “Mostimproved Integrated Reports”● Selected by two of the GPIF’s domestic asset managers for“Excellent TCFD Disclosure,” by three managers for “strategy” andone manager for “metrics and targets” in “Excellent Integrated
Report Disclosure with Four Disclosure Items”● Obtained certification for “DX Certified Operator”
by METI (Kyushu Electric Power)■ Participation in Initiatives, Activities with Industry Associations, etc.
● Expressed support for the TCFD Recommendations (Kyushu
Electric Power)● Participation in Keidanren’s Challenge Zero (Kyushu ElectricPower)● Participation in the 30by30 Alliance for Biodiversity (Kyushu
Electric Power)● Obtained certification under the SBT Initiative● Participation in the GX League

2022 Constituent MSCI Japan

2022 Constituent MSCI JapanESG Select Leaders Index

Empowering Women Index (WIN)FTSE Russell confirms that KYUSHU ELECTRIC POWER CO., INC. has been independently assessed
according to the index criteria, and has satisfied the requirements to become a constituent of the
FTSE Blossom Japan Sector Relative Index. The FTSE Blossom Japan Sector Relative Index is usedby a wide variety of market participants to create and assess responsible investment funds andother products.
THE INCLUSION OF KYUSHU ELECTRIC POWER CO., INC. IN ANY MSCI INDEX, AND THE USE OF MSCILOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE ASPONSORSHIP, ENDORSEMENT OR PROMOTION OF KYUSHU ELECTRIC POWER CO., INC. BY MSCI OR
ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE
MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

Disclosure of Sustainability Information
The latest information on the Kyuden Group’s sustainability initiatives is disclosed on the Kyushu ElectricPower’s website.
・Kyuden Group ESG Data Book
Home > For investors > IR library > ESG Data Book
https://www.kyuden.co.jp/english_ir_library_index.html
・Environment, social, and governance (ESG) information
Home > For investors > Sustainability
https://www.kyuden.co.jp/english_company_esg_index.html

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

137

6 Data Section
Corporate Data

Corporate Data
■ Company■ Overview(As of March 31, 2023)

Company Name

Kyushu Electric Power Company, Incorporated

Head Office

1-82, Watanabe-dori 2-chome, Chuo-ku, Fukuoka 8108720, Japan Phone +81-92-761-3031

Shareholding
Ratio (%)

The Master Trust Bank of Japan, Ltd. (trust unit)

74,19015.7

Date of Establishment

May 1, 1951

Custody Bank of Japan, Ltd. (trust unit)

27,338

5.8

Paid-in Capital¥237,300 million

Meiji Yasuda Life Insurance

20,594

4.3

Number of Employees

4,774*

Kyushu Electric Power Co., Inc. Employees’ Shareholding Association

12,059

2.5

Nippon Life Insurance Company

11,8102.5

The Bank of Fukuoka, Ltd.

8,669

1.8

1,000,000,0001,000

Mizuho Bank, Ltd.

7,252

1.5

JP MORGAN CHASE BANK 385781

6,098

1.3

Number of Shares Issued Common stock:and Outstanding
Class A preferred shares:

474,183,951*
1,000

STATE STREET BANK WEST CLIENT - TREATY 505234

4,716

1.0

SSBTC CLIENT OMNIBUS ACCOUNT

4,060

0.9

Number of Shareholders Common stock:
Class A preferred shares:

123,836
3*

Number of Shares
Held (Shares)

Shareholding
Ratio (%)

Total Number of Shares 1,000,000,000 shares
AuthorizedCommon stock:
Class A preferred shares:■ Class A Preferred Shares

June

Name

Fiscal Year

From April 1 to March 31

Mizuho Bank, Ltd.

400

40.00

Stock Listings

Tokyo Stock Exchange, Fukuoka Stock Exchange (Code: 9508)

Development Bank of Japan Inc.

400

40.00

Transfer Agent andRegistrar

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan

MUFG Bank, Ltd.

200

20.00

Accounting Auditor

Deloitte Touche Tohmatsu LLC* Acquisition and retirement completed as of August 1, 2023
Note: Class B preferred shares issued as of August 1, 2023 (Total Number of Shares Authorized: 2,000,
Number of Shares Issued and Outstanding: 2,000, Number of Shareholders: 3)●Commonstock■ Common Stock
Share Ownership Composition (By Shareholder Type)

Shareholder Composition (By Number of Shares Held)

Governmentalorganizations
0.9%

5,000 or more
3.9%

Foreign investors
15.6%

Number of
Shares Held(Thousand Shares)

7-1, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006,
Japan Phone +81-3-3281-4931

General Meeting ofStockholders

Individuals / Other
35.6%

Name

Tokyo Branch Office* No. of employees denotes employees working for the parent company.The no. of employees for theentire Group (parent and consolidated subsidiaries) is 21,096.

■ Stock■ Information■ Major Shareholders

Financial
institutions
42.1%
Securities
brokers0.9%
Other
domestic
businesses
4.9%

1,000 to
4,999
22.8%

500 to 999
12.4%

Less than100
23.6%
100 to499
37.3%■ Trends in Stock Price and Trading■ Volume

TSR (Total Shareholder Return)
FY2018(million shares)

FY2019FY2020150

Kyushu Electric Power (%)

105.4

73.7

94.0

120

Reference index: TOPIX(including dividends) (%)

95.0

85.9

122.1

FY2021

FY2022

(yen)

75.5

70.7

2,500

124.6

131.8

2,000

90

1,500

60

1,000

30

500

0

2017

2018

Stock Price (right axis)

2019
Trading Volume (left axis)

2020

2021

2022

2023
March

0

Table ofContents

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1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 A Foundation for Creating Value

138

6 Data Section
Corporate Data

About Kyushu
Located nearly at the center of East Asia, Kyushu serves as a hub for interaction with Asia.
Kyushu’s economy is roughly 10% of Japan’s total; it similarly accounts for about 10% of Japan’s land area and population. Kyushu’s regional GDP is on par with the GDP of Austria.
The output of Kyushu’s key industries, such as integrated circuit (IC) production, agricultural production, crude steel production, and four-wheeled automobile production, account for a high percentage of the national total.
Kyushu as a Part of Asia

Kyushu’s Share Compared to Japan Overall

International Comparison of Regional GDP(Billion U.S. dollars)(%)

Russia531

Total area
(as of April 2022)

11.2

SwedenTotal population(as of January 2022)

10.2

Nigeria

475

Regional GDP(nominal) (FY2019)

8.3

Argentina

450

Austria445

Ulaanbaatar
Mongolia

Vladivostok
Beijing

China

Japan

Xi’an

Nepal

South Korea

BhutanChongqing

Shanghai
Okinawa

Bangladesh

TaiwanLaos

IC production value(FY2021)500 km40.8

1,000 kmHong Kong

MyanmarTokyo

Agricultural output(FY2020)

2,000 km19.5

Kyushu443

Philippines
VietnamThailand

3,000 kmCambodia

14.9

Four-wheeled
automobile production(FY2021)

14.7

United Arab Emirates

421

Norway403

Ireland399

4,000 km
BruneiMalaysia

Crude steel production value(FY2021)

Singapore

Export value (FY2021)

8.3

Indonesia

Source: Created based on “Profile of Kyushu 2023,” Kyushu Economy International (KEI), Kyushu Bureau of Economy, Trade and Industry

Source: Created based on “Profile of Kyushu 2023,”
Kyushu Economy International (KEI), Kyushu Bureau of Economy,
Trade and Industry

Note: Values for 2019 are from “World Statistics 2021” by the Ministryof Internal Affairs and Communications
Source: Created based on “Profile of Kyushu 2023,” Kyushu Economy
International (KEI), Kyushu Bureau of Economy, Trade and Industry

KYUDEN GROUP INTEGRATED REPORT 2023

On the Publication of the Kyuden Group Integrated Report 2023
The Kyuden Group has been publishing an integrated report since fiscal

disclosure. In addition, we have also enhanced content regarding information

2021, in order to disclose a uniform account that weaves together

related to governance, along with the Data Section, which we hope to be of

our medium- to long-term vision, strategies, major policies, and othergreat interest to shareholders and investors.

information.

This report is prepared under the editorial leadership of the Corporate

For this year’s integrated report, we wanted to create a report that more

Strategy Division and in collaboration with a range of company departments.

clearly expressed our value creation story focused on the strengths of the

As the Chief ESG Officer responsible for the creation of this report, I would likeGroup. Therefore, along with indicating our current analysis and future direction

to state that the process of preparing the report was appropriate and that the

toward sustainably enhancing corporate value, we aim to enhance content

contents are accurate.

concerning both growth achieved through realizing carbon neutrality that

We hope that this report—one of the communication tools to engage withleverages our strengths as an industry leader in low-carbon and carbon-freestakeholders—will help to further deepen understanding of the Group. We will

efforts, as well as the further strengthening of human capital management.

continue to actively engage in dialogues with stakeholders in order to enrich

Furthermore, with respect to information related to the Taskforce on
Nature-related Financial Disclosures (TNFD), we have made use of thethe report and would be delighted to receive your frank views and feedbackon the report.

TNFD framework (beta version) in proactively undertaking multiple internal

Member of the Board of
Directors
Vice-Presidential Executive
Officer
Chief ESG Officer

deliberations to promote the enhancement of providing initiative details

Created by, and inquiries to:
Enlighten Our Future

Atsushi Soda

Kyushu Electric Power Company, Incorporated
ESG Promotion Group, Corporate Strategy Division
1-82, Watanabe-dori 2-chome, Chuo-ku, Fukuoka 810-8720, Japan
Tel: +81-92-984-4313