(Translation)

Matters Excluded in Physical Documents That Are Provided
to Shareholders Who Requested Provision of PhysicalDocuments Pursuant to Laws, Regulations, and theCompany’s Articles of Incorporation

37th Fiscal Year (April 1, 2023 to March 31, 2024)
Systems for Ensuring the Appropriateness of Business Activities and the Operation
Status of the Systems
Consolidated Statements of Changes in Net Assets
Notes to Consolidated Financial Statements
Non-Consolidated Statements of Changes in Net Assets
Notes to Non-Consolidated Financial Statements

Kyushu Railway Company
Description of the aforementioned matters in physical documents that are provided to shareholders
who requested provision of physical documents is omitted pursuant to laws, regulations, and theCompany’s Articles of Incorporation.

6

Systems for Ensuring the Appropriateness of Business Activities and the
Operation Status of the Systems

The Board of Directors resolved the following with regard to the system for ensuring that the businessexecution of Directors of the Company and Group companies complies with laws, regulations and the
Articles of Incorporation, and other systems for ensuring the appropriateness of operations.
(1) System for Ensuring the Business Execution of Directors and Employees of the Company
and Group Companies Complies with Laws, Regulations, and the Articles of Incorporation
The Company has formulated the JR Kyushu Group’s Code of Ethics to serve as a standard that works
to reinforce corporate ethics with each officer (including Corporate Officers, which includes SeniorCorporate Officers; the same applies hereinafter) and employee of the Company and Group companies
and ensure compliance with laws and regulations. The Administration Department has been put incharge of implementing this code group-wide and also carries out employee training and otherinitiatives. In addition, the Audit and Supervisory Committee conducts audits and other tasks withrespect to the Company’s Directors, while the Auditing Department, which acts as the internal audit
function, audits the status of compliance with laws and regulations among employees of the Company
and Group companies, and reports regularly to the Board of Directors and the Audit and Supervisory
Committee.
(2) System for Storing and Managing Information Related to the Business Execution of
Directors of the Company
In accordance with regulations for the management of written documents, information related to thebusiness execution of the Company’s Directors is recorded in written documents and through anelectromagnetic medium (hereinafter, “documents, etc.,” collectively) is then stored. The documents,
etc., can be viewed at any time by the Company’s Directors.
(3) Regulations and Other Systems for Managing the Risk of Loss at the Company and Group
Companies
Securing railway safety is the most important management issue for the Company. In accordance withsafety management regulations created based on the revised Railway Business Act, which was enactedin October 2006, the Company has established a safety management system and works to ensure,maintain, and improve transportation safety. Safety promotion committees have been established at
the head office. These committees carry out initiatives toward preventing operational accidents andwork-related injuries. Through training and other methods, these committees make thorough efforts toensure the Company can make prompt responses in the event of large-scale accidents or natural
disasters. For risks that would have a significant impact on the Company’s business operations, the1Company will establish regulations at each division that oversees operations and put in place crisis
management systems in order to ensure that an appropriate response is made in the event an issue
arises.
The Company has established the Group Executive Committee, which oversees the management ofGroup companies. The Group Executive Committee is made up of mainly the Company’s Corporate
Officers. The Committee ensures that systems are in place that allow for management to be conductedin an appropriate manner. In addition, the Committee supervises and monitors the management ofGroup companies by holding discussions on key management issues for the JR Kyushu Group basedon regulations for business administration at affiliated companies. Furthermore, in addition toestablishing relevant departments and designating officers to help support and oversee Groupmanagement, the Company works to improve its governance by assigning its officers and employees
to work as part-time directors and part-time auditors at Group companies.
(4) Systems for Ensuring Effective Business Execution by Directors of the Company and Group
Companies
The Company’s Board of Directors delegates a portion of authority to the Directors for execution ofimportant operations when necessary on the basis of the Articles of Incorporation and resolutions of
the Board of Directors. Meanwhile, the Company’s Board of Directors also determines the area incharge undertaken by each Corporate Officer, and ensures that systems are in place to allow each
Director and Corporate Officer to perform his or her assigned work in an efficient manner. In addition,
the Company clarifies the authority and responsibilities of each Director, Corporate Officer andemployee through the Guidelines on Administrative Authorities, thereby securing an effective systemfor business execution.
For Group companies, the Company ensures an effective system for business execution through theestablishment of regulations related to the division concerning segregation of duties, the chain ofcommand, authority, decision making, and other organizational matters.
(5) Systems for Ensuring the Appropriateness of Business Activities at the Company andGroup Companies
In order to establish corporate ethics and reinforce compliance with laws and regulations, the Company
and Group companies have formulated the JR Kyushu Group’s Code of Ethics and established the JR
Kyushu Group Human Rights and Corporate Ethics Committee, which deliberates issues related tocorporate ethics and compliance. Furthermore, the Company operates the JR Kyushu Group Corporate
Ethics Hotline (hereinafter, “the Corporate Ethics Hotline”), which serves as a means for employeesof the Company or Group companies, as well as employees of business partners, to directly provide
information regarding actions that may potentially be in violation of laws and regulations. The

2

Company and Group companies maintain a resolute attitude toward antisocial forces, such as crime
syndicates, companies affiliated with crime syndicates, and corporate extortionists, and rejects any
kind of relationship with such organizations.
(6) Systems for Reporting to the Company Facts Pertaining to Business Execution of Group
Company Directors and Employees
The Company has provided regulations for business administration at affiliated companies. Group
executive strategy and other crucial items are communicated through review and reporting systems
for the Group Executive Committee, which comprises mainly the Company’s Corporate Officers.
Moreover, the Company ensures a system for regular reporting on Group companies’ operating results
and financial conditions.
(7) Items Regarding Employees Who Are to Assist with the Duties of the Company’s Audit andSupervisory Committee
The Company’s Audit and Supervisory Committee Members have the authority to instruct Audit andSupervisory Committee Office employees on items necessary to activities of the Audit andSupervisory Committee.
In addition, Audit and Supervisory Committee Office employees will not receive guidance from
Directors (excluding Directors who are Audit and Supervisory Committee Members) or others withregard to those instructions.
(8) Systems for Reporting to Audit and Supervisory Committee by Directors and Employees of
the Company and Group Companies
The Company ensures a system for Company and Group companies’ Directors, Corporate Officers,
and employees, etc. to promptly report conduct to Audit and Supervisory Committee that may be in
violation of laws, etc., or behavior that will have a major impact on the Company or Group companies.
Moreover, matters provided for in laws and regulations, the implementation status of internal audits
and the contents of messages provided through the Corporate Ethics Hotline are regularly reported to
Audit and Supervisory Committee, as stipulated by law.
Regarding the Corporate Ethics Hotline, the privacy of persons making reports will be strictly
observed, and that such persons will not be treated adversely by reason of the report or consultation to
the Hotline.

3(9) Items Regarding Policy on Prepayment of Fees or Reimbursement Procedures and Costs
or Discharge of Debt for Performance of Duties by the Company’s Audit and Supervisory
Committee Members
The Company secures a budget for views related to the execution of audits on a yearly basis.
(10) Other Systems for Securing Effective Auditing by Audit and Supervisory Committee
The Company’s Audit and Supervisory Committee conducts regular roundtable discussions with the
Representative Directors and outside Directors (excluding Directors who are Audit and Supervisory
Committee Members). Moreover, Audit and Supervisory Committee regularly conduct roundtablediscussions with the Internal Audit Department, accounting auditors, and Group company auditors,
thus strengthening cooperation.
The overview of the operation status of the systems for ensuring the appropriateness of businessactivities is as follows.
(1) Initiatives for Establishing Corporate Ethics and Reinforcing Compliance with Laws andRegulations
1

At the JR Kyushu Group Human Rights and Corporate Ethics Committee, the status ofinitiatives regarding corporate ethics in the Group, the operation status of the Corporate Ethics
Hotline, etc. were reported.

2

The Company provided training and education on compliance with laws and regulations forofficers and employees of the Company and Group companies.
In addition, the Company conducted a survey in the Company in order to ascertain employee
awareness of corporate ethics.

3

In order to eliminate any relationship with anti-social forces, the Company worked to include
exclusion clauses in contracts, etc. and conduct thorough credit investigations.

(2) Initiatives for Ensuring the Appropriateness and Effectiveness of the Business Execution of
Directors and Employees
1

Minutes of meetings of the Board of Directors and documents, etc. related to the businessexecution of Directors were recorded and stored appropriately in accordance with laws,
regulations, etc.

2

In order to secure the effectiveness of the Board of Directors, the Company carried out an
investigation using questionnaires and individual interviews for the Directors to analyze andevaluate that effectiveness. The results of the investigation were reported to the Board of
Directors, and we analyzed and evaluated the effectiveness of the Board of Directors and4discussed the issues recognized in the effectiveness evaluation at a meeting of the Board of
Directors. In addition, various improvements were made based on the investigation results.
3

The Auditing Department conducts internal audits of the Company and Group companies andreports the results of the audits to the Board of Directors and the Audit and Supervisory
Committee.

4

The Company made partial changes to the organization to secure a more effective system forbusiness execution.

(3) Initiatives for Managing the Risk of Loss
1

The Safety Promotion Committee established measures for preventing the occurrence andrecurrence of railway accidents, transport disruptions, etc. The Safety Promotion Committee
also ensured that the measures are disseminated to Group companies, and strongly promoted
the measures to unite the entire Group.

2

The Company conducted audits, etc. in regard to a safety control structure through the Audit
and Supervisory Committee and Safety Management Department.

3

The Group Executive Committee held appropriate discussions and issued reports on importantmatters related to Group management. The Group Executive Committee also reported theoperating results of Group Companies and other information to the Company’s Board of
Directors.

(4) Initiatives for Securing Effective Auditing by the Audit and Supervisory Committee
1

The Company secured a budget for expenses deemed necessary for the execution of duties by
Audit and Supervisory Committee Members.

2

The Audit and Supervisory Committee regularly exchanged opinions with Representative
Directors and outside Directors (excluding Directors who are Audit and Supervisory
Committee Members).

3

The Audit and Supervisory Committee regularly received reports from the Auditing
Department on the status of internal audits and other matters, as well as regularly exchanged
opinions with accounting auditors and Group company auditors on the status of audits, issues,etc.

5Consolidated Statements of Changes in Net Assets(From April 1, 2023 to March 31, 2024)(Millions of yen)
Shareholders’ equity
Capitalsurplus

Share capital
Balance at the beginning of current period

16,000Retainedearnings

225,814

Total
shareholders’equityTreasuryshares

164,479(584)

405,709

Changes during current period
Dividends of surplus(14,629)(14,629)

Net income attributable to owners of theparent38,44538,445

Disposal of treasury stock

15

Purchase of shares of consolidated
subsidiaries

15

(16)

(16)

Net changes in items other thanshareholders’ equity during current period
Total changes during current period

–

(16)

23,81615

23,815

Balance at the end of current period

16,000225,797

188,295(568)

429,524

Noncontrollinginterests

Total net
assets797

406,850

Accumulated other comprehensive income
Valuationdifference
on availablefor-salesecurities
Balance at the beginning of current period

Foreigncurrencytranslation

Remeasurementsof defined
benefit plansadjustment

4,562

(201)

(4,017)

Total
accumulated
othercomprehensive
income343

Changes during current period
Dividends of surplus(14,629)

Net income attributable to owners of theparent38,445

Disposal of treasury stock

15

Purchase of shares of consolidated
subsidiaries(16)

Net changes in items other thanshareholders’ equity during current period

7,089

104

4,366

11,55962

11,622

Total changes during current period

7,089

104

4,366

11,5596235,437

Balance at the end of current period

11,651(97)

348

11,903859

442,287(Note)

The above figures are rounded down to the nearest ¥1 million.

6

Notes to Consolidated Financial Statements
I

Notes on Important Matters for Basis of Presentation of Consolidated Financial Statements

1.

Scope of consolidation(1) The scope of consolidation includes 49 companies including significant subsidiaries indicatedin “(8) Major parent companies and subsidiaries” of the Business Report.
The newly founded JR Kyushu Insurance Consulting Co., Ltd. (founded on April 3, 2023), JR
Kyushu Construction Group Holdings Inc. (founded on July 3, 2023) and Ogori Higata
Development Special Purpose Company (founded on January 10, 2024) are included in thescope of consolidation from the fiscal year ended March 31, 2024.
In addition, FUJIBAMBI Co., Ltd., whose shares were acquired on June 13, 2023, is includedin the scope of consolidation from the fiscal year under review.
The former consolidated subsidiary JR Kyushu TRAINDOR Co., Ltd. has been excluded fromthe scope of consolidation from the fiscal year ended March 31, 2024 due to the completion ofits liquidation.
(2) Names of major non-consolidated subsidiaries
Names of main non-consolidated subsidiaries: 14 companies, including Kyutetsu Built Co., Ltd.
Reasons for excluding from the scope of consolidation
All of the non-consolidated subsidiaries are small in scale, and their total assets, operating
revenue, net income (multiplied by the Company’s ownership percentage) and retained
earnings (multiplied by the Company’s ownership percentage) do not have a material effect on
the consolidated financial statements and have therefore been excluded from the scope of
consolidation.
2.

Application of equity method(1) There are no non-consolidated subsidiaries accounted for under the equity method.
(2) There are five affiliates, including JR Kyushu Secom Inc., accounted for under the equity
method.
The newly founded Battery Station Kyushu LLC (founded on April 12, 2023) is included in thescope of application of the equity method from the fiscal year ended March 31, 2024.
Hakata Station Building Co., Ltd., which was previously not accounted for under the equity
method, is included in the scope of application of the equity method from the fiscal year underreview as the Company acquired some of its shares on July 3, 2023.
Meanwhile, DRUG ELEVEN CO., LTD., which was previously accounted for under the equity
method, has been excluded from the scope of application of the equity method from the fiscal
year under review, as all the shares held were transferred.

7(3) Kyutetsu Built Co., Ltd. and other non-consolidated subsidiaries not accounted for under theequity method, and Hakata Bus Terminal Co., Ltd. and other affiliates are excluded from thescope of applying the equity method as they will have minimal impact on net income(multiplied by the Company’s ownership percentage) and retained earnings (multiplied by theCompany’s ownership percentage) and are not material as a whole.
(4) Special notes on application of equity method
Among those affiliates to which the equity method is applied whose fiscal year-end andconsolidated fiscal year-end differ, the non-consolidated financial statements of the most recent
fiscal year of each subsidiary are used.
3.

Fiscal years of consolidated subsidiaries

Of the consolidated subsidiaries, the fiscal year-end of Manbou Corp. is the end of February, and thefiscal year-end of JR Kyushu Capital Management (Thailand) Co., Ltd., JR Kyushu Business
Development (Thailand) Co., Ltd., and JR Kyushu Corporate Investment LLC. is the end of December.
The consolidated financial statements of these subsidiaries were prepared using the non-consolidated
financial statements dated as of those dates. However, the adjustments needed for consolidation weremade for all the important transactions between consolidated companies that took place between those
dates and the consolidated fiscal year-end.
4.

Accounting policies(1) Basis and method of valuation of significant assets(i)Securities
Held-to-maturity debt securities: Stated at amortized cost (straight-line method).
Other securities (including money held in trust): Those other than “shares etc. withoutmarket value” are stated at fair value (Unrealized gains and losses are included in a separate
component of net assets, and cost of sales is determined based on the moving-averagemethod.) Shares etc. without market value are stated at cost, determined by the movingaverage method.
Investments in limited liability investment partnerships and similar investments (defined as
securities in Article 2, paragraph (2) of the Financial Instruments and Exchange Act (ActNo. 25 of April 13, 1948)) are measured at net amounts equivalent to the equity interest in
the partnerships based on their latest available financial statements whose reporting date is
stipulated in the partnership agreement.

(ii) Derivatives
Stated at fair value.
(iii) Inventories

8

The cost method (method to write down book value due to lower profitability) is adopted
as the basis of valuation.
Merchandise: Stated mainly using the specific identification method.
Real estate for sale: Stated using the specific identification method.
Real estate for sale in process: Stated using the specific identification method.
Supplies: Stated mainly using the moving-average method.
Other: Stated mainly using the last purchase price method.
(2) Depreciation method for significant depreciable assets(i)

Property, plant and equipment (excluding lease assets)
Stated mainly using the straight-line method. However, the following assets are stated using
the following methods.
Replacement assets of fixed assets for railway business: Stated using the replacement
method.

(ii) Intangible assets (excluding lease assets)
Software: Stated using the straight-line method. The amortization period of internal-use
software is the internal useful life (five years).
Other intangible assets: Stated using the straight-line method.
(iii) Lease assets
Lease assets in finance lease transactions that do not transfer ownership: Depreciated using
the straight-line method with the lease term as the useful life and a residual value of zero.
(iv) Long-term prepaid expenses: Stated using the straight-line method.
(3) Accounting standards for significant allowances(i)

Allowance for doubtful accounts
To prepare for losses from bad debt, an estimated uncollectible amount is provided at theamount estimated by either using the historical rate of credit loss in the case of general
receivables, or based on individual consideration of collectibility in the case of specificreceivables such as highly doubtful receivables.

(ii) Accrued bonuses
To prepare for the payment of employee bonuses, the estimated amount to be paid is stated.
(iii) Allowance for safety and environmental measures
To prepare for the expenses for safety and environmental measures, repairs, etc. for railway
facilities, etc. to ensure safe railway operations, the estimated costs are stated.
(iv) Provision for loss on disasterTo prepare for disaster recover expenses, etc., the estimated costs are stated.
(4) Accounting method for retirement benefits

9

(i)

Method of attributing projected retirement benefits to periods
When calculating retirement benefit obligations, the benefit formula method is used toattribute the projected retirement benefits to the period until the end of the current fiscal
year.

(ii) Method of amortization of actuarial gain or loss and past service cost
Actuarial gain or loss is mainly amortized on a straight-line basis over periods (12 years)
within the average remaining years of service of the employees in the year following theyear in which the gain/loss was incurred.
Past service cost is mainly amortized on a straight-line basis over periods (19 years) within
the average remaining years of service of the employees.
(5) Accounting standards for significant revenue and expenses
The main obligations in the Group’s major businesses and the usual points in time at whichrevenue is recognized are as follows. Furthermore, among the obligations under contracts withcustomers in each business, for transactions in which the Group’s role in providing goods orservices to customers is that of an agent, revenue is recognized at the net amount received from
customers with the amount paid to suppliers deducted.
(i)

Transportation GroupIn the transportation business, the main obligation is providing transportation services basedon transportation contracts with customers.
Regarding commuter passes, obligations are considered to be fulfilled once the expiration
date of a commuter pass has passed, and revenue is recognized over a certain period of time.
Regarding tickets other than commuter passes, obligations are considered to be fulfilledfrom the point when a transportation service is provided by use of the ticket, and revenue isrecognized at one point in time.
In addition, compensation for transportation-service-related transactions is generally
received in advance.

(ii) Real Estate and Hotels GroupIn the real estate lease business, the Company primarily manages and operates commercial
facilities, offices, and apartment buildings, and leases these units based on building leaseagreements and other agreements. Regarding building lease agreements and otheragreements, revenue is recognized in the scope of the agreement period based on the“Accounting Standard for Lease Transactions.”
In the real estate sale business, the Company primarily sells condominiums and has
obligations to deliver condominiums based on real estate sales agreements with customers.
These obligations are considered to be fulfilled when control of the relevant property is10transferred to the customer, and revenue is recognized from the point in time when thecondominium was delivered.
In the hotel business, the main obligation is providing accommodation services based on
accommodation agreements with customers. These obligations are considered to be fulfilled
when accommodation service is provided to the customer, and revenue is recognized at one
point in time.
(iii) Retail and Restaurant GroupIn the retail and restaurant business, the Company primarily sell products in stores and has
obligations to deliver products based on sales contracts with customers. These obligations
are considered to be fulfilled at the point when the product is sold and control of said productis transferred to the customer, and revenue is recognized at the point in time when the
product is delivered.
(iv) Construction GroupIn the construction business, the main obligation is conducting civil engineering andbuilding work and the like based on contract work agreements with customers.
Under contract work agreements, obligations are considered to be fulfilled over a certain
period of time, the degree of progress toward fulfillment of the obligations is estimated, andrevenue is recognized over a certain period of time based on the degree of progress. The
method for estimating degree of progress is calculated as the ratio of costs incurred to theestimated total cost. For contracts under which the degree of progress cannot be reasonably
estimated, revenue is recognized in an amount equal to the portion of the costs incurred thatis expected to be recovered.
(v) Business Service GroupIn the construction machinery sales business, the Company primarily sells construction
machinery, and has obligations to deliver construction machinery based on sales contracts
with customers. These obligations are considered to be fulfilled when control of said
construction machinery is transferred to the customer, which is when the construction
machinery is delivered, and revenue is recognized at the point in time when the construction
machinery is delivered.
(6) Treatment of construction grants
The Company receives construction grants from municipal governments and others to aid inconstruction and improvement of railways and other properties, such as construction of elevatedrailway tracks for grade separation and construction for widening railway crossings.
Such construction grants are recognized by deducting the amount equivalent to the contribution
for construction received mainly at the completion of the construction directly from theacquisition cost of the fixed assets.

11

In the consolidated statements of income, the construction grants received, etc. are recognizedin extraordinary gains, and the amount deducted directly from the acquisition cost of the fixed
assets is recognized in extraordinary losses as losses from provision for cost reduction of fixed
assets.
(7) Amortization of goodwill
Goodwill is amortized using the straight-line method, mostly over nine years.
(8) Adoption of the group tax sharing system
The Company and some consolidated subsidiaries in Japan are applying the group tax sharing
system. The accounting processing and disclosures for income taxes and local corporation tax,
as well as the tax effect accounting of the Company and some consolidated subsidiaries in Japan
are in accordance with the Practical Solution on the Accounting and Disclosure Under theGroup Tax Sharing System (ASBJ PITF No. 42, August 12, 2021).
II

Notes on Changes in Presentation(Consolidated balance sheets)“Lease obligations” (¥10,452 million in the previous fiscal year), which was previously listed
separately under non-current liabilities, is included in “Other” under non-current liabilities fromthe fiscal year under review due to its diminished monetary significance with respect to total
assets.
(Consolidated statements of income)(i)Gain on exchange of non-current assets“Gain on exchange of non-current assets” (¥91 million in the previous fiscal year), which
was previously included in “Other” under extraordinary gains, is listed separately from thefiscal year under review due to its increased monetary significance with respect toextraordinary gains.

(ii) Gains on sale of investment securities“Gains on sale of investment securities” (¥2,822 million in the previous fiscal year), which
was previously listed separately under extraordinary gains, is listed as “Other” from thefiscal year under review due to its diminished monetary significance with respect toextraordinary gains.
(iii) Loss on sale of non-current assets“Loss on sale of non-current assets” (¥30 million in the previous fiscal year), which waspreviously included in “Other” under extraordinary losses, is listed separately from the fiscal
year under review due to its increased monetary significance with respect to extraordinary
losses.

12

III Notes on Accounting Estimates
1.

Recoverability of deferred tax assets(1) Amount of deferred tax assets stated in the consolidated financial statements for the fiscal year
under review:¥43,520 million(2) Information on the nature of significant accounting estimates related to the identified items(i)

Calculation method
The Group recognizes deferred tax assets for tax loss carryforwards and deductible
temporary differences to the extent that they are expected to reduce future tax liabilities after
estimating future taxable income based on earning capability and tax planning.

(ii) Key assumptions
The Group estimates the amount of future taxable income based on earning capability andtax planning, mainly based on its business plans.
(iii) Impact on the next fiscal year’s consolidated financial statements
Deferred tax assets are primarily attributable to the impairment loss of the non-current assetsof the Company’s railway business, the recovery of which heavily depends on future taxable
income. Future changes in the business environment or the Group’s business activities may
affect our estimates of taxable income, and changes in the effective tax rate due to tax system
reforms could have a significant impact on the consolidated financial statements for the next
fiscal year and thereafter.

2.

Impairment loss on non-current assets(1) Amount of non-current assets recorded in the consolidated financial statements for the fiscal
year under review:
Property, plant and equipment¥704,851 million

Intangible assets¥6,143 million(2) Information on the nature of significant accounting estimates related to the identified items(i)

Calculation method
The Group assesses whether there is any indication of impairment on assets and asset groups.
If there is an indication for the possibility of an impairment loss, then impairment loss will
be tested based on the undiscounted future cash flows of the asset or asset group concerned.
When it is judged that assets or asset groups should have impairment losses recognized,
their carrying value is reduced to the recoverable amount and the amount of the reduction
is recorded as an impairment loss.

(ii) Key assumptions
For the testing of impairment loss on non-current assets, certain assumptions are madeincluding future cash flows, discount rates, etc.

13

(iii) Impact on next fiscal year’s consolidated financial statements
Future cash flows may be affected by fluctuations in uncertain future economic conditions.
Decreases in future cash flows due to changes in key assumptions or decreases in market
prices could have a significant impact on the consolidated financial statements for the next
fiscal year and thereafter.

3.

Provision for loss on disaster(1) Amount of provision for loss on disaster recorded in the consolidated financial statements forthe fiscal year under review:¥3,302 million(2) Information on the nature of significant accounting estimates related to the identified items(i)

Calculation method
If the Group suffers damage due to a disaster, a provision for loss on disaster is recorded, in
accordance with the extent of damage, for the expenses, etc., expected to be incurred forrestoration in the next fiscal year and thereafter.

(ii) Key assumptions
In estimating provision for loss on disaster, the Group estimates for the recovery plans andconstruction, etc., in accordance with the extent of damage based on actual results forrestoration of damage required in past disasters.
(iii) Impact on next year’s consolidated financial statements
With regard to disaster recovery work, factors such as additions or changes to the details of
construction during the course of construction and changes in the market environment could
have an impact on the recovery work, and any material changes in the estimates for therecovery plan and construction could have a significant impact on the consolidated financial
statements for the next fiscal year and thereafter.
IV Additional Information
1. Board Benefit Trust (BBT)The Company introduced a share-based remuneration plan called the “Board Benefit Trust (BBT)”(the “Plan”) for the Company’s Directors (excluding outside Directors and Directors who are Audit
and Supervisory Committee Members) and its Senior Corporate Officers (the “Directors, etc.”).
(1) Overview of transactions
The Plan is a share-based remuneration plan under which the Company’s shares are
acquired through a trust using money contributed by the Company as the financial funds,
and the Directors, etc. are provided with the Company’s shares and an amount of money
equivalent to the market value of the Company’s shares (the “Company’s Shares, etc.”)
through the trust in accordance with the Rules on Provision of Shares to Officers established14

by the Company. The Directors, etc. shall receive the Company’s Shares, etc. upon theirretirement from office, in principle.
(2) Shares of the Company remaining in the Trust
The shares of the Company remaining in the trust are recognized as treasury stock underequity at the book value in the trust (excluding incidental expenses). The book value of said
treasury stock at the end of the fiscal year under review was ¥568 million and the numberof shares was 176,600 shares.
2. Conclusion of basic agreement on restoration of Hisatsu LineDue to heavy rain in July 2020, train services have been suspended on the Hisatsu Line in Kyushu
between Yatsushiro and Yoshimatsu stations. Kumamoto Prefecture and the Company agreed on the
direction of restoring the railway by adopting the method of separating the infrastructure andoperation between Yatsushiro and Hitoyoshi stations on the line at the 7th meeting of the “JR Hisatsu
Line Review Conference” held on April 3, 2024.
As a result, in the fiscal year ended March 31, 2024, based on reasonable estimates of the costs forrestoring the railway, etc. to its original condition, provision for loss on disaster of ¥2,530 million
and loss on disaster of ¥1,055 million were recorded under extraordinary losses in the consolidated
statements of income. With regard to the construction for restoring the railway, etc. to its original
condition, factors such as additions or changes to the details of construction during the course of
construction, and changes in the market environment and other factors could have an impact on therecovery work, and any material changes in the estimates for the recovery plan or construction could
have a significant impact on the consolidated financial statements for the next fiscal year andthereafter.
3. Damage from the 2023 heavy rain in a seasonal rain front
The heavy rain in a seasonal rain front that occurred in various areas of Kyushu from late June 2023
caused damages, including wash-out of track beds and collapse of slopes, to Kyudai Main Line andother lines. Of the restoration expenses, etc. caused by the rain, restoration expenses, etc. in the fiscal
year ended March 31, 2024 have been recorded as loss on disaster, while the amounts of restoration
expenses, etc. expected in the following fiscal year and thereafter were reasonably estimated andrecorded as provision for loss on disaster under extraordinary losses of the consolidated statements
of income.
V

Notes to Consolidated Balance Sheet

1.

Pledged assets and secured liabilities(1) Pledged assets
Securities¥22 million

Merchandise and finished goods¥110 million

15

Investment securities¥56 million

Other (investments and other assets)¥252 million

Total:¥442 million

The above securities, investment securities and other (investments and other assets) aredeposited to the Fukuoka Legal Affairs Bureau as a warranty against defects on housing
construction in accordance with the Act for Secure Execution of Defect Housing Warranty
Liability.
(2) Secured liabilities
Notes and accounts payable–trade¥61 million

Payables¥5 million

Total:¥67 million

2.

Accumulated depreciation of property, plant and equipment¥789,830 million

3.

Reduction entry due to construction grants received in fixed assets (cumulative)¥428,645 million

VI Notes to Consolidated Statement of Income
1. Impairment loss
The Group determines the asset groups by each business or property based on the classifications
in managerial accounting. For railway business assets, the Group identifies entire railway lines asa single asset group because the railway network generates cash flows as a whole. In addition, theGroup identifies idle assets that are not expected to be used in the future as separate asset groups.
As a result, for discontinued businesses and assets that were determined to be disposed of or forwhich the recoverable amounts have declined to a lower level than originally expected, the bookvalue under non-current assets is reduced to the recoverable amount and the amount of the
reduction in the current fiscal year is recognized as “Impairment loss” (¥1,073 million) under
extraordinary losses.

16

(Millions of yen)
Major applications

Type

Rental assets

6

Retail stores, etc.

26

Idle assets

2

Place

Buildings, andFukuoka

fixtures etc.

Prefecture, etc.

Buildings andKumamoto

fixtures, etc.

Prefecture, etc.

Intangible assets,

Kumamoto

etc.

Prefecture, etc.

Amount
535

443

93

Total

1,073

The recoverable amounts of these asset groups are calculated based on net sale value or value in
use. If the recoverable amount is calculated using value in use, the future cash flows are
determined using a discount rate of 4.0%. In addition, if the recoverable amount is calculatedusing net sale value, the property tax-appraised value of non-current assets is determined basedon reasonable adjustments, etc.
2. Loss on disaster and provision for loss on disaster
The amount of recovery expenses associated with the heavy rain in July 2020 and the heavy rain
in a seasonal rain front in 2023 has been recorded as loss on disaster, and the estimated amount ofexpenses has been recorded as provision for loss on disaster under extraordinary losses.
VII Notes to Consolidated Statements of Changes in Net Assets
1.

Class and total number of shares outstanding as of the end of the fiscal year under review
Common stock2.

157,301,600 shares

Dividends(1) Dividends paid
Resolution

Class of shares

Annual General
Meeting ofCommon stock
Shareholders held on
June 23, 2023

Total dividend
amount(millions of yen)

Dividends per
share (yen)14,62993.0

Record date

Effective date

March 31, 2023 June 26, 2023

Note: The total amount of dividends includes ¥16 million in dividends for the shares of theCompany’s stock held by the trust as trust assets of the Board Benefit Trust (BBT).

17

(2) Among the dividends whose record date falls within the fiscal year under review, those whose
effective date will fall within the next fiscal year
Resolution(scheduled)Class of shares

Annual General
Meeting of
Shareholders
held on June 21,2024

Common stock

Total dividend
Source of Dividends peramountdividends share (yen)(millions of yen)

14,629Retainedearnings

93.0

Record date

Effective date

March 31, 2024 June 24, 2024

Note: The total amount of dividends includes ¥16 million in dividends for the shares of theCompany’s stock held by the trust as trust assets of the Board Benefit Trust (BBT).
VIII Notes on Financial Instruments
1.

Status of financial instruments

The Group invests in securities, etc. and raises funds via issuance of bonds and borrowings from banks
and other financial institutions.
Customer credit risk associated with notes and accounts receivable – trade, and contract assets is
managed under appropriate credit control policies. Investment securities are mainly stocks, and theGroup checks the fair values of listed shares on a quarterly basis.
Commercial papers, bonds and borrowings are used for working capital (mainly short term) and capital
expenditures (long term).
The Group executes derivative transactions in accordance with internal regulations and within thescope necessary for the underlying transactions, and does not engage in speculative transactions.
2.

Fair value of financial instruments

The carrying amounts in the Consolidated Balance Sheets, fair values and unrealized gains and losses
as of March 31, 2024 are as follows.
(Millions of yen)
Carrying amount(*1)(1) Investment securities

Fair value(*1)

Unrealized gain/(loss)

40,87440,8695(2) Bonds(155,225)(146,334)

8,890(3) Long-term debt

(200,672)(197,191)

3,480(*1) Amounts shown in parentheses are net liabilities.
(*2) Regarding “Cash and deposits,” “Notes and accounts receivable – trade, and contract assets,”“Fares receivable,” “Securities,” “Notes and accounts payable – trade,” “Short-term loans,”“Commercial paper,” “Payable,” “Accrued income taxes,” and “Fare deposits received withregard to railway connecting services,” as these items are settled within a short period of time18and the fair values are approximately equal to the carrying amounts, the notes have been omitted.
(*3) Investments in unlisted equity securities, etc. (carrying amount: ¥8,048 million) and investmentsin partnerships (carrying amount: ¥6,595 million) were not included in “(1) Investment securities”
because they do not have market prices.
3.

Matters pertaining to the breakdown of fair value of financial instruments by level and others

The fair value of financial instruments is classified into the following three levels according to theobservability and materiality of the inputs used to calculate fair value.
Level 1 fair value: The fair value calculated based on (unadjusted) quoted prices in active markets
for identical assets or liabilities
Level 2 fair value: The fair value calculated using inputs other than those included within Level 1
that are either directly or indirectly observable
Level 3 fair value: The fair value calculated using key unobservable inputs
When multiple inputs that have a significant impact on the calculation of fair value are used, fairvalue is classified as the level with the lowest priority for fair value calculation among the levels towhich each of the inputs is associated.
(1) Financial assets and financial liabilities for which fair value is recorded on the Consolidated
Balance Sheets(Millions of yen)
Category

Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Other securities
Shares36,648––36,648

Bonds

56

1,137

–

1,194

Other

78

–

–

78

36,783

1,137–

37,921

Total Assets(Note) Of investment securities, investment trusts to which the treatment in Paragraphs 24-9 ofthe “Implementation Guidance on Accounting Standard for Fair Value Measurement”(ASBJ Guidance No. 31, June 17, 2021) is applied are not included in the above table.
The amount of such investment trusts in the consolidated balance sheet was ¥2,136
million.

19

(2) Financial assets and financial liabilities for which fair value is not recorded on the Consolidated
Balance Sheets(Millions of yen)
Category

Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Held-to-maturity debt
securities
Government bonds,
local government
bonds, etc.

319

491

–

810

Total Assets

319

491

–

810

Bonds

–

146,109225

146,334

Long-term debt–

197,191–

197,191–

343,300

225

343,525

Total liabilities(Note)(i)

Explanation of evaluation techniques and inputs used to calculate fair value
Investment securities
Stocks and other similar instruments are classified as Level 1 as their fair value is theunadjusted quoted price in active markets. For debt securities, the fair value is theunadjusted quoted price in active markets, or the price quoted by the transacting financial
institutions, and these are primarily classified as Level 1 for government bonds and Level 2
for all other debt securities.

(ii) Bonds (including bonds current portion of bonds)
Regarding public offering bonds, while fair value is the unadjusted quoted price, thefrequency of market transactions is low and this cannot be considered as a quoted price in
active markets, so they are classified as Level 2. As for private placement bonds, since thefair value of bonds with a short contract period is almost equal to the book value, the bookvalue is regarded as the fair value, and they are classified as Level 3.
(iii) Long-term debt (including current portion of long-term debt)
Regarding Long-term debt, since the fair value is the present value of the total amount ofprincipal and interest payment discounted by the interest rate expected to be applied for asimilar new loan, it is classified as Level 2.

20

IX Notes on Rental Properties
1.

Status of rental properties

The Company and some of its subsidiaries own commercial buildings for rent.
2.

Fair value of investment and rental properties(Millions of yen)
Carrying amount

Fair value

350,265

505,198(Notes)1 The carrying amount is the acquisition cost less accumulated depreciation.
2 For the fair values at the end of the fiscal year under review, the amounts for significant propertiesare calculated by the Company based on Real Estate Appraisal Standards, etc., and the amounts forother properties are calculated by the Company based on certain appraisal values and indicatorsthat are considered to appropriately reflect market prices.
3 Assets under construction or development are not included in the above table because it isextremely difficult to determine their fair values.
X

Notes on Revenue Recognition

1.

Information breaking down revenue from contracts with customers(Millions of yen)
Reportable segment
Transportation

Revenue fromcontracts withcustomers
Revenue fromother sources
Sales to externalcustomers

Real Estate and Hotels
Real estateleasebusiness

Real estatesalebusiness

12,671

31,116

37,13725,258–

1,177

34,763––

114,818

13,84965,88037,13725,258Commuter

NonCommuter

30,267

114,818–
30,267

Other

21

Hotels(Millions of yen)
Reportable segment
Retail andConstruction
Restaurant
Revenue fromcontracts withcustomers
Revenue fromother sources
Sales to externalcustomers
2.

Total

Business
Service

61,28732,59834,575

379,730

131

464

4,135

40,671

61,41833,062

38,710420,402

Information fundamental to understanding revenue from contracts with customers

Information fundamental to understanding revenue is as described in “(5) Accounting standards for
significant revenue and expenses” under “4. Accounting policies” in “I Notes on Important Matters
for Basis of Presentation of Consolidated Financial Statements.”
3.

Information pertaining to the relationship between fulfillment of obligations based on contracts
with customers and cash flows resulting from such contracts, as well as the amounts and timingof revenue from contracts with customers that existed at the end of the fiscal year ended March
31, 2024, which is expected to be recognized in or after the fiscal year ending March 31, 2025

(1) Balance, etc. of contract assets and Contract liabilities
Balance at
beginning of the
fiscal year ended
March 31, 2024
39,270(Millions of yen)
Balance at end of
the fiscal year
ended March 31,
2024
43,957

Contract assets

6,288

8,974

Contract liabilities

19,40919,544

Receivables from contracts with customers

Contract assets primarily pertain to contract construction work agreements in the constructionindustry for which progress has been made on the contracted construction work as of the final
day of the fiscal year but for which rights to claim compensation are unclaimed. Contract assets
are transferred to Receivables from contracts with customers when the right to compensation
becomes unconditional.
Contract liabilities primarily pertain to railway fares received in advance, advances received ofsales proceeds in the real estate sale business, and advances received of lump-sum payments
paid when moving into a fee-based nursing home in the senior citizen business. Contract22

liabilities are reversed upon recognition of revenue.
Of the revenue recognized in the fiscal year ended March 31, 2024, the amount included in thebalance of Contract liabilities at the beginning of the period is ¥13,323 million.
(2) Transaction price allocated to remaining obligations
The Company and consolidated subsidiaries apply a practical expedient method in noting thetransaction prices allocated to remaining obligations, and contracts having an initial estimatedcontract period of one year or less are not included in the scope for notes. The total amount oftransaction prices allocated to remaining obligations and the estimated periods for recognizing
revenue are as follows.
(Millions of yen)
Fiscal year ended
March 31, 2024
1 year or less

48,586

Over 1 year, but not more than 2 years

16,673

Over 2 years, but not more than 3 years

3,674Over 3 years

6,391

Total

75,326

XI Notes on Per Share Information
1.

Net assets per share¥2,809.41

2.

Net income per share¥244.68(Note) When calculating net assets per share, the Company’s shares remaining in the Board Benefit
Trust (BBT) recognized as treasury stock under shareholders’ equity are included in thetreasury stock excluded from the number of shares issued and outstanding at end of period(176,600 shares at the end of the fiscal year under review).
In addition, when calculating net income per share, the shares are included in the treasury
stock excluded from the average number of shares during the period (178,525 shares for the
fiscal year under review).

23

Non-Consolidated Statements of Changes in Net Assets(From April 1, 2023 to March 31, 2024)(Millions of yen)

Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Reserve fortax purpose
reduction
entry of noncurrent assets

Retainedearnings
brought
forward

Total retained
earnings

11,19085,82897,018Dividends of surplus(14,629)(14,629)

Net income

32,92032,920

421

(421)

–

(440)

440

–

Balance at beginning of
period16,000Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus171,908

52,113224,022

Changes during current
periodProvision of reserve
for tax purpose
reduction entry of
non-current assets
Reversal of reserve fortax purpose reduction
entry of non-current
assets
Disposal of treasurystock
Net changes in items
other thanshareholders’ equity
during current period
Total changes during
current period
Balance at end of period

–

–

–

–

(18)

18,30918,291

16,000171,908

52,113224,022

11,171

104,137

115,30924

Shareholders’ equity
Total shareholders’ equity

Treasury shares
Balance at beginning of
period(584)

336,456

Valuation and translation
adjustments
Valuation difference on
available-for-sale securities

3,492

Total net assets

339,948

Changes during current
periodDividends of surplus(14,629)(14,629)

Net income

32,92032,920

–

–

–

–

15

15

Provision of reserve
for tax purpose
reduction entry of
non-current assets
Reversal of reserve fortax purpose reduction
entry of non-current
assets
Disposal of treasury
stock

15

Net changes in items
other thanshareholders’ equity
during current period

4,951

4,951

Total changes during
current period

15

18,306

4,951

23,258

Balance at end of period(568)

354,7628,443

363,206(Note)

The above figures are rounded down to the nearest ¥1 million.

25

Notes to Non-Consolidated Financial Statements
I

Notes on Significant Accounting Policies

1.

Basis and method of valuation of securities(1) Shares in subsidiaries or affiliates: Stated at cost using the moving average method.
(2) Other securities (including money held in trust): Those other than “shares etc. without market
value” are stated at fair value (Unrealized gains and losses are included in a separate componentof net assets, and cost of sales is determined based on the moving-average method.) Shares etc.
without market value are stated at cost, determined by the moving-average method.
Investments in limited liability investment partnerships and similar investments (defined as
securities in Article 2, paragraph (2) of the Financial Instruments and Exchange Act (Act No.
25 of April 13, 1948)) are measured at net amounts equivalent to the equity interest in thepartnerships based on their latest available financial statements whose reporting date is
stipulated in the partnership agreement.
2.

Basis and method of valuation of inventories

The cost method (method to write down book value due to lower profitability) is adopted as the basisof valuation.
(1) Real estate for sale: Stated using the specific identification method.
(2) Real estate for sale in process: Stated using the specific identification method.
(3) Supplies: Stated using the moving-average method.
3.

Depreciation method for non-current assets(1) Property, plant and equipment (excluding lease assets)
Stated mainly using the straight-line method. However, the following assets are stated using thefollowing methods.
Replacement assets of fixed assets for railway business: Stated using the replacement method.
(2) Intangible assets (excluding lease assets)
Software: Stated using the straight-line method. The amortization period of internal-use
software is the internal useful life (five years).
Other intangible assets: Stated using the straight-line method.
(3) Lease assets
Lease assets in finance lease transactions that do not transfer ownership: Depreciated using thestraight-line method with the lease term as the useful life and a residual value of zero.
(4) Long-term prepaid expenses: Stated using the straight-line method.

26

4.

Accounting standards for allowances(1) Allowance for doubtful accounts
To prepare for losses from bad debt, an estimated uncollectible amount is provided at theamount estimated by either using the historical rate of credit loss in the case of general
receivables, or based on individual consideration of collectibility in the case of specificreceivables such as highly doubtful receivables.
(2) Accrued bonuses
To prepare for the payment of employee bonuses, the estimated amount to be paid is stated.
(3) Allowance for retirement benefits
To prepare for payment of employees’ retirement benefits, the allowance for retirement benefits
is stated according to such liability for retirement benefits as was estimated at the end of the
fiscal year under review.
The term attribution method for estimated retirement benefits is based on the benefit formula
method. Any actuarial gain or loss is accounted for as cost from the fiscal year following theoccurrence in an amount prorated using the straight-line method over a given number of years(12 years) within average remaining employee service years at the time of the occurrence in thefiscal year.
(4) Allowance for safety and environmental measures
To prepare for the expenses for safety and environmental measures, repairs, etc. for railway
facilities, etc. to ensure safe railway operations, the estimated costs are stated.
(5) Provision for loss on disasterTo prepare for disaster recover expenses, etc., the estimated costs are stated.
(6) Provision for guarantee obligations
To prepare for loss on debt guarantees for subsidiaries and affiliated companies, an amountdeemed to be required individually is stated.
5.

Accounting standards for significant revenue and expenses

The main obligations in the Company’s major businesses and the usual points in time at which revenue
is recognized are as follows. Furthermore, among the obligations under contracts with customers ineach business, for transactions in which the Company’s role in providing goods or services tocustomers is that of an agent, revenue is recognized at the net amount received from customers withthe amount paid to suppliers deducted.
(1) Railway business
The Company is obligated to provide passenger rail transportation services based primarily ontransportation agreements with customers.
Regarding commuter passes, obligations are considered to be fulfilled once the expiration date27

of a commuter pass has passed, and revenue is recognized over a certain period of time.
Regarding tickets other than commuter passes, obligations are considered to be fulfilled fromthe point when a transportation service is provided by use of the ticket, and revenue isrecognized at one point in time.
In addition, compensation for transportation-service-related transactions is generally received
in advance.
(2) Related businesses
In the real estate sale business, the Company primarily sells condominiums and has obligations
to deliver condominiums based on real estate sales agreements with customers. Theseobligations are considered to be fulfilled when control of the relevant property is transferred tothe customer, and revenue is recognized from the point in time when the condominium wasdelivered.
In the real estate lease business, the Company primarily manages and operates commercial
facilities, offices, apartment buildings and hotels, and leases these units based on building leaseagreements and other agreements. Regarding building lease agreements and other agreements,
revenue is recognized in the scope of the agreement period based on the “Accounting Standard
for Lease Transactions.”
6.

Treatment of construction grants

The Company receives construction grants from municipal governments and others to aid inconstruction and improvement of railways and other properties, such as construction of elevatedrailway tracks for grade separation and construction for widening railway crossings.
Such construction grants are recognized by deducting the amount equivalent to the contribution for
construction received mainly at the completion of the construction directly from the acquisition costof the fixed assets.
In the non-consolidated statements of income, the construction grants received, etc. are recognized in
extraordinary gains, and the amount deducted directly from the acquisition cost of the fixed assets is
recognized in extraordinary losses as losses from provision for cost reduction of fixed assets.
7.

Accounting method for retirement benefits

The method for accounting for an unrecognized actuarial gain or loss for retirement benefits differsfrom the method for doing so in consolidated financial statements.
8.

Adoption of the group tax sharing system

The Company is applying the group tax sharing system. The accounting processing and disclosures
for income taxes and local corporation tax, as well as the tax effect accounting of the Company is in28

accordance with the Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing
System (ASBJ PITF No. 42, August 12, 2021).
II

Notes on Changes in Presentation(Non-consolidated statements of income)(i)Gain on exchange of non-current assets“Gain on exchange of non-current assets” (¥91 million in the previous fiscal year), which
was previously included in “Other” under extraordinary gains, is listed separately from thefiscal year under review due to its increased monetary significance with respect toextraordinary gains.

(ii) Gains on sale of investment securities“Gains on sale of investment securities” (¥2,821 million in the previous fiscal year), which
was previously listed separately under extraordinary gains, is listed as “Other” from thefiscal year under review due to its diminished monetary significance with respect toextraordinary gains.
(iii) Loss on sale of non-current assets“Loss on sale of non-current assets” (¥1 million in the previous fiscal year), which waspreviously included in “Other” under extraordinary losses, is listed separately from the fiscal
year under review due to its increased monetary significance with respect to extraordinary
losses.
III Notes on Accounting Estimates
1. Recoverability of deferred tax assets(1) Amount of deferred tax assets stated in the non-consolidated financial statements for the fiscal
year under review:¥35,786 million(2) Information on the nature of significant accounting estimates related to the identified items
Calculation method for the amount stated in (1) above is as described in “1. Recoverability ofdeferred tax assets” under “III Notes on Accounting Estimates” of the notes to consolidated
financial statements.
2. Impairment loss on non-current assets(1) Amount of non-current assets recorded in the non-consolidated financial statements for the
fiscal year under review:
Fixed assets for railway business¥149,852 million

Fixed assets for other businesses¥394,200 million

Fixed assets relating to both businesses¥17,054 million

Construction in progress¥27,875 million29

(2) Information on the nature of significant accounting estimates related to the identified items
Calculation method for the amount stated in (1) above is as described in “2. Impairment loss on
non-current assets” under “III Notes on Accounting Estimates” of the notes to consolidated
financial statements.
3. Provision for loss on disaster(1) Amount of provision for loss on disaster recorded in the non-consolidated financial statements
for the fiscal year under review:¥3,302 million(2) Information on the nature of significant accounting estimates related to the identified items
Calculation method for the amount stated in (1) above is as described in “3. Provision for loss
on disaster” under “III Notes on Accounting Estimates” of the notes to consolidated financial
statements.
IV Additional Information
1. Board Benefit Trust (BBT)“Board Benefit Trust (BBT)” is as described in “1. Board Benefit Trust (BBT)” under “IV. Additional
Information” of the notes to consolidated financial statements.
2. Conclusion of basic agreement concerning restoration of Hisatsu Line“Conclusion of basic agreement concerning restoration of Hisatsu Line” is as described in “2.
Conclusion of basic agreement concerning restoration of Hisatsu Line” under “IV. Additional
Information” of the notes to consolidated financial statements.
3. Damage from the 2023 heavy rain in a seasonal rain front“Damage from the 2023 heavy rain in a seasonal rain front” is as described in “3. Damage from the2023 heavy rain in a seasonal rain front” under “IV. Additional Information” of the notes toconsolidated financial statements.
V

Notes to Non-Consolidated Balance Sheets

1. Pledged assets and secured liabilities
Pledged assets
Securities¥22 million

Investment securities¥56 million

Other investments¥252 million

Total:¥332 million

The above securities, investment securities and other investments are deposited to the Fukuoka
Legal Affairs Bureau as a warranty against defects on housing construction, etc. in accordancewith the Act for Secure Execution of Defect Housing Warranty Liability.

30

2. Accumulated depreciation of property, plant and equipment¥685,703 million

3. Cumulative value of construction grants subtracted directly from cost of acquisition of non-current
assetsFixed assets for railway business¥402,264 million

Fixed assets for other businesses¥17,145 million

Fixed assets relating to both businesses¥7,242 million

4. Total value of accounts under non-current assets
Property, plant and equipment
Land¥156,020 million

Buildings¥251,261 million

Fixtures¥77,564 million

Vehicles¥53,629 million

Machinery and rolling stock¥13,456 million

Tool and furniture¥3,955 million

Lease assets¥2,595 million

Intangible assets
Lease assets¥132 million

Other¥2,493 million

5. Contingent liabilities(1) Guarantee liabilities(Guarantee on financial institution loans to subsidiaries and affiliated companies)
JR Kyushu Business Development (Thailand) Co., Ltd.

¥20,496 million

JR Kyushu Senior Life Support Co., Ltd.

¥3,315 million

JR Kyusyu Food Service Inc.

¥225 million

JR Kyushu Capital Management (Thailand) Co., Ltd.

¥208 million

JR Kyushu Farm Co., Ltd.

¥50 million(2) Management guidance memorandums
JR Kyushu Farm Co., Ltd.

¥47 million

6. Monetary claims and liabilities to subsidiaries and affiliated companies
Short-term monetary claims¥22,771 million

Long-term monetary claims¥2,387 million

31

Short-term monetary liabilities¥39,452 million

Long-term monetary liabilities¥6,617 million

7. Balances of liability for retirement benefits
Liability for retirement benefits¥35,636 million

Balance of actuarial gain or loss not yet amortized
Balance of allowance for retirement benefits¥134 million¥35,770 million

VI Notes to Non-Consolidated Statements of Income
1. Operating revenue¥234,340 million

2. Operating expense
Transportation, other services and cost of sales¥156,990 million

Selling, general and administrative expense¥14,492 million

Taxes¥12,467 million

Depreciation and amortization¥20,493 million

3. Value of operating transactions with subsidiaries and affiliated companies
Operating revenue¥28,454 million

Operating expense¥71,424 million

Value of non-operating transactions¥21,893 million

4. Loss on disaster and provision for loss on disaster
The amount of recovery expenses associated with the heavy rain in July 2020 and the heavy
rain in a seasonal rain front in 2023 has been recorded as loss on disaster, and the estimatedamount of expenses has been recorded as provision for loss on disaster under extraordinary
losses.
VII Notes to Non-Consolidated Statement of Changes in Net Assets
Class and number of treasury stock as of the end of the fiscal year under review
Common stock

176,687 shares

Note: The above treasury stock includes the shares of the Company’s stock (176,600 shares)
held by the trust as trust assets of the Board Benefit Trust (BBT).
VIII Notes on Tax Effect Accounting
Deferred tax assets occurred mainly due to impairment losses, employees’ severance and retirement

32

benefits and tax loss carryforwards. An amount deducted from deferred tax assets (valuation
allowance) stood at ¥89,220 million.
IX Notes on Transactions with Related Parties
Subsidiaries and affiliated companies(Millions of yen)
Category

Company name

Ratio of voting
rightsownership

Relationshipwith therelated parties

Transaction Transaction
description
value

Account

Endingbalance

12,809Subsidiaries

Kyutetsu
Awarding ofConstructio
Direct ownership
Corporation Co.,
constructionn work fee
100.0%
Ltd.
work contracts (Note 1)

15,569 Payables

Subsidiaries

JR Kyushu
Business
Development(Thailand) Co.,Ltd.

Direct ownership
49.0%
Indirectownership
24.0%

20,496

Subsidiaries

JR Kyushu
Business
Partners
Company

Consignment
Direct ownership of finance100.0%
relatedservices, etc.

CapitalDebt
contribution
guarantee
for a project in(Note 2)ThailandLending offunds(Note 3)–Other
– current
assets–15,400Transaction terms and policy on determining them
(Note 1) Transaction terms are determined through price negotiations each term in consideration ofmarket prices and total costs.
(Note 2) Debt guarantee was provided on bank loans, and debt guarantee fees were determinedthrough consultations in consideration of ordinary guarantee fees.
(Note 3) Transaction terms are determined in consideration of short-term market interest rates.
Moreover, since these transactions are conducted as part of short-term and repetitivetransactions under the cash management service operated by the Company, the amount oftransaction is omitted.
X

Notes on Revenue Recognition

Information that serves as the basis for understanding revenue from contracts with customers
Information that serves as the basis for understanding the revenue is as stated in “5. Basis forrecognizing significant revenue and expenses” under “I Notes on Significant Accounting Policies.”
XI Notes on Per-share Information
1.

Net assets per share¥2,311.58

2.

Net income per share¥209.52

Note: When calculating net assets per share, the Company’s shares remaining in the Board Benefit

33

Trust (BBT) recognized as treasury stock under shareholders’ equity are included in the treasury stock
excluded from the number of shares issued and outstanding at end of period (176,600 shares at the endof the fiscal year under review).
In addition, when calculating net income per share, the shares are included in the treasury stock
excluded from the average number of shares during the period (178,525 shares for the fiscal year underreview).

34