Kyushu Railway : Consolidated Financial Results for the Three-Month Period Ended June 30, 2021

(Translation)

Consolidated Financial Results

for the Three-Month Period Ended June 30, 2021

(Japanese GAAP)

August 3, 2021

Company name:	Kyushu Railway Company
Stock exchange listings:	Tokyo and Fukuoka
Securities code:	9142
URL:	https://www.jrkyushu.co.jp/
Representative:	Toshihiko Aoyagi, President and CEO
Contact:	Keiichi Takano, General Manager, Public Relations Department
	Tel.: [phone]

Scheduled date for filing of quarterly report:	August 6, 2021
Scheduled date of dividend payment commencement:	－
Preparation of supplementary explanations for financial results:	Yes
Holding of a briefing on quarterly financial results:	None

(Amounts less than one million yen, except for per share amounts, are omitted.)

1. Consolidated Financial Results for the Three-Month Period Ended June 30, 2021 (From April 1, 2021 to June 30, 2021)

(1) Consolidated operating results				(Percentages show year-on-year changes.)
	Operating revenues	Operating income	Ordinary income	Net income attributable to
	owners of the parent
Three months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
June 30, 2021	72,097	16.6	(1,333)	－	385	－	927	－
June 30, 2020	61,848	(38.4)	(15,703)	－	(15,234)	－	(5,119)	－

(Note) Comprehensive income:	Three months ended June 30, 2021: ¥2,360 million (－%)
		Three months ended June 30, 2020: ¥(6,658) million [(－%)]
	Net income per share	Net income per share
		- basic	- diluted
Three months ended		Yen	Yen
June 30, 2021		5.90	－
June 30, 2020		(32.59)	－

(2) Consolidated financial position

	Total assets	Net assets		Equity ratio
	Millions of yen	Millions of yen		%
As of June 30, 2021		862,867	380,940		43.9
As of March 31, 2021		891,379	395,408		43.8
(Reference) Shareholders' equity:	As of June 30, 2021: ¥378,519 million
		As of March 31, 2021: ¥390,189 million

2. Dividends

				Annual dividends
	First		Second		Third		Fiscal	Total
	quarter-end		quarter-end		quarter-end		year-end
	Yen		Yen		Yen		Yen	Yen
Year ended March 31, 2021	－	0.00		－	93.00		93.00
Year ending March 31, 2022	－
Year ending March 31, 2022		0.00		－	93.00		93.00
(Forecast)
(Note) Revisions to the most recently disclosed dividend forecasts: No

3. Consolidated Forecasts for the Fiscal Year Ending March 31, 2022 (April 1, 2021 to March 31, 2022)

(Percentages for the full year show year-on-year changes.)

							Net income		Net income per
	Operating revenues	Operating income	Ordinary income	attributable to owners
							of the parent		share
	Millions of	%	Millions of	%	Millions of	%	Millions of		%	Yen
	yen	yen	yen	yen
Full year	344,200	17.1	10,600	－	10,600	－	12,900		－	82.10

(Note) Revisions to the most recently disclosed financial forecasts: No

Notes

1. Changes in significant subsidiaries during the three months ended June 30, 2021 (changes in specified subsidiaries affecting the scope of consolidation): No
2. Application of special accounting treatment in preparing the quarterly consolidated financial statements: No
3. Changes in accounting policies, changes in accounting estimates and restatement of revisions
4. 1. Changes in accounting policies with revision of accounting standards: Yes
   2. Changes in accounting policies other than the above: Yes
   3. Changes in accounting estimates: Yes
   4. Restatement of revisions: No
      (Notes)
      ii is subject to "Changes in Accounting Policies That Are Difficult to Distinguish from Changes in Accounting Estimates."

For details about i, please refer to "(3) Notes to Quarterly Consolidated Financial Statements, Changes in Accounting Policies" on page 12 of the accompanying materials.

For details about ii and iii, please refer to "(3) Notes to Quarterly Consolidated Financial Statements, Changes in Accounting Policies That Are Difficult to Distinguish from Changes in Accounting Estimates and Changes in Accounting Estimates" on page 13 of the accompanying materials.

(4) Number of shares outstanding (common stock)

1. Number of shares issued and outstanding at end of period (including treasury stock)
2. Number of shares of treasury stock at end of period
3. Average number of shares during the period

As of June 30,	157,301,600	As of March 31, 2021	157,301,600
2021	shares	shares
As of June 30,	184,600	As of March 31, 2021	184,600
2021	shares	shares
As of June 30,	157,117,000	As of June 30, 2020	157,115,500
2021	shares	shares

Note: The number of shares of treasury stock at the end of the period includes the number of shares of the Company's stock held by the Board Benefit Trust (BBT) (First quarter of FY2022/3, 184,600 shares; FY2021/3, 184,600 shares). In addition, the number of shares of the Company's stock held by the Board Benefit Trust (BBT) is included in the treasury stock that is subtracted in the calculation of the average number of shares during the period (First quarter of FY2022/3, 184,600 shares; First quarter of FY2021/3, 186,100 shares)

• This summary of consolidated financial results is not subject to quarterly reviews by certified public accountants or corporate auditors.

Explanation of Appropriate Uses of Performance Forecasts and Other Important Items

Performance forecasts and other forward-looking statements appearing in this document are based on currently available information and specific assumptions deemed rational, and are not assurances that the Company will achieve these forecasts. Actual performance can vary greatly depending on various factors such as fluctuations in interest rates, fluctuations in share prices, changes in exchange rates, fluctuations in the value of assets, changes in the economic and financial environment, changes in the conditions of competition, occurrences of large-scale and other disasters, and changes in regulations.

Supplementary quarterly materials are attached to this summary of consolidated financial results.

Contents of Accompanying Materials
1. Qualitative Information on Quarterly Consolidated Financial Performance.......................	2
(1)	Qualitative Information on Consolidated Operating Results .................................................	2
(2)	Qualitative Information on Consolidated Financial Position .................................................	6
(3)	Qualitative Information on Consolidated Performance Outlook............................................	7
2. Quarterly Consolidated Financial Statements and Major Notes ...........................................	8
(1)	Consolidated Balance Sheets..................................................................................................	8
(2)	Consolidated Statements of Income and Comprehensive Income .........................................	10
	Quarterly Consolidated Income Statements
	Consolidated Cumulative First Quarter............................................................................	10
	Quarterly Consolidated Comprehensive Income Statements
	Consolidated Cumulative First Quarter ...........................................................................	11
(3) Notes to Quarterly Consolidated Financial Statements............................................................	12
	(Notes on Going Concern Assumption) .................................................................................	12
	(Notes on Significant Changes in the Value of Shareholders' Equity)...................................	12
	(Changes in Accounting Policies) ..........................................................................................	12
	(Changes in Accounting Policies That Are Difficult to Distinguish from Changes in
	Accounting Estimates and Changes in Accounting Estimates) ............................................	13
	(Segment Information) ...........................................................................................................	14
	(Significant Subsequent Events) ............................................................................................	15

○ (Financial results presentation materials)

Financial Results for the First Quarter of FY2022/3 (Cumulative total for the three-month period from April to June)

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1. Qualitative Information on Quarterly Consolidated Financial Performance

Forward-looking statements in this document are based on assessments as of the end of the first quarter of FY2022/3.

From the first quarter of FY2022/3, the Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc.

Details are provided in "2. Quarterly Consolidated Financial Statements and Major Notes, (3) Notes to Quarterly Consolidated Financial Statements (Changes in Accounting Policies)" and "2. Quarterly Consolidated Financial Statements and Major Notes, (3) Notes to Quarterly Consolidated Financial Statements (Segment Information)."

(1) Qualitative Information on Consolidated Operating Results

In the three month period ended June 30, 2021, Japan's economy faced downward pressure on business conditions due to the influence of the COVID-19 infection in Japan and overseas. Due to the re-spread of the infection from April 2021, a state of emergency was declared for the third time in 10 prefectures, including Fukuoka Prefecture. The timing, extent, etc., of a recovery in economic activity remain highly uncertain, and challenging conditions are expected to continue for the time being.

Looking at the Group's results, due to spread of the COVID-19 infection, the railway and other businesses were affected by declining mobility demand, sluggish consumer spending. In these conditions, we worked in accordance with our recognition that our most important mission is safety in the railway business, which is our mainstay business. We steadily invested in railway safety, and in April 2021 we opened the Kumamoto Station Building, which is part of our implementation of strategic city-building initiatives in the regions around our bases. Furthermore, we rolled out a project under the title "Until the day the state of emergency is lifted, let's stay strong together," which expresses our wishes for the resolution of COVID-19 and the invigoration of Kyushu. We also implemented initiatives to promote "Local Community Invigoration," such as establishing a specialized regional fund. In addition, the future course of trends in the management environment is unclear. In preparation for changes in the management environment, we took steps to reduce costs, centered on the railway business. These steps included temporary leave for employees.

As a result, operating revenues were up 16.6% year on year, to ¥72,097 million; operating loss was ¥1,333 million (compared with operating loss of ¥15,703 million in the same period of the previous fiscal year); EBITDA was ¥5,041 million (compared with negative EBITDA of ¥9,144 million in the same period of the previous fiscal year); ordinary income was ¥385 million (compared with ordinary loss of ¥15,234 million in the same period of the previous fiscal year); and net income attributable to owners of the parent was ¥927 million (compared with net loss attributable to owners of the parent of ¥5,119 million in the same period of the previous fiscal year).

(Note) EBITDA for the consolidated period under review is the numerical value of operating income plus the cost of depreciation (excluding the cost of depreciation related to lease assets held for the purpose of subleasing).

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