Hankyu Hanshin Holdings
Securities code: 9042

ANNUAL REPORT

2016

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ANNUAL REPORT 2016

Contents

Key Facts

Financial Section and Corporate Data	   1Group Management Philosophy

	  73

Consolidated Six-Year Summary	   3Corporate Social Responsibility (CSR)	  74

Consolidated Financial Review	   4

At a Glance	  77

Business Risks	   6

Location of Our Business Base

	  78

Consolidated Balance Sheets	  8Business Environment

	  80	Consolidated Statements of Income /	  10

Performance Highlights (Consolidated)	  14

ESG Highlights

Consolidated Statements of Comprehensive Income

Business Policies and Strategies
	  16
	  24

To Our Stakeholders
Special Feature: Anticipating Change,
Pursuing Growth Opportunities

		

29

Providing Services that Add Value to Areas		

32

Capitalising on Opportunities through Overseas Businesses	  36

CSR and Value Enhancement in Line-Side Areas

Core Businesses: Overview and Outlook	  38

Core Business Highlights

	  40

Urban Transportation

	  44

Real Estate	  48

Entertainment and Communications

	  50

Travel	  52

International Transportation

	  54

HotelsManagement Organisation
	  56

Directors and Audit & Supervisory Board Members

	  58

Management Organisation	  66

Principal Risks and Countermeasures	  68

Safety Initiatives in the Railway Business

Definition of the areas served by the Hankyu and Hanshin lines:
Below are lists of areas with Hankyu Corporation andHanshin Electric Railway stations (including tier 2 railway operators).
Osaka Prefecture: Osaka City (Fukushima, Konohana, Nishi, Naniwa,
Nishi-Yodogawa, Higashi-Yodogawa, Yodogawa, Kita and Chuo, out ofa total of 24 wards); and Toyonaka, Ikeda, Suita, Takatsuki, Ibaraki,
Minoh, Settsu cities and Shimamoto town
Hyogo Prefecture: Kobe City (Higashi-Nada, Nada, Hyogo, Nagata andChuo, out of a total of 9 wards); and Amagasaki, Nishinomiya, Ashiya,
Itami, Takarazuka and Kawanishi cities
Kyoto Prefecture: Kyoto City (Nakagyo, Shimogyo, Ukyo, Nishikyo, outof a total of 11 wards); and Muko and Nagaokakyo cities andOyamazaki town

	  81

Consolidated Statements of Changes in Net Assets

	  83

Consolidated Statements of Cash Flows	  84

Notes to the Consolidated Financial Statements

108

Major Rental Properties / Major Sales Properties

109

Major Group Companies

110Group History

111

Investor Information

Search Index
Group Overview
1–15, 38–39, 108–111
2016 Financial and Business Performances
10–13, 17–19, 73–76
Forecasts for Fiscal 2017 Onward
Group: 22
Urban Transportation: 41
Real Estate: 45
Entertainment and Communications: 49
Travel: 51
International Transportation: 53
Hotels: 55
Medium-Term Management Plan and Growth Strategies
20–22
Risks and Opportunities
26–27
Safety Initiatives in the Railway Business
66–67, 68–72
Financial Policy and Shareholder Returns
13, 17

Forward-Looking Statements
The reader is advised that this annual report contains forward-looking statements regarding
the future plans, strategies, and earnings performance of Hankyu Hanshin Holdings, Inc.,
which are not statements of historical fact but constitute estimates or projections based on
facts known to the Company’s management as of the time of writing. Actual results may
therefore differ substantially from such statements.
About the Compilation of this Annual Report and the Auditing Company Used
The financial section of this annual report includes a digest of information including consolidated financial statements in the Company’s Securities Report for the 178th period,
audited by KPMG AZSA LLC presented in a somewhat changed format. We have presented
this information in such a way as to ensure that there is no discrepancy with the data presented in the annual securities report. However, the annual report itself has not been
audited by KPMG AZSA LLC.
Definition“Fiscal 2016” refers to the fiscal year ended 31st March 2016. Other fiscal years are referred toin a corresponding manner in this annual report. Figures are basically rounded off. Sums
expressed in units of ¥100 million are rounded to the nearest ¥100 million.

Group Management Philosophy

MissionWhat we try to achieve
By delivering “Safety and Comfort” and “Dreams and Excitement,”
we create satisfaction among our customers and contribute to society.

Hankyu Hanshin Holdings • Annual Report 20161

Group Management Philosophy

ValuesWhat is important to us

Customers First
Everything we do
is for the customer.
That’s where it all starts.

Sincerity
Gain customers’ confidenceby always being sincere.

Foresight & Creativity
With our pioneer spirit
and flexible thinking,we create a new value.

Respect for People
Everyone is absolutely invaluable
to the Group.

2

Hankyu Hanshin Holdings • Annual Report 2016

Corporate Social Responsibility (CSR)

We believe contributing to local communities and preserving the environment are social responsibilities that it is incumbent
upon us to fulfil and which are essential for our medium-to-long-term development. Therefore, the two pillars of our CSR
activities are social contribution activities, which develop towns and cities in partnership with local ­communities, and­environmental preservation activities promoting environment-friendly business activities.

Social Contribution
Activities

Basic Policy
We intend to promote the creation of towns
and cities along our railway lines that people
will truly want to live in.

Environmental
Preservation
Activities

Basic Concept
Mindful that global environmental preservation is a task facing all mankind, the Hankyu
Hanshin Holdings Group works for a sustainable society through environmental activities
aimed at handing down a sounder global andhuman environment to the next generation.

Hankyu Hanshin Holdings • Annual Report 20163

At a Glance

Major Operating Companies

Urban Transportation

Fiscal 2016 Results¥

Operating Income¥

Segment Assets

¥

794.3

billion (YoY +2.0 %)Revenues fromOperations

¥

220.9

billion (YoY +7.0 %)Operating Income¥

Segment Assets¥

Revenues fromOperations¥

Operating Income¥

Segment Assets¥

Revenues fromOperations¥

Operating Income¥

Segment Assets

¥

65.2

billion (YoY – 4.1%)

Revenues fromOperations

¥

36.7

billion (YoY –7.0 %)Operating Income¥

Segment Assets

¥

39.9

billion (YoY –12.9 %)Revenues fromOperations

¥

68.0

billion (YoY +7.9 %)Operating Income¥

Segment Assets¥

Hankyu Corporation

阪神電気鉄道Hanshin Electric Railway

Real EstateEntertainment andCommunications

TravelHankyu Travel International

International Transportation
Hankyu Hanshin Express

HotelsHankyu Hanshin Hotels

4Hankyu Hanshin Holdings • Annual Report 2016

239.5

Revenues fromOperations

41.3

49.9

billion (YoY +2.6 %)billion (YoY +7.0 %)billion (YoY +34.1%)

1,022.6
112.5
15.3

0.7

1.8

3.3

billion (YoY – 0.1%)

billion (YoY +2.1%)

142.7
30.5

billion (YoY +2.9 %)billion (YoY – 0.4 %)billion (YoY – 4.6 %)billion (YoY – 44.5%)

billion (YoY – 41.4 %)billion (YoY +171.2%)

82.8

billion (YoY +0.7%)

At a Glance% of Revenues from Operations,Operating Income, and Segment Assets

32.1

36.5

36.4

Nature of BusinessThis segment comprises railway operations (with Hankyu Corporation operating the Kobe,
Takarazuka, and Kyoto lines out of Osaka-Umeda and Hanshin Electric Railway lines directly
linking Kobe with Osaka’s major northern and southern terminals, Osaka-Umeda, and Namba).
Together, the Hankyu and Hanshin network, combined with other lines, and bus, taxi, andother urban transportation services form a single large-scale network in the Kansai area, centred on the cities of Kyoto, Osaka, and Kobe.
Total length of lines operated:
Hankyu Corporation: 143.6 km

Hanshin Electric Railway: 48.9 km(Including tier 2 railway operators)

The Real Estate segment derives its core revenue from leasing and management of c­ ommercial
facilities and office buildings and its condominium business. Its attractive business portfolio
includes rental properties located mainly in the Umeda area and along the Group’s rail lines,
such as Umeda Hankyu Building, Hankyu Sanban Gai Shopping Centre, HERBIS OSAKA, HERBIS
ENT, GRAND FRONT OSAKA, Hankyu Nishinomiya Gardens, and the highly regarded Geo­condominium brand in the Kansai and Tokyo metropolitan areas. This segment is also ­exploringoverseas markets, specifically building and owning logistics centres and developing condominiums in Southeast Asia.

29.6
44.1

46.8

Since its establishment in 1948, while meeting the diversified needs of customers throughalways taking their perspective, Hankyu Travel International has sold its products via various
media through its five brands. They are the Trapics brand that provides enhanced content at areasonable price, the Crystal Heart brand, the Hanshin Aviation Friends’ Tour brand for relaxed
travel, the e-very brand for self-planning travel, and the Royal Collection brand for luxurious
travel. This company provides safe, comfortable travel that offer customers inspiration anddreams, ranging from package tours through to original plans for individual customers, travel
to Japan, and business travel services.

15.1

In 1948, as Japan’s first International Air Transport Association (IATA) certified freight agency,
Hankyu Hanshin Express (Hankyu Corporation at that time) began international airline freighttransportation operations. Since then, regardless of whether for imports or exports, it has been
providing fast and safe door-to-door international transportation services. As a pioneer in international logistics, it utilises the track record and experience it has cultivated in developing its
overseas business over many years and provides high-quality customised logistics services on a
one-stop basis and offers support for its customers with optimised supply chain management.

4.1
4.9

13.5
6.5

9.1
3.0

5.2

This segment offers a wide variety of live entertainment, centred on the sports business—thenationally popular and famous Hanshin Tigers professional baseball team and their homeground and high-school baseball mecca, Hanshin Koshien Stadium—and the stage revue
business, based on the hugely popular Takarazuka Revue, which delivers performances thatmove and inspire customers. In addition, this segment runs a wide range of businesses, suchas the broadcast and communications business and the information services business.

0.6
1.6
2.9

1.8
3.8

0.9

1.6

The Hankyu-Hanshin-Daiichi Hotel Group operates 45 hotels, consisting of 18 that are directly
managed and 27 belonging to chains operated by franchises. The group is one of Japan’s leading hotel chains with 9,948 guest rooms (as of 1st April 2016). As a hotel operator with many
directly managed hotels in the Tokyo metropolitan and Kansai areas—Japan’s two largest
markets—the group offers a wide range of hotel formats, from general-purpose “city hotels” to
new style hotels (with very limited function facilities). In addition to chain operations, it also
manages The Ritz-Carlton, Osaka, a venerable international luxury brand with which it hasformed an alliance.

Note: Figures for percentage of revenues from operations and operating income are calculated based on the simple aggregate amount (including intersegment transactions) of each segment.

Hankyu Hanshin Holdings • Annual Report 20165

Location of Our Business BaseThe Hankyu Hanshin Holdings Group’s business base is theKansai area, which has a population of approximately 20 million. This is second only to the Kanto area, centred on Tokyo.
Further, the Kansai area is one of Asia’s economic powerhouses. According to a Cabinet Office survey,* in the fiscal
year ended 31st March 2014 the Kansai area’s gross production reached US$792.6 billion, surpassing the combined grossdomestic product of Thailand and Malaysia.
* Cabinet Office, Report on Prefectural Accounts for the Fiscal Year Ended
31st March 2014

Hanshin area
Questionnaires about where local
people would prefer to live rank
the area as one of the most p­ opularresidential areas.

Tokyo

Tanigami

Kyoto
Kyoto
City

Hyogo

Shiga

Kobe City
Osaka City
Osaka

Nara

 reas of highA
population densities

Kobe Rapid Transit
Railway Line

o

k
yu
nK
shi Lineku
Ho ilwayRa

Hankyu Kobe Line

Shin-Kobe

Kobe
Sannomiya
Minatogawa
Shinkaichi

Motomachi

NishidaiWakayama

Osaka BayThe Group’s railway network links the Kansai area’s major cities:
Osaka-Umeda, Kobe, and Kyoto. By heightening customer satisfaction and transportation efficiency simultaneously, we haveestablished an unshakable presence in the Kansai area. Since
the earliest days of its railway operations, the Group has developed housing, entertainment facilities, and commercial facilities in the areas served by its lines. Further, thanks to efforts to
attract universities, almost 50 universities and colleges arelocated in the areas served by our lines. Easy access to the
Kansai area’s major cities and plentiful infrastructure for everyday life make our line-side areas* some of the most popularKansai International
AirportThe largest airport in westernJapan, this is the Kansai area’s
gateway to the world.

places to live in the region. Consequently, in the Kansai area,
high population densities differentiate these areas.
* Line-side areas refer to areas served by the Hankyu and Hanshin lines.

Kansai International
Airport6

Hankyu Hanshin Holdings • Annual Report 2016

N

Arashiyama

Kyoto
Prefecture

Kawaramachi
KatsuraHankyuArashiyama Line

Kyoto

Kyoto
Japan’s iconic tourism destination,
Kyoto welcomes 50 million visitorsfrom other parts of Japan andfrom overseas every year.

Nissei-chuo
Myokenguchi

Hyogo
Prefecture

Hankyu Kyoto Line
Nosé Electric
Railway Line

Osaka Prefecture
Hankyu Mino-o Line
Mino-oKawanishi-noseguchi
Kita-senri
Osaka Ishibashi
International
AirportHankyuTakarazuka
Line

KoyoenansenHankyu
Senri
Line

ink

Hankyu Itami
Itami Line

HankyuKoyo Line

Senri-chuo

Kita-Osaka Kyuko

HankyuImazu LineSh

Takarazuka

Esaka
ShukugawaNishinomiyakitaguchi

Tsukaguchi
ShinOsaka

Imazu
Imazu

Mukogawa

Daimotsu

Awaji

Juso

Tenjimbashisuji
6-chomeAmagasaki

Umeda

Kintetsu-Nara

Mukogawadanchimae

SubwaySakaisuji Line

Hanshin Main Line
Hanshin Mukogawa Line
Hanshin Namba Line

Osaka-Namba

Nara Prefecture

Kintetsu Nara LineUmeda
The Group’s most important base,the Umeda area, is the Kansai economic bloc’s hub and one of Japan’s
world-famous shopping and entertainment districts.

Hankyu Railway Network

Average number of passengers per day using stations ofprivate railway operators (non-JR) in fiscal 2016
1,134

Keio Shinjuku Station

758

Hankyu Umeda Station

545

Odakyu Shinjuku Station

492

Seibu Ikebukuro Station

483

Hanshin Umeda Station

165

Takarazuka Line
(Takarazuka Line, Mino-o Line)

28.5 km

Kyoto Line

65.4 km

(Kyoto Line, Senri Line, Arashiyama Line)(Thousands of people)

Tokyu Shibuya Station

143.6 km

Kobe Line
46.9 km(Kobe Line, Imazu Line, Itami Line, Koyo Line)

Kobe Rapid Transit Railway LineHanshin Electric Railway Network

2.8 km

48.9 km

Hanshin Line
43.9 km	
(Hanshin Main Line, Hanshin Namba Line,
Mukogawa Line)
Kobe Rapid Transit Railway Line

5.0 km

5 km

Source: Prepared by the Group based on documents
released by respective companies
Hankyu Hanshin Holdings • Annual Report 20167

Business Environment

Population of areas served by the Hankyu and Hanshin lines (1991 = 100)
106

103

100

97

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
(CY)

Due to the aging of society and a declining
birth rate, the Kansai area’s overall popu­
lation is decreasing gradually. Meanwhile, thepopulation is comparatively large in areas
served by the Hankyu and Hanshin lines, atestament to the image branding these areas
as popular places to live. In these areas, thepopulation has been trending upward sincebottoming in 1996, the year after the Great
Hanshin Earthquake.

Areas served by the Hankyu and Hanshin lines
Kansai area
Sources: Prepared by the Company based on data from “Local Economy Directory,” published by Toyo Keizai, Inc.,and “Basic Resident Register,” published by the Ministry of Internal Affairs and Communications.
Note: Definition of the areas served by the Hankyu and Hanshin lines is presented on the Contents page.

Population by age group along the Hankyu and Hanshin lines (Population Census of Japan)(Millions of people)
6

5.41

5.32

5.43
0.49

0.42

0.57

5.50

5.37

5.23

0.83

0.65

5.56
1.01

1.20

4

3.65

3.80

3.92

3.81

3.81

3.72

3.64

2

1.23

1.11

0.91

0.76

0.72

0.72

0.72

80

85

90

95

00

05

10

0

(CY)

According to the official Population Census ofJapan, although the population aged below
15 remains stable, the population aged between 15 and 64 is declining. The latter groupis the working-age population—the mainpurchasers of commuter passes.
Notes: Tallies do not add up to the total at the top foreach year as the age group is not known in manycases. Unknowns account for the difference.
Definition of the areas served by the Hankyu andHanshin lines is presented on the Contents page.

Young
Working age
Elderly
Source: Prepared by the Company based on data from “2010 Population Census of Japan,” published by the Ministry ofInternal Affairs and Communications.

Average vacancy rates at office buildings

The rapid appreciation of the yen has caused
increased uncertainty with regard to the outlook for corporate performance. Nevertheless,demand for office expansion and the integration of previously discrete offices remains
strong. In the Umeda area, the vacancy rateon 30th April 2016 was down more than 3
percentage points from a year earlier.

(%)
15

10

5

0

07

08

09

10

Osaka business areas (all)Umeda area
Source: Miki Shoji, “Office Data.”

11

12

13

14

15

16

Tokyo business areas (all)
(Comparison of average rents in April of respective years)

Average rents at office buildings

Solid demand for offices is driving an increase
in office rents in Tokyo. In Osaka businessareas and the Umeda area, however, rents
were relatively unchanged year on year. The
number of new large-scale buildings completed in Osaka City is expected to be limited
up until 2018, and rents are anticipated togradually increase going forward as a result.

(¥/3.3 m2)
25,00020,00015,00010,000
5,000
0

07

08

09

10

Osaka business areas (all)Umeda area
Source: Miki Shoji, “Office Data.”

8Hankyu Hanshin Holdings • Annual Report 2016

11

12

13

14

15

16

Tokyo business areas (all)
(Comparison of average rents in April of respective years)

Business Environment

New supply of condominiums

The number of new condominiums suppliedin 2015 was down by roughly 10% year on
year in the Tokyo metropolitan area, although
there was a slight rise in the Kansai area. In theTokyo metropolitan area, supply was relatively
unchanged year on year within Tokyo itself,while supply decreased in the surrounding
areas. In the Kansai area, supply of large-scalecondominiums was brisk in central Osaka.

(Units)100,000
80,00074,46361,02160,00056,47843,73340,00030,14630,21920,00036,37644,53544,49945,602
24,691

13

22,744

19,784

21,716

20,21923,266

08

09

10

11

12

44,913

18,81440,44918,930

0

06

07

14

15 (CY)Tokyo metropolitan area
Kansai area
Source: Real Estate Economic Institute Co., Ltd., “National Condominium Market Trends.”

Condominium prices (Tokyo metropolitan and Kansai areas)(¥ million)

(¥ thousand/m2)

80

800

60

600

40

400

20

200

In 2015, average condominium prices reachedthe highest level seen in the past decade inboth the Tokyo metropolitan area and theKansai area. This rise was fuelled by higher
land prices as well as a spike in the costof building materials and labour and otherconstruction costs.

0

0

06

07

08

09

10

11

12

13

14

15 (CY)Tokyo metropolitan area (average)
Kansai area (average)
Tokyo metropolitan area (right axis)
Kansai area (right axis)
Source: Real Estate Economic Institute Co., Ltd., “National Condominium Market Trends.”

Consolidated air cargo originating in Japan(Thousand ton)
2,000

1,500

1,308

1,323

1,000

983

934

09

10

1,076

996

856

862

13

14

996

902

15

16 (FY)500

The deceleration of the yen depreciation
trend seen in the latter half of fiscal 2015 andthe sluggish growth of the Chinese economy
resulted in a year-on-year decrease of approximately 10% in international air cargo originating in Japan. Nevertheless, transportation
demand is expected to increase centred on
Asian markets over the medium term amidst
ongoing economic growth in these markets.

0

07

08

11

12

Source: Japan Aircargo Forwarders Association, “Airfreight Forwarding Results.”

Overseas visitors to Japan and Japanese travellers going overseas(Millions of people)
25
20

17.5

17.3

16.0

15

15.4

16.6

17.0

18.5

19.7
17.5

16.2
13.4

10
5

16.9

7.3

8.3

8.4

06

07

08

6.8

8.6
6.2

8.4

10.4

0

09

10

11

12

13

14

Overseas visitors to Japan
Japanese travellers going overseas
Source: Japan National Tourism Organization (JNTO), “Visitors Arrivals, Japanese Overseas Travellers.”

15 (CY)

In 2015, the number of overseas visitors toJapan exceeded 19.7 million, surpassing thenumber of outbound travellers from Japan for
the first time since 1970, more than 45 years
ago. In the midst of this increase, in March
2016 the Japanese government announced
its goal of increasing the annual number ofoverseas visitors to Japan to 40.0 million by
2020, which means effectively doubling thecurrent target. In this manner, the tourism
industry is becoming ever more important toeconomic policy.

Hankyu Hanshin Holdings • Annual Report 20169

Performance Highlights (Consolidated)

Key Financial Indicators(¥ million)
20071

FY

2008

2009

2010

2011

2012

2013

¥ 682,439

Result of Operations:¥ [813,613]¥ 752,300¥ 683,715¥ 653,287¥ 638,770¥ 649,703

Operating income[94,800]

90,724

77,82370,12664,74373,80987,921

2

EBITDA[146,500]

145,200

135,300

133,200

127,100

133,500

145,100

Ordinary income

74,86974,88257,44550,40946,49465,39374,914

Income before income taxes

65,30526,09834,06433,89932,76043,41962,192

Net income attributable toowners of the parent[40,507]627

20,55010,79318,06839,25239,702———

12,541

14,72844,99254,081

Capital expenditure

53,795

134,307

109,688

132,386

68,431

55,26759,512

Depreciation and amortisation

43,88851,57754,79860,41859,66956,96854,540

Revenues from operations

Comprehensive income

Cash Flows:
74,902¥ 108,597¥ 146,955¥ 103,252¥ 124,525¥ 127,655

Cash flows from investing activities¥(199,578)(100,058)(115,047)(132,737)(62,516)(44,295)(58,923)

Free cash flow

(120,596)(25,155)(6,449)14,21740,73580,23068,732

Cash flows from financing activities

132,289

36,718

7,014(24,200)(39,544)(78,978)(69,195)¥2,366,694¥2,348,476¥2,307,332¥2,337,331¥2,314,669¥2,274,380¥2,281,007

Total net assets

522,286

476,639

473,878

480,633

486,947

524,801

573,154

Interest-bearing debt

1,209,382

1,271,100

1,275,620

1,282,583

1,251,665

1,183,647

1,126,633

¥

¥

¥

¥

¥

¥

¥

Cash flows from operating activities
3

78,981¥

Financial Position:
Total assets

Per Share Data (Yen):
Net income attributable to ownersof the parent

Basic

31.84

0.50

16.28

8.55

14.32

31.13

31.48

—

0.41

16.18

8.51

14.27

31.13

31.47

Net assets

405.35369.25366.96371.70377.17407.01443.63

Dividend

5.00

5.00

5.00

5.00

5.00

5.00

5.00

DilutedRatios:[11.7]

12.1

11.4

10.7

10.1

11.4

12.9

4

ROA (%)

3.8

3.2

2.5

2.2

2.0

2.8

3.3

5

ROE (%)

[8.4]

0.1

4.4

2.3

3.8

7.9

7.4

Interest-bearing debt/EBITDA (Times)

8.39

8.8

9.4

9.6

9.8

8.9

7.8

Equity ratio (%)

21.7

19.9

20.1

20.1

20.6

22.6

24.5

Debt/equity (D/E) ratio (Times)6

2.4

2.7

2.8

2.7

2.6

2.3

2.0

Operating income margin (%)

Stock Price Index:
Stock price at the end of fiscal year (Yen)

¥

713

¥

431

¥

447

¥

433

¥

384

¥

361

¥

569

Market capitalisation (¥ billion)

906.5

548.0

568.3

550.5

488.2

459.0

723.4

PER (Times)

22.4

862.0

27.5

50.6

26.8

11.6

18.1

PBR (Times)

1.8

1.2

1.2

1.2

1.0

0.9

1.3

Hankyu Railway (Thousand)7

618,877

618,373618,585

605,963

603,233

608,632

615,324

Hanshin Electric Railway (Thousand)7

179,871

180,906

182,997

193,620

205,202

218,560

221,133

2.95

3.08

5.88

8.90

11.22

7.29

11.50

Business Data:

Average vacancy rates of rental office buildings(Umeda area, Osaka; %)8

1.	From the second quarter of fiscal 2007, consolidated results of Hanshin Electric Railway Co., Ltd., are included as a result of management integration in the scope of consolidationof the Group. Figures in [ ] are calculated assuming the management integration was executed at the beginning of the fiscal year.
2.	EBITDA = operating income + depreciation expenses + amortisation of goodwill. EBITDA figures are rounded to the nearest ¥100 million.
3.	Free cash flow = cash flows from operating activities + cash flows from investing activities
4.	ROA = ordinary income/total assets (average of period-start and period-end totals)
5.	ROE = net income attributable to owners of the parent/equity (average of period-start and period-end totals)
6.	D/E ratio = interest-bearing debt/equity
7.	Annual number of passengers carried
8.	Average vacancy rate figures are overall rates for the Umeda city centre area at the end of March for major rental office buildings (including properties not owned by the Group)with a total floor area of at least 3,300 m2 and are based on “Latest Trends in the Office-Building Market in Osaka,” Miki Shoji, “Office Data.”
9. The figure has been calculated using EBITDA, which has been calculated based on the assumption that management integration was executed at the beginning of the fiscal year.

10

Hankyu Hanshin Holdings • Annual Report 2016

Performance Highlights (Consolidated)

Revenues from operations: ¥707.4 billion(up 3.1%, or ¥21.5 billion, from the previous fiscal year)
Operating income: ¥110.3 billion(up 17.3%, or ¥16.3 billion, from the previous fiscal year)

2016

2014

2015

¥ 679,157¥   685,906¥  707,359
110,293

91,82894,026

149,200

150,100

166,500

81,191

85,590104,479

83,542

77,62096,08746,352

54,201

69,971

55,941

71,034

63,84280,722

68,11566,63954,474

53,14353,701

Performance in the Urban Transportation Business and the Hotels Business benefited fromthe increase in the number of overseas visitors to Japan, outweighing the decrease inrevenues in the International Transportation Business stemming from the sluggish
Chinese economy. In addition, sales of land for facilities were recorded in the Real EstateBusiness. As a result, revenues from operations increased 3.1%, or ¥21.5 billion, year on
year, to ¥707.4 billion, and operating income rose 17.3%, or ¥16.3 billion, to ¥110.3 billion.

Operating income: Factor analysis (YoY change)(¥ million)

94,026FY2015

Real Estate¥ 146,991¥  131,881+12,678
Urban Transportation¥  124,838(45,517)(52,529)(78,843)

101,474

79,35245,995(105,079)(81,746)(47,278)+2,717
Hotels+2,082+308

Entertainment and Communications–546

TravelInternational Transportation–1,265

Other – 64
Adjustments+356¥2,286,928¥2,279,638¥2,282,180

617,598

679,482

724,237

1,032,307

955,828

916,57036.76¥    42.98¥    55.58

36.75

42.95

55.53

477.69525.56

Net income attributable to owners of the parent: ¥70.0 billion(up 29.1%, or ¥15.8 billion, from the previous fiscal year)

563.196.00

6.00

Net non-operating loss (total non-operating expenses net of total non-operating income)7.00

declined ¥2.6 billion, year on year, to ¥5.8 billion, due to an increase in equity in income

13.5

13.7

15.6

total extraordinary loss was a loss of ¥8.4 billion, up ¥0.4 billion because losses on revalu-

3.6

3.7

4.6

ation of investment securities was recorded, counteracting lower impairment loss.

8.0

8.6

10.3

6.9

6.4

5.5

26.3

29.1

31.0

1.7

1.4

1.3

562

¥      743¥        718

714.5

944.7

912.9

15.3

17.3

12.9

1.2

1.4

1.3

629,125

627,536

644,563

226,004

227,203234,226

9.22

7.84

5.54

¥

FY2016110,293of affiliates and a decrease in interest expense. Further, total extraordinary income net of¥

Due to the above, net income attributable to owners of the parent increased 29.1%,
or ¥15.8 billion, year on year, to ¥70.0 billion.

Net income attributable to owners of the parent: Factor analysis (YoY change)
Increase in revenues from operations+¥21.5 billion

Decrease in total non-operating expenses+¥1.9 billion

Increase in total non-operating income+¥0.7 billion

Increase in selling, general and administrative expenses–¥1.9 billion

Increase in total income taxes–¥2.7 billion

Increase in operating expenses and costs of sales of transportation–¥3.3 billion

Interest-bearing debt: ¥916.6 billion(down 4.1%, or ¥39.3 billion, from the previous fiscal year-end)
The outstanding balance of interest-bearing debt at the end of the fiscal year underreview amounted to ¥916.6 billion, a decrease of 4.1%, or ¥39.3 billion, from the previous
fiscal year-end. This was because net cash provided by operating activities was used to
repay interest-bearing debt.

Note: Figures expressed in units of ¥1 billion are rounded to the nearest one tenth of a billion.

Hankyu Hanshin Holdings • Annual Report 201611

Performance Highlights (Consolidated)

Key Financial Indicators (Graphs)
Revenues from operations(¥ billion)
900[813.6]

752.3

683.7

600

653.3

638.8

649.7

10

11

12

682.4

679.2

685.9

707.4

13

14

15

16(FY)

300

0

07

08

09

Operating income and operating income margin(¥ billion)

(%)

120

21

110.3
[94.8]

80

90.7[11.7]

12.1

77.8
11.4

87.9
70.1

15.6

14

13.7

13.5

12.9

11.4

10.1

10.7

40

73.8

64.7

94.0

91.8

7

0

0

07

08

Operating income

09

10

11

12

13

14

16(FY)

15

Operating income margin (right axis)

EBITDA
166.5[146.5]

145.2

135.3

133.2

09

10

120

127.1

133.5

145.1

149.2

150.1

13

14

15

Operating income was up 17.3%, or ¥16.3 billion, year on year, to ¥110.3 billion, setting a
new record for the third consecutive year
­primarily as a result of the aforementioned
increase in revenues from operations. This
increase offset decreases in income in theInternational Transportation Business, due
to the deceleration of the Chinese economy
and sluggish domestic logistics demand, as
well as in the Travel Business, due to difficulty
attracting customers as a result of international security concerns.

Operating income rose 17.3%, or ¥16.3 billion,
year on year, to ¥110.3 billion; depreciation
and amortisation increased 1.0%, or ¥0.6 billion, to ¥53.7 billion; and amortisation of
goodwill declined 13.7%, to ¥2.5 billion. As aresult, EBITDA reached a new record high of¥166.5 billion.

(¥ billion)
180

In fiscal 2016, revenues from operations increased 3.1%, or ¥21.5 billion, year on year, to¥707.4 billion. This increase was due in part tostrong performance in the Urban Transportation Business, particularly with regard to the
Hankyu and Hanshin lines in railway oper­
ations, driven by a rise in the number of­overseas visitors to Japan. This rise in overseas
visitors also contributed to higher hotel occupancy rates and daily rates in the Hotels­Business. In addition, one-time revenue fromsales of land for facilities in the Real EstateBusiness was recorded.

60

0

07

08

11

12

(FY)

16

Net income attributable to owners of the parent and ROE(¥ billion)

(%)

80

16

70.0
60

12

54.2
[40.5]

40

39.3

[8.4]
20.6

20

0.6
07

08

8

8.6

8.0

7.4

18.1
3.8

4.4
10.8

0

39.7

7.9

10.3

46.4

4

2.3

0.1
09

10

Net income attributable to owners of the parent

0

11

12

13

14

15

16

(FY)

ROE (right axis)

Note: From the second quarter of fiscal 2007, consolidated results of Hanshin Electric Railway Co., Ltd., are included as aresult of management integration in the scope of consolidation of the Group. Figures in [ ] are calculated assuming the management integration was executed at the beginning of the fiscal year.

12

Hankyu Hanshin Holdings • Annual Report 2016

Total income taxes were up from fiscal 2015,
but higher income before income taxes
caused net income attributable to owners of
the parent to increase 29.1%, or ¥15.8 billion,
year on year, breaking the previous record
for the fifth consecutive year. As a result, ROE
increased 1.7 percentage points, to 10.3%,
exceeding 10% for the first time since theCompany’s founding.

Performance Highlights (Consolidated)

Total assets and ROA(¥ trillion)

(%)
6

3

2.37
2

2.35

2.34

2.31

2.31

3.8
3.2

2.28
3.6

3.3

2.8
2.5

2.28
4.6

3.7

4

2.0

2.2

1

2.29

2.28

2.27

2

0

0

07

08

Total assets

09

10

11

12

13

14

16(FY)

15

ROA (right axis)

Interest-bearing debt, D/E ratio, and interest-bearing debt/EBITDA(¥ trillion)

(Times)
15

1.5

1.0

1.25
9.6

9.4

8.8

8.3*

1.28

1.28

1.27

1.21

1.18
9.8

1.13
8.9

1.03
7.8

0.96
6.9

10

0.92
6.4

5

5.5

0.5

2.8

2.7

2.4

2.7

2.6

2.3

2.0

1.7

1.4

1.3

0

07

08

09

10

11

12

13

14

0

16(FY)

15

Interest-bearing debt
D/E ratio (right axis)
Interest-bearing debt/EBITDA (right axis)
* The figure has been calculated using EBITDA, which has been calculated based on the assumption that management
integration was executed at the beginning of the fiscal year.

Cash flows
147.0

150

108.6
79.0

103.3

74.9
14.2

0
–50

–25.2

–150
–200

68.7

40.7

131.9

124.8

79.4
46.0

–6.4
–115.0–120.6

127.7

101.5

80.2

50

–100

124.5

147.0

–100.1

–62.5

–44.3

–58.9

– 45.513

14

The outstanding balance of interest-bearing
debt was down 4.1%, or ¥39.3 billion, from theprevious fiscal year-end, to ¥916.6 billion.
Consequently, the D/E ratio decreased to 1.3
times. Also, the interest-bearing debt/EBITDA
ratio declined to 5.5 times, falling below 6
times for the first time since the Company’s
founding. We will continue to improve ourfinancial position in order to hedge risks offuture interest increases and secure funding
capacity over the medium-to-long term.

Net cash provided by operating activities was¥124.8 billion, reflecting income before
income taxes, depreciation and amortisation,and income taxes paid. Net cash used ininvesting activities was ¥78.8 billion due topurchases of noncurrent assets. Net cashused in financing activities was ¥47.3 billion
as a result of a net decrease in short-termborrowings.

(¥ billion)

100

Total assets rose ¥2.5 billion, from the p­ revious
fiscal year-end, to ¥2,282.1 billion, due to anincrease in land and buildings. ROA edged up
0.9 percentage point, to 4.6%, reflecting ourfourth consecutive year of record-­breaking
ordinary income.

–52.5
–78.8

–132.7–199.6
07

08

09

10

Net cash provided by operating activities
Free cash flow

11

12

16(FY)15

Net cash used in investing activities

Returns to shareholders(Yen)(%)
1,000.0

1,000

10.00

58.5

8.00

60

7.00
6.00

5.00

5.00

5.00

4.00

5.00

34.9

30.7

2.00

6.00

5.00

5.00

6.00

45

5.00
30

16.3

15.9

16.1

15.7

25.0
15

14.0
0

0

07

08

09

10

11

12

13

14

15

16(FY)

Dividend per share
Total payout ratio (right axis)
Notes: The total payout ratio for fiscal 2016 includes purchase of treasury stock (amounting to ¥8.7 billion).
The Company conducted a 1-for-5 reverse stock split with an effective date of 1st August 2016. The figures for
dividend per share above are prior to the reverse stock split.

Based on the move to a new management
stage in pursuit of medium-to-long-term
growth and the progress of financial position
improvements, dividend payments from profits in fiscal 2016 were raised ¥1 per share, to¥7 per share. In addition, the Company conducted treasury stock purchases in fiscal 2016
after setting a target of 25% for the total
payout ratio, which represents the combined
total of purchases of treasury stock and thetotal annual dividend as a percentage of net
income attributable to owners of the parent.

Hankyu Hanshin Holdings • Annual Report 201613

ESG Highlights

Environment
CO2 emissions volumes and energy consumption on crude oil-conversion basis(t-CO2)(kl)800,000

800,000

666,673

657,299

610,487

600,000

600,000

482,887
400,000

400,000

330,156

324,329200,000

312,677

320,905

200,000

0

0

2012

2013

Urban Transportation
Entertainment and Communications
International Transportation
Other

2014

(FY)

2015

Real Estate
TravelHotelsEnergy consumption on crude oil-conversion basis (right axis)

Electricity consumption during summer months (July–September)(Thousand kWh)
300,000

285,682

285,000

284,056
279,451
270,714270,000

264,353

255,000

0

2012

2013

2014

2015

(FY)

2016

Note: Figures above are for Hankyu Hanshin Holdings, Inc., and its domestic consolidated subsidiaries, but exclude
certain business sites for which electricity consumption is difficult to track.

SocialCapital investment in railway operations(¥ billion)
25

20

3.3
15

10

5

0

1.8

10.6

2.8

2.9

3.2

16.1

13.7

11.4
1.3

1.2

4.4

3.8

Hankyu Hanshin
2012

Hankyu Hanshin
2013

1.5

13.0
1.1

0.6

4.9

4.0

4.4

Hankyu Hanshin
2014

Hankyu Hanshin
2015

Hankyu Hanshin
2016

(FY)

Safety-related capital investment
Other capital investment
Note: The total length of lines operated is 143.6 km for Hankyu Corporation and 48.9 km for Hanshin Electric Railway.

14

Hankyu Hanshin Holdings • Annual Report 2016

In fiscal 2015, we pursued reductions in CO2 emissions in the six business segments, and overall emissions were down 1.4% year on year, to 657,299 t-CO2,
as a result. Approximately 65% of CO2 emissions canbe attributed to the Urban Transportation Business.
We strove to cut back on energy consumption inthis business by introducing new rolling stock andswitching to light-emitting diode (LED) lighting in­stations. Groupwide efforts to lower environmental
impacts and energy costs have led to a gradualdecrease in energy consumption that has continued
for four consecutive years. While CO2 emissions
jumped in fiscal 2013, this rise was a result of anincrease in the portion of electricity supplied fromthermal power gen­eration after the halt in operations of nuclear power plants following the March2011 Great East Japan Earthquake.

After the March 2011 Great East Japan Earthquake,
the Japanese government issued a request thatcompanies conserve electricity in order to help
alleviate the tight balance between supply and­demand for electricity. In response to the request,
the Group has been endeavouring to decrease its
electricity consumption over the peak usage
months from July to September. As a result, total
electricity consumption from July to September
2015 was 264,353,000 kWh, down 15% fromthe equivalent period in 2010. We are also committed to fulfilling our obligation to work toward an
average annual reduction of more than 1% over the
medium-to-long term in unit energy consumption
or unit energy consumption after adjustment for
usage fluctuations as set forth by the Japanese government. The Urban Transportation Business has
been implementing ongoing measures to reduce
unit energy consumption accordingly. Due to thesemeasures, the average annual reduction in unit
energy consumption over the five-year period
from fiscal 2011 to fiscal 2015 was 1.6% for Hankyu
Corporation and 1.3% for Hanshin Electric Railway.

As a railway operator, the Group provides a form of
public infrastructure. We therefore make prioritizing
the safety of our customers a fundamental policyof management, and conduct ongoing safetyrelated capital investments in our railway operations
accordingly. In fiscal 2016, such investments totalled¥13.0 billion at Hankyu Corporation and ¥4.4 billion
at Hanshin Electric Railway. These investments wereprimarily used to conduct station upgrades, including track elevation, seismic reinforcement of elevated tracks, expansion of platforms, and measures
for making stations barrier-free. At Hankyu Corpo­
ration, emergency stop buttons were installed at all
stations that can be pressed to automatically stop
trains as a safety measure for use if a customer falls
on the tracks.

ESG Highlights

Number of programmes and participants of the Hankyu Hanshin Dreams
and Communities Challenge Troop(Programmes)(Participants)
50

3,000

45

43
39

36

2,602
2,501

2,024
27

25

1,500

1,200

17
13
600
0

2011

Programmes

445

404

0

2012

2013

2014

2015

2016

2017

(FY)

Invited participants (right axis)* The survey was conducted among a random samplingof 1,000 customers of both genders that were between
the ages of 18 and 69 and living in the 23 towns andcities in the Kyoto, Osaka, and Kobe area.

GovernanceMembership of the Board of Directors(People)
15

2

2

2

2

2

10

7

7

6

6

5

5

5

5

2012

2013

2014

6

5

6

0

Directors with operational execution responsibilities
Internal directors without operational execution responsibilities
External directors

2015

2016

(As of the conclusion of the General Meetingof Shareholders for each fiscal year)

Cross-shareholdings(Number of companies in which the Company holds shares)
120

111

107
96
81

80

81

40

0

2012

As part of Hankyu Hanshin Dreams and Communities of the Future Project social contribution activity,
we hold experience-based learning programmes
for primary school students during summer vacation. These programmes take advantage of theunique business expertise of Group companies toprovide students with a diverse range of learning
opportunities. Since we began the initiative in 2010,
we have invited 9,776 students to participate inprogrammes from an aggregate total of roughly
70,000 applications. Moreover, a survey conductedby the Company in September 2015 found that 46%
of customers using the Hankyu or Hanshin lines
more than four days a week were aware of the
Hankyu Hanshin Dreams and Communities of the
Future Project.* This survey also discovered thatthose customers who are aware of the programme
held highly positive opinions of the Group and wereinclined to live alongside our lines.

2013

2014

2015

The Board of Directors of the Company is comprisedof directors with operational execution responsibilities that are well-versed on the Group’s business aswell as part-time directors that represent majorGroup companies in order to reflect the perspectives of the six core businesses into management. In
addition, part-time directors have been appointed
from H2O Retailing Corporation and Toho Co., Ltd.,
with the aim of strengthening coordination withother companies in the Hankyu Hanshin Toho
Group. Further, two external directors that are independent of the Company and have abundant experience and expertise in corporate management
have been selected to raise the standard of decision
making and strengthen oversight functions forGroup management.

The Company acquires and holds shares of stock forthe purposes of strengthening business relationships and increasing coordination with partnercompanies as well as maintaining relationships withlocal communities. The ultimate goal of these holdings is to build trust with our various stakeholders
and improve corporate value from a medium-tolong-term perspective. We are progressively sellingholdings that are no longer meaningful. On 31st
March 2016, the Company held stocks in 81 companies for such purposes. On a market value basis,these stocks were worth approximately ¥38.0 billion
and accounted for 1.7% of total assets.

2016(As of 31st March of each year)

Hankyu Hanshin Holdings • Annual Report 201615

To Our Stakeholders

Kazuo Sumi
President andRepresentative Director

At the Hankyu Hanshin Holdings Group, we appreciate theimportance of advancing far-sighted initiatives to offer services
that reflect society’s emerging needs. Also, we understand the­importance of continued investment in sources of value creation toachieve growth that enhances long-term corporate value. Therefore,
we aim to sustain growth by increasing the value of line-side areas
and acquiring business opportunities in new markets.
In fiscal 2016, the year ended 31st March 2016, we posted
records in operating income for the third consecutive year, inordinary income for the fourth consecutive year, and in net
income attributable to owners of the parent for the fifth consecutive year. Our achievement of operating income and ordinary income above ¥100 billion for the first time was particularly
noteworthy. As I shall explain later, this increase in earnings waspartly attributable to one-time factors in the fiscal year under

16

Hankyu Hanshin Holdings • Annual Report 2016

review. Nonetheless, business results in the first fiscal year of theGroup’s new management stage were favourable. It gives me
great pleasure to have met the expectations of shareholders
and investors. Further, I can report that during fiscal 2016 we
made steady progress in laying foundations for medium-tolong-term growth. For example, we decided multiple newinvestee projects for growth investment, and we expanded
services that create value in line-side areas.

To Our Stakeholders

Fiscal 2016 Business Results In fiscal 2016, revenues from operations were up 3.1%, or ¥21.5
billion, year on year, to ¥707.4 billion. This increase resulted fromrobust performances by the Urban Transportation and Hotels
businesses and the sale of land for facilities by the Real EstateBusiness. Thanks to contributions from these three business segments as well as from the Entertainment and Communications
Business, the Group recorded a significant 17.3%, or ¥16.3 billion,
year-on-year rise in operating income, to ¥110.3 billion. Due toan improvement in net non-operating loss, we realised year-onyear increases of 22.1%, or ¥18.9 billion, in ordinary income, to¥104.5 billion, and 29.1%, or ¥15.8 billion, in net income attributable to owners of the parent, to ¥70.0 billion.

The Real Estate Business benefited from the sale of land forfacilities, which was a one-time factor. However, I believe therailway business performed well as a result of steady efforts toenhance the value of line-side areas. Also, the Hotels Businessachieved solid business results by taking advantage of theincrease in overseas visitors to Japan to capture related demand
effectively. Taking such progress into consideration, I feel wehave gained the strength to generate operating income ataround the ¥90.0 billion level stably. We intend to continue
focusing on sustaining growth and the creation of corporate
value by implementing the current medium-term management plan steadily.

Fiscal 2016 business results overview
(¥ billion)

FY2015 results

FY2016 results

Revenues from operations

685.9

Operating income

YoY(Increase)

(%)

707.4

21.5

3.1

94.0

110.3

16.3

17.3

Ordinary income

85.6

104.5

18.9

22.1

Net income attributable to owners of the parent

54.2

70.0

15.8

29.1

Returns to Shareholders Taking into account improvement in our financial standing, we
increased the dividend by ¥1 per share, to ¥6 per share in fiscal
2014. In fiscal 2016, we made another ¥1 per share increase,giving a dividend of ¥7 per share. We have established continued payment of stable annual dividends as a policy. Moreover,
we have set a total payout ratio of 25% as an indicator. With thisbenchmark in mind, we acquired ¥8.7 billion of treasury stock toprovide further returns to shareholders in fiscal 2016.
In the near term, we will pay stable annual dividends andacquire treasury stock in accordance with the abovementioned
policy and indicator. However, I believe that we should continue examining how we provide returns to shareholders inlight of our management situation and the need to achieve abalance with growth investment.

Returns to shareholders(¥ billion)
21

(Yen)
45

35*
14

7

30*
25*
6.3

35

30*

30

8.7
7.6

7.6

8.8

8.8

15

2014

2015

2016

2017 (Est.)

(FY)

0

0

2013
Total dividend

Acquisition of treasury stock

Dividend per share (right axis)* Shares were consolidated at the ratio of 5 shares to 1 share with 1st August
2016 as the effective date.
Annual dividends for fiscal 2016 and earlier are converted based on thisshare consolidation.

Note: Billions of yen figures are rounded to one decimal place.

Hankyu Hanshin Holdings • Annual Report 201617

To Our Stakeholders（¥ billion）


1,700

Interest-bearing debt/
EBITDA ratio

9.4 times

9.6 times

9.8 times

8.9 times

8.8 times
1,400

145.2

135.3

EBITDA (right axis)

133.5

133.2
127.1

1,275.6

1,271.1
1,100

149.2

145.1

1,282.6

7.8 times

1,251.7

Interest-bearing debt
(left axis)

150.1

6.9 times

1,183.6

6.4 times

1,126.6
1,032.3

955.8

2014

2015

800

2008

2009

2010

2011

2012

2013

Enhancement of cash flow generation
due to payback from major projects

Reduction in interest-bearing debt
through lowering of capital investment

Investment in development
for growth

Steady improvement
in financial standing

Approx. ¥320 billion*
Capital investment

Approx. ¥240 billion*

Approx. ¥130 billion
Investment for growthInvestment in maintenanceand renewal

Approx. ¥60 billion

Approx. ¥190 billion

Approx. ¥180 billion

FY2008 – FY2011

FY2012 – FY2015* Excluding capital investment related to the repurchase of securitised assets and the exchange of the assets with Hankyu REIT Asset Management, Inc.

3/20083/20093/20103/20113/20123/20133/20143/2015

Hankyu Nishinomiya Gardens Development (September 2004 – November 2008)
Extension of Hanshin Namba Line (Opening of new extension) (October 2003 – March 2009)
Renovation of Hanshin Koshien Stadium* (October 2007 – March 2010)
Rebuilding of Umeda Hankyu Building (May 2005 – November 2012)
September 2009: Opening of
Department Store Building (Phase I)

April 2010: Completion of Office Tower

November 2012: Grand opening of the Umeda Flagship Store ofHankyu Department Store
Osaka Station North District (Umekita)
Phase I Development Area Project (GRAND FRONT OSAKA)(March 2010 – March 2013)* Renovation work conducted during three off-seasons.
Note: Project start times are as of works commencement. Also, finish times are project completion dates(completion of A and B blocks for Osaka Station North District (Umekita) Phase I Development Area Project).

18

Hankyu Hanshin Holdings • Annual Report 2016

To Our Stakeholders（¥ billion）

166.5

170

further
Towagrrdowth

152.0

140

110

6.1 times

Between 5 and 6 times
over the medium-to-long term

916.6
5.5 times
2016

930.0
80

2017
（Est.）

2019（FY）

Development of foundations
for medium-to-long-term growth
Approx. ¥350 billion
Investment in major­ evelopment projects anddnew market development
Approx. ¥130 billion
Investment in maintenanceand renewal ofexisting infrastructure, etc.
Approx. ¥220 billion
FY2016 – FY2019

3/20163/2017

Completion of phase I
construction (2018)

3/2019

Umeda 1-1 Project
Completion of phase II (around spring 2022)
construction (2022)
Rebuilding and renewal of
Kobe Hankyu Building (2021)
Construction of Nishinomiya Kitaguchi Hankyu
Building (provisional name) (autumn 2018)

Progress since Management Integration 
Almost a decade has passed since the management integrationof Hankyu Holdings, Inc., and Hanshin Electric Railway Co., Ltd.,in October 2006, that established Hankyu Hanshin Holdings,
Inc. Broadly speaking, the Hankyu Hanshin Holdings Group has
proceeded through three management stages in the past 10
years. At each stage, we set out clear management themes andtackled issues earnestly. These efforts have enabled the Groupto realise its collective strength and laid the foundations of ourposition today. Therefore, I would like to summarise our initiatives over the past decade.
Directly after management integration, we advanced largescale projects with a view to future growth. While we recognised
the need to improve our financial standing, we felt that advancing development projects was the priority management task.
Accordingly, we continued projects begun before management
integration, such as the rebuilding of Umeda Hankyu Building;the development of a multipurpose commercial facility, Hankyu
Nishinomiya Gardens; and the implementation of plans fora new railway line, the Hanshin Namba Line. Initiatives begun
after management integration included refurbishment of the
Hanshin Koshien Stadium and the Osaka Station North District(Umekita) Phase I Development Area Project, now GRAND FRONTOSAKA. Meanwhile, as a result of investment in the above­development projects interest-bearing debt reached the ¥1,280
billion level for a time. Coinciding with a worsening of businessconditions resulting from the global recession, this period ofdevelopment saw the interest-bearing debt/EBITDA ratio deteriorate to 9.8 times.
In response, around 2011, after the level of investment in thelarge-scale projects had peaked, we made improving our financial standing the first priority and focused on allocating funds to
the reduction of interest-bearing debt. By the end of fiscal 2015,
we had lowered interest-bearing debt to the ¥950 billion level.
During this stage, the abovementioned large-scale projects
began to contribute steadily to cash flow growth, boosting
EBITDA to around ¥150 billion. Consequently, the interestbearing debt/EBITDA ratio improved significantly to 6.4 times.
Given that the above measures had enabled us to repay
debt to some extent, we decided to begin a new management
stage. Thus, under the current medium-term management
plan, we are once again focusing on the development of foundations for medium-to-long-term growth.

Other projects
Ebie 1-Chome Development Plan
Kita-Osaka Kyuko Railway Line Extension Project (around spring 2021)
REMM Roppongi (around spring 2017)
Sale of condominiums in Vietnam (2017 – 2018)
Logistics centre in Singapore (around spring 2017)
Redevelopment Project for Area in Front of JR Yotsuya Station (around autumn 2019)

Hankyu Hanshin Holdings • Annual Report 201619

To Our Stakeholders

Framework of the Current Medium-Term Management Plan Positioning the four fiscal years from fiscal 2016 as a period ofdeveloping foundations for medium-to-long-term growth, thecurrent medium-term management plan calls on the Group to(1) enhance value of the Umeda area and other line-side areas,and (2) develop new markets for medium-to-long-term growth.
Moreover, as we pursue these business strategies we aim tocapture burgeoning demand from non-Japanese tourists.
Further, we will allocate funds in a balanced manner to realise
returns to shareholders and continuous strengthening of our
financial standing. At the same time, we will prepare for the
future by investing in major development projects and developing new markets. The Group will also steadily invest in themaintenance and renewal of existing infrastructure.

Businessstrategies

Businessstrategy

1Many of the projects that the Group tackles take a longtime to bear fruit. As a result, periods arise when we do not
anticipate near-term earnings growth. Over the mediumto-long term, however, I am confident that our projects willproduce benefits steadily.
For overviews of specific projects and their progress, please
see the special feature and the “Core Businesses: Overview and
Outlook” section of this report. At this point, I would like toexplain the thinking behind the two business strategies mentioned above.

Implementing two business strategies with a view to medium-to-long-term growth
Enhance value of the Umeda area
and other line-side areas

Businessstrategy2Create line-side areas people want to live in long term
or visit frequently

Developline-side areas

Enhancingline-side area value

Develop additional
value inline-side areas

Develop new markets for
medium-to-long-term growth
Expand businesses in Tokyo metropolitan areaand begin developing new businesses overseasTokyo
metropolitan area

Overseas

Combine business

Capture burgeoning demand from non-Japanese tourists

strategies 1 and 2

Offset Japan’s sluggish consumer market and step up efforts to capture rapidly growing demand
from visitors to Japan

Financialstrategy

Allocate funds in a balanced manner on forward-looking investment, continuous strengtheningof financial standing, and returns to shareholders

Forward-looking investment
Give priority in fund allocation,
mainly focus on initiatives reflecting
business strategies 1 and 2Continuous strengtheningof financial standing
Mitigate risk of future interest rate rises
and secure funding capacity
over the medium-to-long term

20

Hankyu Hanshin Holdings • Annual Report 2016

Approx.

65

Approx.

%Business strategy 1



35

%

Business strategy 2

Investment for growth

Returns to shareholders
Endeavour to increase them while
maintaining balance with investment
and strengthening of financial standing

Approx.

130¥

billionTo Our Stakeholders

Business strategy 1

Enhance value of the Umeda area and other line-side areas

It is essential to continue investment aimed at bolstering theurban functions of the Umeda area, which is synonymous with
the Kansai area and the Group’s most important base. The Umeda
area is known for having Japan’s highest concentration of commercial facilities. This strong focus on the Umeda area is theresult of continuous development aimed at increasing the area’s
appeal spanning several eras. Just as these past development
efforts have created today’s prosperity, we will take far-sighted
measures to evolve and create new value in the Umeda area
going forward. For example, we will develop multipurpose buildings with leading-edge disaster prevention capabilities and environmental performance. And, we will foster the entrepreneursthat may become the future tenants of such buildings.
Similarly, line-side areas other than the Umeda area need to
evolve. However, I believe that, as well as the development ofsuch infrastructure as railways and properties for lease, we needto create shared value in line-side areas with local communities.
Although the population of the Group’s line-side areas is rising,Japan’s demographics mean that the time will come when it
begins declining. Given this outlook, we believe contributing toBusiness strategy 2

the quality of residents’ lives is key because this will ensure
people continue to choose our line-side areas as the places
they want to live in, remain in long term, or keep visiting. Basedon this belief, we are creating value through the provision of
new services in five areas: fostering of the next generation;
health and seniors; community and culture; development ofsafe, secure towns; and industry creation.

A conceptual illustration of the Umeda 1-1 Projectupon completion

Develop new markets for medium-to-long-term growth

Expanding businesses in the Tokyo metropolitan area anddeveloping businesses overseas will allow the Group to capitalise on its accumulated expertise in new markets.
As one of Asia’s most famous cities, Tokyo is an appealing
market that is likely to maintain its importance in and links with
the international economy even in an era of population decline.
In preparation for the Tokyo 2020 Olympic and Paralympic
Games, real estate development is moving up a gear in thecentre of Tokyo. Against this backdrop, the Group is stepping up
business development in the city. As well as steadily increasing
the development and sale of condominiums, we plan to open ahotel mainly comprising guest rooms for overnight stays, REMM
Roppongi, in March 2017. Other initiatives in Tokyo include
our participation with business partners in a redevelopment
project for the area in front of JR Yotsuya Station. In the above
projects, we will take advantage of expertise garnered in thedevelopment of the Umeda area and other line-side areas.
Further, we aim to use the projects as bridgeheads for expanding businesses in the Tokyo metropolitan area.

Overseas, in April 2016 we opened a logistics centre inIndonesia, which has begun handling such products as automotive components, medical equipment, and electronic components. In addition, plans call for the completion of a large
logistics centre in Singapore in spring 2017. The International
Transportation and the Real Estate businesses are working
together closely to advance these projects and realise synergies within the Group.

A conceptual illustration of the Singapore logistics centre
upon completion

Hankyu Hanshin Holdings • Annual Report 201621

To Our Stakeholders

Management Indicators through to Fiscal 2019 
The management indicators that we are targeting and ourapproach to them are shown in the table below. In light of current business results, we have revised numerical targets forprofitability and capital efficiency. Regarding profitability benchmarks, we have upwardly revised numerical targets for operating
income and net income attributable to owners of the parent
during the medium-term management plan by ¥10 billion eachversus the numerical targets initially announced in fiscal
2016. Also, the likelihood of reaching benchmarks for capitalefficiency (ROE) and financial soundness (interest-bearing debt)
has been increasing steadily.
Further, we will maintain financial soundness over the
medium-to-long term by keeping the interest-bearing debt/
EBITDA ratio between 5 and 6 times and the D/E ratio around
1 time. In tandem with this policy, we want to allocate surplus
funds to investment in growth and enhancement of returns
to shareholders.

Numerical
targets

Profitability

Keep operating income at ¥90 billion leveland keep net income at ¥50 billion level(Each up ¥10 billion versus previous target)

While focusing efforts on developing foundations for medium-to-long-term
growth, we will maintain a certain level of operating income. Further, given that therisk of incurring significant extraordinary losses has lessened, we expect stable net
income attributable to owners of the parent.

Capitalefficiency

Realise ROE of at least 6%

Through stable net income attributable to owners of the parent and the acquisition of treasury stock, we aim to realise ROE of at least 6% on a consistent basis.

Financialsoundness

Reduce interest-bearing debt toless than ¥900 billion by the end of fiscal 2019

We will continue steadily strengthening our financial standing to mitigate the riskof interest rate rises and ensure our ability to secure surplus funds over the
medium-to-long term.

Financial soundness targeted overmedium-to-long term

Keep interest-bearing debt/EBITDA ratio between 5 and 6 times and D/E ratio around 1 time

Fiscal 2017 Business Results Outlook 
In fiscal 2017, the year ending 31st March 2017, we expect
revenues from operations to increase 7.4%, or ¥52.6 billion,
year on year, to ¥760.0 billion, and year-on-year decreases of
13.9%, or ¥15.3 billion, in operating income, to ¥95.0 billion,and 14.3%, or ¥10.0 billion, in net income attributable toowners of the parent, to ¥60.0 billion. We are projecting lower

earnings due to the absence of the sale of land for facilities
that the Real Estate Business recorded in fiscal 2016 and an
expected increase in depreciation and amortisation in the
Urban Transportation Business. However, we will raise theunderlying level of earnings by continuing to lift the basic performance level of each business.

Fiscal 2017 management indicators outlook
FY2016 result

FY2017 estimate

Revenues from operations1¥707.4 billion

Operating income¥110.3 billion¥760.0 billion¥95.0 billion

EBITDA¥166.5 billion¥152.0 billion

Interest-bearing debt

¥916.6 billion¥930.0 billion

Interest-bearing debt/EBITDA ratio

5.5 times

6.1 times

D/E ratio

1.3 times

1.2 times¥70.0 billion¥60.0 billion

10.3%

8.0%

¥892.3 billion¥905.0 billion

5.4 times

6.0 times

Net income attributable to owners of the parent
ROE(Reference)

Net interest-bearing debt2
Net interest-bearing debt/EBITDA ratio

1. As of fiscal 2017, the presentation of revenues from operations of the International Transportation Business has changed from net togross amounts.
2. Amount of interest-bearing debt less cash and deposits

22

Hankyu Hanshin Holdings • Annual Report 2016

To Our Stakeholders

Line-Side Value Enhancement and Intangible Assets—Our Business Model’s Core 
In Japan, the Hankyu Hanshin Holdings Group and other private
railway operators manage railways linking city centres and suburbs. Further, many of these railway operators have histories ofdeveloping their line-side areas to attract more passengers. No
exception to this tendency, the Group has been developing
line-side areas for over a century.
While we refer to “line-side value” as if it has a fixed meaning,
what we identify as having value differs in each era. For thisreason, efforts to enhance value are unending. Adeptly responding to changes in society’s needs and sense of value in each era,
our predecessors developed houses, commercial facilities, andhotels; managed a theatre group and a professional baseballteam; and entered the related areas of theatre and baseball stadium management. Such progressive initiatives have cultivatedline-side value to which residents have become strongly
attached. As a result, compared with the operations of otherrailway companies, our railway business has superior operating
efficiency, and we have a more balanced business portfolio.
Considering the significance of the tangible and intangible
management capital that our successors built reminds me of
the importance of passing on our enterprising DNA, analysing
likely needs in the coming era, and continuing to create newvalue. For example, by 2025 society’s aging will have advanced,
with the entire baby-boom generation having reached 75 yearsof age or older. Also, in 10 years’ time the pace of change insociety—including technological innovation and deregulation—is likely to be dramatically faster, which in turn will transform the Group’s business conditions. Therefore, we have begun

focusing on the corporate profile we should have a decadefrom now. We are mulling how to exploit the abovementioned
changes as opportunities to develop new services and markets
and thereby realise further growth in the next era.
While mapping the way to further growth in this way, I want us
to continue addressing a range of social issues through our businesses so that we remain a corporate group that society trusts. To
this end, I intend to encourage each officer and employee topursue self-growth and to make meeting society’s expectations
their mission and the basis of their judgement and conduct.
Our greatest assets are relationships of trust with customers,
other stakeholders, and society in general. While we continue
strengthening these relationships, we will remain aware of the
crucial role such non-financial assets as organisational culture
and personnel capabilities play in supporting the relationships.
With this mindset, I intend to pursue business managementthat is focused on sustaining growth and creating corporate
value over the medium-to-long term.

September 2016

Kazuo Sumi
President and Representative Director

Hankyu Hanshin Holdings • Annual Report 201623

Special Feature:

Anticipating Change,
Pursuing Growth Opportunities

The Hankyu Hanshin Holdings Group’s Evolution
Since their establishment as railway operators around the turnof the twentieth century, the Hankyu Hanshin Holdings Group’s
mainstay companies, Hankyu Corporation and Hanshin Electric
Railway Co., Ltd., have primarily provided railway services anddeveloped real estate. In step with the extension of railway
networks, the companies have developed land and housing in
new regions. Combining railway services and real estate development creates synergy benefits by encouraging the growthof the resident population in suburbs while increasing commuters between suburbs and city centres. This combination ofbusinesses not only became the basis of our business model, it
significantly affected Japan’s private (non-JR) railway operators
as a whole.

Further, both companies have exploited new business opportunities by being well attuned to trends and potential demand.
For example, in the sale of land and housing we successfully
tapped demand among the middle classes by adopting a longterm monthly installment payment method—revolutionary at
the time. Also, from the 1910s to the 1930s, we opened a theatre
and a baseball stadium and formed a theatre company and aprofessional baseball team. Other initiatives included developing
and managing commercial facilities in areas around terminal
railway stations. Catering to new lifestyles and the burgeoning
demand for entertainment that accompanied economic growth,
the abovementioned businesses played a major role in heightening the appeal of line-side areas.
Our predecessors’ open mindedness encouraged progressiveness and an appetite for challenges—attributes that havebecome integral components of our corporate culture.

Creating business opportunities from the outset

24

1909

1910

Completed 30 rental homes in front ofNishinomiya Station

Began selling land and housing (Ikeda Muromachi)

1913

1924

Formed the Takarazuka Girls’ Revue(currently the Takarazuka Revue Company)

Completed the Koshien Stadium (currently the Hanshin Koshien Stadium)and the Takarazuka Grand Theatre

1929

1935

Opened Asia’s first railway terminus department store, Hankyu Department Store

Established Osaka Baseball Club
(currently the Hanshin Tigers)

Hankyu Hanshin Holdings • Annual Report 2016

Special Feature: Anticipating Change, Pursuing Growth Opportunities

As a result of venturing into business areas strongly related tothe development of railways and real estate, the Group has
established and realised synergies among six core businesses.
In addition to the Urban Transportation and Real Estate businesses, our business portfolio comprises the Entertainment
and Communications, Travel, International Transportation, andHotels businesses. The Urban Transportation and Real Estatebusinesses generate stable cash flows and account for approximately 65% of revenues from operations and 83% of operating
income. Moreover, revenues from operations and operating
income per operating kilometre are high. In other words, thehigh asset efficiency of our railway services is a feature of ouroperations. Another feature of the Hankyu Hanshin HoldingsGroup is that the Entertainment and Communications Businessmakes a larger contribution to business results than industry
peers’ equivalent business segments.

Revenues from operations breakdown

Operating income breakdown

Business Portfolio and the Value of Line-Side Areas

Hotels 9.1%

Other 5.2 %Urban
Transportation

32.1

International
Transportation 4.9 %%International Transportation 1.6 %Hotels 2.9 %Travel 0.6 %Other 0.9 %Entertainment
and Communications

13.5 %

Urban Transportation

Travel 4.1%

¥707.4 billion¥110.3 billion

Real Estate

29.6

36.5

%

%

Entertainment
and Communications

Real Estate

15.1%

Approx. 60%

44.1

%

Approx. 80%

Note: Calculations of the breakdowns for revenues from operations and operating income are based on each business segment’s simple totals, which include intersegment transactions.

As well as developing railway infrastructure and surrounding
real estate, the Group has created value in line-side areas byimproving services that add to the convenience or appeal ofline-side areas for those that live, work, or study in them. In
particular, the Group and local residents have formed communities that have developed unique local cultures and contribute to line-side areas’ brand value. As a result, areas served by
the Hankyu and Hanshin lines are some of the most sought
after residential zones. For example, a survey of 957 prospective
condominium purchasers asking where they would like to livein the Kansai area revealed that areas centred on the Group’s
railway stations accounted for all of the most popular areas.
Sumitomo Realty & Development Co., Ltd., and six other realestate developers conducted the survey in July 2016.

Survey of prospective condominium purchasers regarding theirpreferred Kansai residential area, conducted in fiscal 2017
Ranking Station

Points Area

1

Nishinomiya-kitaguchi

253

Nishinomiya, Hyogo Pref.

2

Shukugawa

230

Nishinomiya, Hyogo Pref.

3

Okamoto174

Kobe, Hyogo Pref.

4

Umeda

135

Osaka, Osaka Pref.

5

Takarazuka

122

Takarazuka, Hyogo Pref.

6

Ashiyagawa

115

Ashiya, Hyogo Pref.

7

Mikage107

Kobe, Hyogo Pref.

8

Senri-Chuo

106

Toyonaka, Osaka Pref.

9

Toyonaka

95

Toyonaka, Osaka Pref.

10

Ashiya91

Ashiya, Hyogo Pref.

Source: A survey of prospective condominium purchasers regarding their preferred
residential area, conducted by seven major real estate developers (Sumitomo
Realty & Development Co., Ltd., Daikyo Incorporated, Tokyu Land Corporation,
Tokyo Tatemono Co., Ltd., Nomura Real Estate Development Co., Ltd., Mitsui
Fudosan Residential Co., Ltd., and Mitsubishi Jisho Residence Co., Ltd.) andincluded in a press release dated 29th September 2016

Reasons respondents preferred residential areas
Nishinomiya-kitaguchi Station (n=49)

Shukugawa Station (n=43)

Okamoto Station (n=39)

1

It’s convenient for commuting.

1

It’s quiet.

1

It’s quiet.

2

It has a lot of commercial facilities.

2

It feels affluent.

2

It’s convenient for commuting.

3

It’s convenient for daily life.

3

It’s attractive.

3

It’s chic.

Hankyu Hanshin Holdings • Annual Report 201625

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Emerging Needs and Social Trends
For more than a century, the Group has been heightening the value of line-side areas by anticipating the demand for easy
commutes, quiet residential areas, and entertainment that can be enjoyed in the suburbs. As a leader in line-side area town
development, we are analysing emerging needs and taking far-sighted measures in preparation for social change.

Increase in active elderly people

Rise in the number of women in employment

By 2025, those aged 65 or older will account for roughly 30% ofJapan’s population. Therefore, demand for health maintenanceand nursing care services for elderly people is set to rise.

Given the increase in the number of women in employment aswell as the decrease in population, society as a whole needs tocreate conditions that are more conducive to bringing up children.

Estimated number of elderly people who will be active
or require nursing care

Number of people in employment by gender
and women as a percentage of total(Millions of people)
30(Millions of people)
60

28.39

27.77

27.81

28.73

40

20

43.12

52.63

53.93

20.48

22.29

15.48 35.9
10

9.83

9.59

8.18

6.15

20

27.64

0

43.9

32.15

31.64

31.66

1995

2005

2015

40

20

0

2015

2025
(Forecast)

2035(Forecast)2045(At October(Forecast) of each year)

Active elderly people (not requiring nursing care)
Elderly people requiring nursing care
Source: Consumption Forecast in Relation to Seniors: After 2020 Households Aged 50
or Older to Account for More than 70% of Consumption, estimates by YOMIKO
ADVERTISING INC. and Research and Development, Inc.

0

1985

(CY)

Men in employment
Women in employment
Women as a percentage of total (right axis)
Source: Labour Force Survey, Ministry of Internal Affairs and Communications

Expansion of the middle classes in Asia

More Japanese companies establishing operations in Asia

In the 10 countries that comprise ASEAN, the middle classes areaccounting for a larger share of the population, and their purchasing power is increasing as a consequence. Demand is expected
to grow in the ASEAN region over the medium-to-long term.

Many Japanese companies—particularly manufacturers of cars,
motorbikes, electronic components, and food—are establishing
manufacturing bases in the ASEAN region due to its growing
economy and working-age population.

Breakdown of the population of six ASEAN member countries
by income bracket

Number of Japanese subsidiaries in Asia

(%)

100

(Subsidiaries)

6,000

80

23.3

35.3

50.5

60

76.1

84.7

4,929
4,000

47.3
45.9

40

2,000

38.6

20
0

2001

12.0
2.1
1.2

2006

18.7
3.5
1.7

2011

7.7
3.2

2016
(Est.)

13.6
5.2

Hankyu Hanshin Holdings • Annual Report 2016

3,973
862
3,111

1,153

5,330
1,321

5,639
1,429

3,776

4,009

4,210

2013

2014

2015

21.7
2021
(Est.)

7.7

0

(FY)

Affluent: US$35,000 or above
Upper middle: US$15,000–35,000
Lower middle: US$5,000–15,000
Low income: US$5,000 or below
Source: White Paper on International Economy and Trade 2011, Ministry of Economy,
Trade and Industry

26

24.74
41.3

38.9

(%)
60

56.40

2012

(FY)

Four ASEAN member countries
Other Asian countries
Source: Summary of Basic Survey on Overseas Business Activities, Ministry of Economy,
Trade and Industry

Special Feature: Anticipating Change, Pursuing Growth Opportunities

The Effect of Social Changes on the Group

Opportunities	Natural decline in the working-age population (those
aged between 15 and 65), the main purchasers of
train and bus commuter passes

	Maintain or increase population through town development catering to a range of needs, including thoseof disabled and elderly people	Outflow of residents seeking conditions conducive tobringing up children and a corresponding decline in
the working-age population

	Develop new earnings sources and create value by
developing and providing services related to safety
and peace of mind, health, and bringing up children

Risks

Opportunities	Tap into demand in growth markets by participatingin the real estate businesses that target middle classes

	Loss of existing customers to competitors withenhanced logistics services in Japan and overseas	Enhance overseas logistics services even further todevelop business with existing customers and acquire
new customers
	Disperse business risk by establishing presence inmultiple countries

Economic growth in Asia

	Loss of growth opportunities due to delay in or curbing of overseas business development

	Increase in volatility of business results due to fluctuations in the economy, interest rates, or exchange rates

Demographic change in Japan

Risks

Hankyu Hanshin Holdings • Annual Report 201627

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Building the Value of Line-Side Areas and Raising Corporate Value
With the railway business as its founding business, the Hankyu Hanshin Holdings Group has forged relationships of trust with theresidents of line-side areas and developed businesses through the provision of safe, reliable products and services. Further, farsightedness and creativity has enabled us to anticipate and address society’s emerging needs and issues. This approach is consistent
with our Mission, which states “By delivering ‘Safety and Comfort’ and ‘Dreams and Excitement,’ we create satisfaction among ourcustomers and contribute to society.”
Creating line-side areas that people want to live in long term or visit frequently—in other words, enhancing the value of line-side
areas—will remain a key strategy for the Group. By continuing to heighten the appeal of line-side areas through an array of different
businesses, we will strengthen the Hankyu-Hanshin brand while increasing resident and non-resident populations. These efforts will
broaden our earnings base and raise corporate value over the medium-to-long term.

Increase in resident
population

Increase in
non-resident population

Enhancement of thevalue of line-side areas• People want to live in areas long term
• People want to visit areas frequently

Real estate sales businessCondominiums and detached houses

Lifestyle support business

Real estate leasing business
Offices and commercial facilities

Entertainment business
Hanshin Tigers

Service for watching over children
Hanshin Ikiiki Day Service
After-School Kippo
Comprehensive support for the elderly

Takarazuka Revue

Hotels Business

Urban Transportation Business(railways, buses, taxis)

Expansion of earnings baseStrengthening of the Hankyu-Hanshin brandCorporate value enhancement

28

Hankyu Hanshin Holdings • Annual Report 2016

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Providing Services that Add Value to Areas
How can a company realise business growth in a country with an aging society and a declining population? Enhancing thevalue of line-side areas is one of the Hankyu Hanshin Holdings Group’s answers to this conundrum. Aiming to take advantage of social change to increase our business opportunities, we are providing services that cater to society’s current andemerging needs.

Demographic Change and Enhancing the Value of
Line-Side Areas
The population of line-side areas is the largest external factor
affecting the Group’s businesses. It impacts the business results
and potential of the Urban Transportation and the Real Estatebusinesses, which represent the Group’s earnings base. Stable
population growth in line-side areas leads directly to growth in
the number of passengers using our railway-centred urban
transportation services as well as in demand for housing andcommercial facilities in the areas.
As of 2016, the population of the Group’s line-side areas
continues to rise. (Please see page 8.) In light of Japan’s demographics, however, the eventual decline of this population is
unavoidable. Against this backdrop, to keep the population at alevel that can support stable revenues and earnings, the Groupneeds to ensure that line-side areas served by the Hankyu andHanshin lines motivate as many people as possible to live inthem long term. Therefore, we have to consider the type ofareas people want to live in long term as well as the type ofline-side areas that will have value in the coming era.

The first business we created under the system’s auspices
was a location-based service for watching over children goingto and returning from school. The manager of the business,
Mitsuhiko Kozaka, recalls how development of the service
began: “With the media sometimes reporting on crimes inwhich the victims were children, I often heard parents say thatthey worried about their children being alone after school. This
made me think it would good if there was a system to relieve
such anxiety.” The idea led to the development of a service that
notifies parents by e-mail when their child passes through theschool gates on their way to and out of school. In June 2016,
five years after its launch, the service accounted for approximately 160,000 customers, clearly testifying to the fact that it iscatering to local residents’ need for peace of mind.
Our second new business was a service related to healthand the elderly, the Hanshin Ikiiki Day Service, which began in
2013. In line-side areas, the business operates day-care facilities
that specialise in providing half-day rehabilitation programmes
for the elderly. The manager of the business, Satoshi Miura,
explains that he established it to create a service that would beindispensable in an aging society. “In line-side areas, the elderly
population will increase by about 40% over the next 15 years.
We gave a lot of thought to what type of service would help
the elderly live better lives.”

New Businesses Fostered by an In-House
Business Creation Support System
A support system for in-house business creation that Hanshin
Electric Railway established in 2009 has fostered businesses
that are helping enhance the value of line-side areas under thethemes of developing safe, secure towns and providing services related to health and the elderly.

Hankyu Hanshin Holdings • Annual Report 201629

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Mitsuhiko Kozaka
Manager, New Business Development Dept.
Hanshin Electric Railway Co., Ltd.

Parents who use our service for watching over children often send lettersof thanks saying that receiving notification when children arrive at andleave school gives them peace of mind. Currently, we are extending theservice beyond line-side areas. The positive response we have received
from customers underpins the success of the service.

Mr. Kozaka and Mr. Miura both say that using the support
system for in-house business creation encouraged them toconsider the Group’s advantages and features in a new light. Mr.
Miura recalls the situation three years ago. “The Group was callingon us to submit new ideas and create businesses without fear of
failure. After giving the matter some thought, I decided that
I wanted to use the Group’s management resources to create aunique service.”

The Unique Management Resources and Know-Howof a Local Business
Mr. Miura points out that the trust and the brand that existing
businesses had established were major assets in providing a
new service. “The Group not only operates the area’s railway
services but also owns a sports business that manages the
Hanshin Tigers baseball team, which is based in the area andhas won many local fans over the years. Local residents
strongly associate Hanshin with sports, which is one of thereasons why we decided to create a day-care service specialisingin rehabilitation. Many companies offer day-care services.
However, I believe Hanshin Ikiiki Day Service has succeeded

Subscribers to service for watching over children(Schools)

800

79
173

0

81
2012

21

142

326
2015

2016 (At 31st Marchof each year)

Schools using system
Orders received (system not yet operating)Service subscribers (right axis)

30

Hankyu Hanshin Holdings • Annual Report 2016

10

360

8
6

5

180

0

2014

450

80

40

162
2013

(People)(Centres)

270

656

440
36

37

Mr. Kozaka also stresses that existing businesses serve as
foundations for new businesses. “We have been doing businessin this area for more than a century. We are thoroughly familiar
with the area, and this enables us to pick up on residents’ latentneeds. The service for watching over children has grown to asize that is enabling it to benefit from first-mover advantage. In
2011, however, before a service like this offering peace of mind
existed, we had to acquire contracts by patiently conducting

9

69

105
200

160

120

95

80

400

Expanding Businesses to Create Additional Value

Hanshin Ikiiki Day Service: Subscribers and centres(Thousands of people)

600

because a focus on becoming healthy through rehabilitation
sets it apart from other providers.”
Having opened its 10th centre on 1st July 2016, Hanshin
Ikiiki Day Service is growing its network of centres andmembership steadily. Mr. Miura is upbeat about the future. “Inan aging society, the value of being able to live healthily in a
familiar area is sure to rise. Currently, we are thinking about our
next steps. We are considering how to provide services thatcater flexibly to the needs of each client as well as how to use
and monetise the know-how we have garnered in relation torehabilitation and day-care services for elderly.”

2

90
0

1
8
Oct.
2013

Subscribers

78
Apr.
2014

3

3
215

285

139
Oct.
2014

Apr.
2015

Oct.
2015

413

4
2
0

Centres (right axis)

Apr.
2016

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Satoshi Miura
Representative, Hanshin Ikiiki Day Service
Hanshin Electric Railway Co., Ltd.

Becoming involved in the day-care service business has given me a real
sense of the culture that the Group and local communities have created
together as well as the extent of the Group’s presence in local communities. Aiming to establish its own unique identify, Hanshin Ikiiki Day
Service will expand its network of centres.

sales activities targeting elementary schools in line-side areas.
We were able to establish a new business thanks to existingsolid business foundations in line-side areas.”
Aiming to create even more value, Hankyu Hanshin
Holdings launched a Safety and Peace of Mind Network
business, which is compatible with the service for watchingover children, as a public–private initiative with the city of
Itami, Hyogo Prefecture, in April 2016. This initiative will install
1,000 cameras and wireless receivers throughout Itami toestablish a network that provides family members and parents
with location information through the use of receivers to pickup radio signals from transmitters carried by elderly people
with dementia who are at risk of wandering and children. We
intend to increase the scale of this business in collaboration
with Itami—which has a population of 200,000 and 17
elementary schools—and as part of a campaign that is
mobilising local volunteers to make the area safer and give
residents greater peace of mind. Mr. Kozaka explains his
commitment to developing the business going forward. “Wewill establish and grow the new service as infrastructure thatprovides safety and peace of mind. In this way, we will help
create areas that people want to live in long term.”

E-mail notification service for watching over children
going to and returning from school

Rehabilitation at a Hanshin Ikiiki
Day Service centre

Other initiatives to enhance the value of line-side areas
Initiative

Details

After-School Kippo

To help parents bringing up children in areas served by our lines, we are developing private afterschool day-care centres for elementary school students. We have established two centres as of
September 2016.

Stajimo Line-Side Community BasesIn April 2015, we began establishing bases to cultivate links between communities in line-side areas
and the Group’s businesses.

Hankyu Hanshin Holdings • Annual Report 201631

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Capitalising on Opportunities
through Overseas Businesses
Based on its medium-term management plan, the Hankyu Hanshin Holdings Group will develop new markets over the
medium-to-long term. To advance this strategy, we are establishing bridgeheads for overseas businesses by simultaneously
conducting four projects in three countries.

Establishing New Businesses in the ASEAN Regionin Anticipation of Strong Internal Growth
The aggregate GDP of the 10 countries comprising the
Association of Southeast Asian Nations (ASEAN) was more than
US$2.5 trillion in 2014, and has continued to grow gradually sincethen.* The region is likely to see economic growth continue overthe medium-to-long term due to its large population of approximately 622 million, a young median age, and stronger internal
demand accompanying expansion of the middle classes.
Further economic integration of ASEAN also promises to drive
growth. In Southeast Asia, we embarked upon the full-fledged
launch of a real estate development business in March 2015.
Hankyu Hanshin Express, which is responsible for theInternational Transportation Business, and Hankyu Corporationand Hanshin Electric Railway, which are responsible for the Real
Estate Business, are developing logistics centres in Indonesia
and Singapore. This is a new type of collaboration between ourbusinesses, through which we aim to realise synergies. The
International Transportation Business has been building anoverseas network since 1961, and the Real Estate Business has
successfully completed many large-scale real estate development projects in Japan. Kazuhiro Sakai of Hankyu Hanshin
Properties Singapore Pte. Ltd. explains the Group’s advantages.
“The development of logistics centres calls for the know-how
of a real estate developer in land acquisition and building construction as well as the insight of a logistics centre operator.

Given our diverse business portfolio, we believe we can bringstrengths to bear.” Following on from our completion of a logistics centre in Indonesia at the end of November 2015, in
Singapore we are building a logistics centre due for completionin spring 2017.

Acquiring Tangible and Intangible Assets that Will
Drive Growth
Takehiko Kadoya of Hankyu Hanshin Express Southeast Asia
Pte. Ltd., which was established as the Group’s ASEAN headquarters in fiscal 2016, stresses the significance of developing
logistics centres for the logistics businesses. “Until now we haveused leased facilities to conduct logistics centre operations.
However, owning logistics centres has enabled us to participate in third-party logistics in earnest.” Today’s logistics services
no longer means the simple transportation of goods. Rather,
we must offer “total solutions,” which are able to improve theoverall efficiency of client companies’ supply chains. Mr. Kadoya
is confident of being able to meet such needs. “In addition to
the forwarding services that we have previously provided, weare now able to offer high-value-added logistics services that
include collection and delivery, sorting, and inventory control
and product inspection. Our ASEAN headquarters will help us
to accumulate and share know-how throughout the Group.”

The 10 ASEAN countries and locations of the Group’s projects

VietnamSingapore
Our logistics centre in Indonesia

Indonesia

32

Hankyu Hanshin Holdings • Annual Report 2016

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Takehiko Kadoya

Kazuhiro Sakai

Satoshi Suzuki

Logistics Manager
Hankyu Hanshin Express Southeast Asia Pte. Ltd.

Managing Director
Hankyu Hanshin Properties Singapore Pte. Ltd.

Senior Manager
Hankyu Hanshin Properties Singapore Pte. Ltd.

We are in the process of establishing a business model for the ASEAN region. Accordingly,
as well as operating the logistics centre, we
are focusing on securing and developing
capable personnel, realising stable profitability in logistics centre operations, and coordinating with forwarding services.

The Group’s varied business portfolio reflects
a corporate culture that welcomes new challenges. Overseas, we will continue developing progressive initiatives to realise growth.

Working with local experts who have indepth knowledge and a strong sense of
professionalism motivates me to take pridein myself as a Japanese businessman andwork hard so that we can have discussions
on an equal footing.

Similarly, Mr. Sakai points out that benefits of the Group’s
efforts in Southeast Asia extend beyond the mere establishmentof logistics infrastructure. “When we were developing the logistics centre in Indonesia, we set aside our preconceptions of how
real estate development ought to be conducted and did ourbest to absorb knowledge of local laws, regulations, and business practices as well as expertise in advancing real estate development projects. The Group used its own capital to develop thelogistics centre and from the outset undertook decision making
and solved problems, at all stages. This approach has given us

knowledge and experience that will be a major asset as wedevelop real estate overseas.” Satoshi Suzuki of Hankyu Hanshin
Properties Singapore agrees. “Singapore has established asystem for developing real estate based on collaboration amongaccountants, lawyers, and other outside professionals withexpertise and extensive experience in specific fields. We learned
a great deal about methods of real estate development andrisk management.”

Overview of the logistics centre in Indonesia
LocationBekasi 17520, West Java, Indonesia

Site area

18,210 square metres

Total floor space

11,855 square metres (reinforced concrete structure, single-story building)Main goods
handledAutomotive components, medical equipment,
electronic components, daily goods

Overview of the logistics centre in Singapore
A rendering of our logistics centre in Singapore upon completion

Location

38 Jalan Buroh, Singapore

Site area

19,200 square metres

Total floor space

48,000 square metres(reinforced concrete structure, 9 floors)

Hankyu Hanshin Holdings • Annual Report 201633

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Developing Businesses Rapidly through Partnerships
with a Local Company
At the same time as developing logistics centres in Indonesia
and Singapore, we are advancing a project in Vietnam. With partners Nishi-Nippon Railroad Co., Ltd., and Nam Long Investment
Corporation, which is based in southern Vietnam and one of thearea’s major housing developers, Hankyu Realty Co., Ltd., isundertaking a project for the development and sale of condominiums in Ho Chi Minh City. The response of local customers
has been encouraging as Keiji Okamoto of Hankyu Realty
explains. “Ho Chi Minh City has a population of more than 8 million, and young middle-income earners are increasingly eager tobuy homes. Also, many consumers feel an affinity with Japan andfavour its technology and quality. Our first project has sold all 500
of the units that it completed at the end of June 2016.”
Mr. Okamoto says the advantages of having Nam Long
Investment as a partner are its brand power in the housing area
and the company’s ability to negotiate with banks and otherfinancial institutions. “We are playing a complementary role. We
provide know-how accumulated in Japan, such as capabilities inrelation to questionnaire surveys of purchasers and other typesof market research as well as proposals for the improvement ofsite layout plans for buildings and basic plans.”
In April 2016, we launched a second project with the same
partners, testifying to the speed at which the three-company
partnership is creating benefits. At approximately ¥6.5 billion, thesecond project’s total costs will be more than double those of
the first project. As well as developing condominiums for sale,the project will develop detached houses. As such, Hankyu
Realty’s expertise in town development and effective site utilisation is likely to be even more important.

A rendering of Fuji Residence condominiums and detachedhouses upon completion, our second housing sales
project overseas

34

Hankyu Hanshin Holdings • Annual Report 2016

Keiji Okamoto
Manager
Overseas Project Sec., Corporate Planning Dept.
Hankyu Realty Co., Ltd.

We are in an unknown business area, and the processof self-reform through learning as well as learningfrom each other as we exchange opinions with partner companies is extremely stimulating.

Continued Commitment Builds Trust,and Trust Leads to New Business Opportunities
Mr. Sakai, Mr. Suzuki, and Mr. Okamoto agree that simultaneously
developing housing in Vietnam and logistics centres in Indonesia
and Singapore effectively demonstrates to local professionals
and partner companies the Group’s level of commitment. Mr.
Suzuki points out that when a company does not have a trackrecord in a particular field, its level of commitment can be questioned. “The Hankyu Hanshin Holdings Group is well-known inJapan but unknown within the ASEAN region. Continuing
involvement in development forms the basis of a real estatedeveloper’s reputation and trustworthiness. If a developerbuilds a good reputation and trust, it will receive informationthat leads to further businesses opportunities.” Aiming to develop
new ­markets for medium-to-long-term growth in accordance withthe business strategy set out in its the medium-term management plan, the Group will continue tackling ambitious projects in
Asia’s market.
* “Near-term moderate growth in ASEAN,” Update on the Economic Outlook for Southeast
Asia, China and India 2016
http://www.oecd.org/dev/asia-pacific/economic-outlook-southeastasia-china-india2016-press-release.htm(As of August 2016)

Special Feature: Anticipating Change, Pursuing Growth Opportunities

Taking On a New Business

Introducing the S-POINT Common Point Service for the Kansai Area
In April 2016, the Hankyu Hanshin Holdings Group and the H2ORetailing Group launched a common point service for bothgroups in the Kansai area, S-POINT. Previously, the companies ofeach group issued their own credit cards or cash point cards andawarded points. Thanks to the introduction of the S-POINT
common point service, customers can use points at any facility
that the groups’ companies operate in the Kansai area if they
have an S-POINT compatible card issued by one of the groups’
companies. This new system makes it easier for customers tosave and use points.
Including old cards due to be changed over, we had issued
approximately 7.5 million S-POINT compatible cards as of July
2016, and we expect to award 7 billion points per year. The
launch of a common point service will enable us to leverage ourstrengths in the Kansai area as a provider of many different typesof services and as an operator of numerous facilities, which

include supermarkets, shopping centres, and department storesas well as theatres and a baseball stadium. Further, we plan topursue tie-ups with outside companies and increase the number
of affiliated stores.
https://www.s-pt.jp/(Available only in Japanese)

Capturing Demand from Non-Japanese Tourists
The number of non-Japanese tourists visiting the Kansai area isrising due to an increase in the number of flights that low-costcarriers operate as well as Kansai’s proximity to Asia’s mainland.
Between January and December 2015, the number of non-Japanesepeople entering the country through Kansai International
Airport rose 59% year on year to surpass 10 million. Aiming to tap
this demand from non-Japanese tourists, the Hankyu Hanshin
Holdings Group is developing a range of initiatives.
For example, the Urban Transportation Business is encouraging non-Japanese tourists to visit line-side areas by offering theHankyu Tourist Pass and the Hanshin Tourist Pass, which are travel
passes for non-Japanese tourists that cover all of the Hankyu andHanshin lines. In fiscal 2016, we sold 320,000 such passes, up
150% year on year. Also, we are improving our ability to cater to
non-Japanese tourists by establishing tourist information centres
and centres providing services for travellers and offering free
Wi-Fi in line-side areas.
In addition, Hankyu Hanshin Hotels Co., Ltd., has increased
the number of guest rooms that reflect the preferences of nonJapanese tourists as well as refurbished guest rooms to reflect aJapanese aesthetic. Moreover, the Travel Business is focusing efforts

on participating in travel expos and business meetings overseas
and hosting inspection tours for non-Japanese travel agencies.

Sales of travel passes for tourists(Thousands of tickets)

400

320

300

200

130

100

0

20
2013

50
2014

2015

2016

(FY)

Hankyu Hanshin Holdings • Annual Report 2016

35

CSR and Value Enhancement in Line-Side Areas

Based on its Group Management Philosophy, the Hankyu Hanshin Holdings Group aims to create corporate value continuously by providing value to local communities and society that helps their development. Therefore, CSR activities are an
important part of the Group’s business activities. Our CSR activities come under two categories: social contribution activities, in which we work with customers, citizens’ groups, Group companies, employees, and other s­ takeholders to develop
towns and cities, and environmental preservation activities, which promote environment-friendly business activities.

Social Contribution Activities 
Mainly through its Urban Transportation and Real Estate businesses, the Group develops businesses that arerooted in local communities. Efforts to invigorate line-side areas and thereby maintain and increase their
population will underpin the growth of our businesses over the medium-to-long term. With this in mind, we
conduct social contribution activities under the Hankyu Hanshin Dreams and Communities of the Future
Project, which collaborates with such stakeholders as customers, citizens’ groups, Group companies, andemployees to advance a variety of activities that are mainly aimed at enhancing line-side areas. Our continuous
activities in local communities have earned favourable third-party evaluations1 and are helping strengthen theGroup and its line-side areas as a brand. (Please see page 15.)
1. The Hankyu Hanshin Holdings Group came in sixth in a CSR evaluation ranking—under the category recognising corporate contributions tosociety and local communities—which Nikkei Business Publications, Inc., announced in the Nikkei Ecology magazine in August 2016.

Basic Policy

We intend to promote the creation of towns and cities along our railway lines that people will truly want to live in.

Priority Areas Our social contribution activities focus on two priority areas: environment-friendly development, which improves the environment
in towns and cities, and human capital development, aimed at fostering the generation that will be responsible for the future of communities.

Environment-Friendly Development

Human Capital Development

As a Group with strong local roots, we arecommitted to sustainable community building
with environment-friendly developments thatprovide local residents with security, peace ofmind, and cultural enrichment.

We are creating opportunities for the healthy
development of ambitious children, upon whoseshoulders the task of building the communities ofthe future rests.

Example Initiative

Collaborating with Citizens’ Groups to Develop Towns

The Hankyu Hanshin Dreams and Communities of the Future Fund

publicity when grant recipients target customers in areas served

comprises contributions collected from Group employees andby the Hankyu and Hanshin lines and conduct campaigns aimed atmatching contributions from the Group. From among the applications

raising awareness of social problems or organise programmes thatthat it receives from citizens’ groups conducting activities inencourage volunteer work.

areas served by the Hankyu and Hanshin lines that correspond with
the Hankyu Hanshin Dreams and Communities of the Future Project’s
policies and priority fields, the foundation selects projects andprovides them with grants. In fiscal 2016, we provided a total of¥6 million in grants to 10 groups, including a group that protects
farmland and conducts environmental education and a groupengaged in translating children’s books into Braille and lending
them nationwide free of charge.
As well as providing funds through the Hankyu Hanshin Dreams
and Communities of the Future Fund, we help grant recipients withpublicity efforts. Citizens’ groups have welcomed this assistancebecause their publicity-related budgets and know-how areoften limited. Specifically, we undertake collections and provide

36

Hankyu Hanshin Holdings • Annual Report 2016

Grant recipients Akutagawa Club (left) and Japan CliniClowns Association (right)

The Hankyu Hanshin Holdings Group conducts a wide range of other social
contribution activities. For details about these activities, please visit theGroup’s website.
	http://www.hankyu-hanshin.co.jp/yume-machi/top.html(Available only in Japanese)

CSR and Value Enhancement in Line-Side Areas

Environmental Preservation Activities 
The Group has established a Basic Environmental Philosophy and Basic Environmental Policies, which guide its environmental preservation
activities. Further, to advance such activities Groupwide, the Group has established the Environment Committee, chaired by the president
and representative director of Hankyu Hanshin Holdings, Inc., which exercises control over all environmental preservation activities thatGroup companies implement within each core business.

Basic Concept

Example Initiative

Mindful that global environmental preservation is a task facing all mankind, the Hankyu Hanshin Holdings Group works for a sustainable
society through environmental activities aimed at handing down a sounder global and human environment to the next generation.

Reducing Environmental Burden through Business Activities

The Group is continuously developing measures to reduce thereceived DBJ Green Building Certification2 from Development Bank

environmental burden of its business activities. For example, theof Japan Inc. for the measures taking into account the environment

Urban Transportation Business is introducing new-model rollingand society of the Umeda 1-1 Project Building (provisional name) as

stock that consume less energy. (Please see page 43.)

well as for efforts to reduce environmental burden in the commercial

Another example of efforts to reduce environmental burden
through business activities is the Umeda 1-1 Project, a development
project that Hanshin Electric Railway and Hankyu Corporation are
currently advancing. In December 2015, the Ministry of Land,
Infrastructure, Transport and Tourism recognised the Umeda 1-1

facility operations of existing buildings Hankyu Nishinomiya Gardens
and HEP FIVE.
2. Under this system, the Development Bank of Japan certifies buildings based on such
criteria as outstanding environmental performance as well as consideration for tenants’
comfort, the surrounding environment, disaster prevention, and local communities.

Project as a pilot project for the construction of sustainable buildingsthat reduce CO2. Aiming to spread and heighten awareness ofpioneering technology related to energy saving and CO2 reduction,
the Ministry seeks applications from the initiators of projects tasked
with constructing housing and buildings that will establish
precedents. Our project earned a favourable evaluation for seeking
to build an energy system incorporating leading-edge heat source
equipment that uses electricity and gas in a multipurpose building

HEP FIVE

Hankyu Nishinomiya Gardensthat will comprise a department store and offices. Also, we have

Example Initiative

Developing Communities and Heightening Environmental Awareness

The Council for Collaboration in the Management of the Umeda
Area plays a central role in organising the Umeda Yukata Festival,
which is themed on Japanese culture and the environment.
To heighten interest in environmental problems among festival
goers in the Umeda area, the council decided to encourage themto participate in the symbolic sprinkling of water around the area.
Further, we participated in an event that prompts people tothink about living sustainably by turning off the lights in towns
and lighting candles, the “1 Million People Candle Night@Osaka
City” event. Hankyu Corporation took part in the Chayamachi
area, while Hanshin Electric Railway contributed to the effort in

The Hankyu Hanshin Holdings Group conducts a wide range of otherenvironmental preservation activities. For details about these activities, please
visit the website below.
	http://www.hankyu-hanshin.co.jp/csr/eco/(Available only in Japanese)

the Umeda area.

Hankyu Hanshin Holdings • Annual Report 201637

Core Business Highlights

Main Business Lines

Urban Transportation

P. 40

Railway operations:Hankyu Corporation, Hanshin Electric Railway, Nosé Electric Railway, Kita-Osaka Kyuko Railway, Hokushin Kyuko
Railway, Kobe Rapid Transit Railway

Automobile business (bus, taxi):

Hankyu Bus, Hanshin Bus, Hankyu Kanko Bus, Osaka Airport Transport, Hankyu Denen Bus, Hankyu Taxi, Hanshin Taxi

Retailing business:

Hankyu Corporation, Eki Retail Service Hankyu Hanshin, Hankyu Style Labels

Advertising business:

Hankyu Corporation, Hankyu Advertising Agency

Real Estate

P. 44

Real estate leasing business:

Extensive property holdings, mainly in the Umeda area and along the Hankyu and Hanshin lines (For details ofmajor properties, please see page 108.)
Major companies: Hankyu Corporation, Hanshin Electric Railway, Hankyu Realty

Real estate sales and other business:

We market condominiums, residential land lots, and detached houses, mainly alongside the Hankyu and Hanshinlines in the Kansai area. In recent years we have also focused on the Tokyo metropolitan area. We are engaged inproperty management, building maintenance, and other building operation and management services, as well as
real estate fund management, including private placement funds, and J-REIT businesses.
Major companies: Hankyu Corporation, Hanshin Electric Railway, Hankyu Realty, Hankyu Hanshin Building
Management, Hankyu Investment Partners, Hankyu REIT Asset Management

Entertainment andCommunications

P. 48

Sports business:

Professional baseball business (the Hanshin Tigers) and management and operation of Hanshin Koshien Stadium,and related businesses; music business (Billboard Live)

Stage business:

Takarazuka Revue and related businesses, operation of Umeda Arts Theatre and promotion of stage productions

Communication and media business:

Information services business, broadcast and communications business

Leisure business:

Management of Mt. Rokko business©Takarazuka Revue Company

TravelP. 50

International
Transportation

P. 52

HotelsP. 54

Travel business:

Hankyu Travel International, Hankyu Hanshin Business Travel, Hankyu Travel Support

International transportation business:

Hankyu Hanshin Express, Hankyu Hanshin Logipartners, 25 overseas subsidiaries of Hankyu Hanshin Express

Principal directly operated hotels:
Hotel Hankyu International
Hotel new Hankyu Osaka
Dai-ichi Hotel Tokyo
The Ritz-Carlton, Osaka** The Ritz-Carlton, Osaka is operated by the Ritz-Carlton hotel chain under the management of Hanshin Hotel Systems.

38

Hankyu Hanshin Holdings • Annual Report 2016

Core Business Highlights

Revenues from Operations (¥ billion) (right axis)
and Operating Income (¥ billion)
60

300

234.6
40

233.4

38.5

239.5

243.2

41.3

38.6

39.8

20

0

2014

2015

2016

2017
(Est.)

208.6

206.4

220.9

200

38.2

20

100

2014

2015

2016

110.4

112.6

112.5

14.2

15.0

15.3

2017
(Est.)

30

110.3
100

10

2014

2015

33.0

32.0

12.6

2016

2017
(Est.)

30.5

32.0

4

2

0

1.2

2014

2015

2016

2017
(Est.)

80.3
3.1

3

2.1

1
0

1.8
39.4

37.7

2014

2015

63.7

63.0

4
3

36.7

38.9
(net*)

2016

2017(Est.)

68.0

67.8
3.5

3.3

2
1
0

30

0

80

40
20

0.8
2014

2015

0

80
60

20

2016

2017
(Est.)

Although air freight exports have been declining in recent years due to the transfer ofmanufacturing overseas, worldwide logistics demand promises to grow steadily centred
on Asia. Further, as the manufacturing industry and other industries globalise their business activities, supply chains extending from raw material procurement through to thedelivery of products to consumers are becoming more complex, which is heightening
demand for forwarders able to provide comprehensive solutions.

(FY)

40

1.2

External factors, including economic trends, currency fluctuations, social conditions, andearthquakes and other natural disasters, affect the business conditions of the Travel
Business. Currently, the number of Japanese overseas travellers is stagnant due to uncertainty over the international situation. Meanwhile, the number of overseas visitors toJapan has been rising steadily over the past three years, and demand from overseas visitors promises to continue growing.

(FY)

60

2.2

According to the Ministry of Internal Affairs and Communications Statistics Bureau’s
Family Income and Expenditure Survey, consumption expenditure of total households
in 2015 decreased 2.7% year on year. Further, recreational service expenditure of total
households declined 4.0% year on year, down for the second consecutive year.
Nonetheless, the Hanshin Tigers and Takarazuka Revue continue to enjoy strong­customer-drawing power.

0

10

0.7

In the Umeda area, the market for rentable office space is seeing vacancy rates trend
toward gradual improvement due to the end of a growth period in the supply of new
office floor space and a steady trend toward small and medium-sized tenants relocating
to larger premises or seeking additional floor space in existing buildings.
As for conditions in the housing market, sales have been steady in the Tokyo metropolitan area and the Kansai area because lower interest rates for home loans are counter­acting an upward trend in sales prices stemming from land acquisition costs andconstruction costs that are rising and remaining high. As a result, the sales inventory is at
a low level.

(FY)

20

1.5

1.2

4

2

50

40

3

1

0

(FY)

150

20

0

0

223.6

49.9

37.2

In the Kansai area, the population has been declining in recent years as society ages. The
decrease is particularly pronounced in the group aged between 15 and 64. Consequently,
the Urban Transportation Business faces challenging business conditions. Areas servedby the Group’s railway lines, however, are comparatively popular. As a result, in theseareas the population has been trending upward since bottoming in 1996, the year after
the Great Hanshin Earthquake.

(FY)

300

38.0

0

200

100

60

40

Market Conditions

0

(FY)

According to the “White Paper on Leisure 2016,” hotel revenues rose 6.9% year on year
and reached a new record thanks to three consecutive years of growth. The main driverof this growth has been a surge in the number of overseas visitors to Japan. In 2016, therate of increase in the number of overseas visitors to Japan surpassed that of the previous year, and the overseas visitors market is likely to expand further. The rapid increase inoverseas visitors and a shortage of accommodation for the Tokyo 2020 Olympic andParalympic Games has led to stepped-up building of new hotels and renovation of existing hotels.

* As of fiscal 2017, revenues from operations will be presented on a gross basis rather than a net basis (total transactions net of freight costs).
Hankyu Hanshin Holdings • Annual Report 201639

Urban Transportation

Priority Tasks
1 	Provide quality urban transportation

services and other related services

Basic Strategy
3 	Ensure reliable transportation and peaceof mind

The Urban Transportation Business willgrow by strengthening the operational

Develop personnel

Enhance security

foundations that enable safe, reliable,

Strengthen Group collaboration

Develop rolling stockand comfortable services while creating
advanced urban transportation services inEnhance services and convenienceE nhance value of line-side areas andpublicise them4 	Expand feeder transportation andan environmentally and socially responsible manner. Specifically, we will strengthenEnhance appeal of railway stations

extend catchment areas of railway lines
and stations

tion services and feeder transportation2 	Increase convenience of existing infra-Introduce common sales measures tothe bus businessstructure and expand railway network evelop railway stations and constructD
continuous grade separations
Expand and strengthen railway network articipate in community transportationPin the taxi businessE nhance bicycle parking areas at railway
stations and bicycle rental services
 ollaborate with line-side area municiC
pal authorities, chambers of commerce
and industry, and companies

coordination with connecting transportaservices and extend their coverages areas.
Also, we will increase and improve railway stations’ ability to provide services andinformation. Such efforts will expand theGroup’s businesses in line-side areas, attract
outside companies to the areas, strengthen
lifestyle services and economic functions,and heighten line-side value.

40

Hankyu Hanshin Holdings • Annual Report 2016

Urban Transportation

Fiscal 2016 Review of Operations
In the Urban Transportation Business, railway operation revenue

and includes buttons that allow customers to open and close doors

increased due to favourable performances by the Hankyu andto maintain the cabin temperature. In addition, we changed to an

Hanshin lines, which resulted from increases in line-side area popula-elevated railway track between Uozaki and Ashiya stations in a proj-

tions and overseas visitors to Japan as well as a recovery from theect to construct continuous grade separations on the outbound line

effect of the previous fiscal year’s consumption tax increase. Also, in

between Sumiyoshi and Ashiya stations.

the automobile business, airport routes performed well. As a result of

The automobile business heightened customer convenience by

the above, the business segment posted year-on-year increases of

beginning mutual usage of hanica commuter passes for the services

2.6%, or ¥6,124 million, in revenues from operations, to ¥239,544 million,of Hankyu Bus Co., Ltd. and Hanshin Bus Co., Ltd. Also, in March 2016

and 7.0%, or ¥2,717 million, in operating income, to ¥41,270 million.

Hanshin Bus expanded by assuming all municipal bus routes of
Amagasaki Municipal Transportation Bureau and extending the

The railway business increased the safety and comfort of custom-route network to all areas of Amagasaki.

ers and reduced its environmental burden. As part of these efforts,
Hankyu Corporation introduced five 1000 series trains, which makes

The retailing business developed and sold original products andless noise and consumes less energy than older rolling stock, andheld a stamp rally at line-side area convenience stores to mark thecompleted the change to an elevated railway track between Katsura

20th anniversary of the opening of the inaugural asnas convenienceand Higashi-muko stations in a project to construct continuous

store. Moreover, we integrated sales campaigns linking products

grade separations near Rakusaiguchi Station on the Kyoto Line.

available at stores with transportation advertising media and promo-

Further, Hanshin Electric Railway introduced one new 5700 series

tional activities at event spaces.

train to local services, which realises outstanding energy-saving
Hankyu Corporation and Hanshin Electric Railway: Performance results
Fare revenues (¥ million)*

HankyuHanshin

Passenger volumes (Thousands)*

FY2016FY2015

Change%FY2016FY2015

Change%Other tickets

62,92060,9102,009

3.3

319,023

308,843

10,179

3.3

Commuter pass

32,272

31,549722

2.3

325,540

318,692

6,847

2.1

Total

95,192

92,4592,732

3.0

644,563

627,536

17,027

2.7

Other tickets

21,03520,286748

3.7

116,440

112,000

4,439

4.0

Commuter pass

11,372

11,107264

2.4

117,786

115,203

2,582

2.2

Total

32,40731,394

1,013

3.2

234,226

227,203

7,022

3.1

* Sum of tier 1 and tier 2 railway operators for both Hankyu and Hanshin

Fiscal 2017 Outlook
In the railway business, railway operation revenue is likely to grow asincrease in revenues from operations, to ¥243.2 billion. However,increases in line-side area populations and overseas visitors to Japan

mainly due to construction costs of elevated railway tracks andoffset the absence of the rush demand had been anticipated prior tohigher depreciation and amortisation accompanying investment in

a consumption tax rise that was previously scheduled for April 2017.

the manufacture of rolling stock, we expect operating income toConsequently, we anticipate a 1.5%, or ¥3.7 billion, year-on-year

decline 3.6%, or ¥1.5 billion, year on year, to ¥39.8 billion.

Hankyu Corporation and Hanshin Electric Railway:
Performance forecasts (fiscal 2017)

Urban Transportation Business:
Outlook for revenues from operations and operating income(¥ billion)

Fare revenues (¥ million)*

HankyuHanshin

FY2017FY2016

Change%96,586

95,192

1,393

1.5

32,77432,407366

1.1

Passenger volumes (Thousands)*

HankyuHanshin

FY2017FY2016

Change%654,981644,563

10,4171.6

237,013234,226

2,786

1.2

(¥ billion)

50

233.4

40

38.6

239.5

243.2

250

41.3

39.8

200

30

150

20

100

10

50

0

0

2015

* Sum of tier 1 and tier 2 railway operators for both Hankyu and Hanshin
Operating income

2016

2017
(Est.)(FY)

Revenues from operations (right axis)

Hankyu Hanshin Holdings • Annual Report 201641

Urban Transportation

Medium-Term Management Plan: Ongoing Project
Kita-Osaka Kyuko Railway Line Extension

Renovation of Hanshin Umeda Station Begins

and Improvement ProjectOn 3rd March 2015, Hanshin Electric Railway began construction

The Osaka Prefectural Government, Minoh City, Kita-Osaka Kyuko

work to upgrade Hanshin Umeda Station in Kita-ku, Osaka. Currently,

Railway Co., Ltd., and Hankyu Corporation explored the possibility of

the company is working with Hankyu Corporation to rebuild the Dai

extending the Kita-Osaka Kyuko Railway Line from Senri-Chuo

Hanshin Building, which Hanshin Department Store’s Umeda

Station to Shin-Mino-o Station (provisional name). The aims of theseFlagship Store occupies, and upgrading surrounding public facilities

deliberations were to strengthen Osaka’s north–south axis, reduce

under the Umeda 1-1 Project. In conjunction with this work, on the

traffic congestion on National Highway No. 423 (Shin-Midosuji), andnorth side of Hanshin Umeda Station we have begun widening

improve the convenience of public transportation in northernand upgrading an east–west underpass (the urban development

Osaka. In December 2015, a “license of Type I Railway Business” and a

project’s passageway No. 1 in front of Osaka Station). Further, while“charter for railway track operations” was obtained from the Ministry

implementing this widening work, we plan to construct an inte-of Land, Infrastructure, Transport and Tourism. Further, in March 2016

grated structure on the floor directly beneath the underpass tothe four parties involved in the project concluded a basic contract

create additional space in the railway station, thereby enabling theconcerning the objectives of the line extension and the sharing ofwidening of platforms. Also, we plan to install automatic platform

development costs. Plans call for beginning construction in fiscal

gates and make the west ticket gate exit area barrier-free. This con-2017 and opening the extension in fiscal 2021.

struction work to upgrade Hanshin Umeda Station will transform it
into a station customers can use even more comfortably and with

Development plan summary•••• Extension distance:

2.5 km, from Senri-Chuo Station to
Shin-Mino-o Station (provisional name) New stations:Mino-o-Semba Station (provisional name)and Shin-Mino-o Station (provisional name)greater peace of mind.

 Estimated project cost: ¥65.0 billion Demand:

42,000 people per day

A conceptual illustration of the renovated Hanshin Umeda Station

Fiscal 2016 Initiatives
Assumption of Amagasaki Municipal Bus Business

Integration of Transportation Advertising

Hanshin Bus Co., Ltd., assumed the Amagasaki municipal bus businessand Retailing Businesseson 20th March 2016. Competition among the general bus services ofHankyu Corporation integrated the management of transportation

Amagasaki Municipal Bus, Hanshin Bus Co., Ltd., and Hankyu Bus Co.,

advertising and retailing businesses under the Station Retail andLtd., has established an extensive route network in the Amagasaki

Advertising Department, which is creating synergies between thearea in Hyogo Prefecture. Aiming to heighten ­convenience further,businesses. By exploiting the contacts with customers and manufac-

Hanshin Bus and Hankyu Bus will provide bus services in theturers of the retailing business and the information distribution

Amagasaki area jointly and realise cohesive management that takes

capabilities of the transportation advertising business, we will inte-advantage of the companies’ common IC card, hanica.

grate sales campaigns linking products available at stores with transportation advertising media and promotional activities at event
spaces. These initiatives will create synergies, which will help increase
profitability and invigorate line-side areas.

42

Hankyu Hanshin Holdings • Annual Report 2016

Urban Transportation

Introduction of New Rolling Stock that Offers Comfortable

Hanshin Electric Railway 5700 Series Rolling Stock

Cabins While Saving Energy

On 24th August 2015, Hanshin Electric Railway began operating Jet

Since fiscal 2014, Hankyu Corporation has been steadily introducing

Silver 5700 series rolling stock on local services to ensure worry-

1000 series and 1300 series rolling stock to all of its railway lines. As

free, comfortable conditions inside trains and to save energy.

well as more comfortable cabins, the new rolling stock features dra-

Incorporating the latest technology, this new rolling stock has inher-

matically improved environmental performance. Further, in theited many of the basic features of Jet Car rolling stock, includingsummer of 2015, Hanshin Electric Railway introduced to local ser-advanced acceleration and deceleration performance. The design ofvices new 5700 series rolling stock that benefits passengers and thethe new rolling stock reflects feedback from customers. We haveenvironment. As a company responsible for urban transportation

arranged the seating partitions in a generous manner so that those

infrastructure, after confirming safety and reliability, we will incorpo-

sitting or standing are comfortable, included buttons for opening

rate leading-edge technology and advance the development of new

and closing doors to maintain a comfortable cabin temperaturerolling stock that realises comfortable cabins and energy-saving

when trains are stationary, and introduced liquid crystal displays

performance simultaneously.

inside trains showing journey information. Further, we have reduced
energy consumption roughly 60% versus standard local service roll-

Hankyu Corporation 1000 Series and 1300 Series Rolling Stocking stock, which uses resistance control, by introducing the main

Hankyu Corporation’s new 1000 series and 1300 series rolling stock

circuit system that we adopted for Hankyu Corporation 1000 series

reduces noise within trains, making them more comfortable for pas-rolling stock and by introducing LED lighting. The rolling stock has

sengers, and saves energy. Specifically, we adopted an adjustablebeen very well-received, winning the Japan Railfan Club’s 2016 Blue

voltage adjustable frequency (AVAF) inverter controller and, for the

Ribbon Prize.

1000 series, a totally enclosed, self-cooling-type permanent magnet
synchronous motor. In addition, we introduced light-emitting diode(LED) lighting throughout, including cabin lighting, headlights, taillights, and marker lights. As a result, the new rolling stock consumes
approximately 50% less energy than the existing 5000 series rollingstock and about 20% less than the previous 9000 series and 9300
series rolling stock.

Hanshin Electric Railway 5700 series rolling stock

Hankyu Corporation 1000 series rolling stock

Comparison of annual power consumption
(kWh)

1,600

1,200

Approx.
60%
reduction

800

Approx.
40%
reduction

Seating partitions are arranged so thatthose sitting or standing are comfortable

400

05700 series

5001 series

5131/5331 series

Hankyu Hanshin Holdings • Annual Report 201643

Real Estate

Priority Tasks
1 	Enhance appeal of and revitalise Umeda

3 	Grow the Group’s Real Estate Business

The Umeda area is the Hankyu Hanshinarea and other areas served by our lines

further through stable management ofreal estate funds and REIT businesses

Holdings Group’s most important business ursue external growth of the RealP
Estate Business through linkage with
Hankyu REIT Asset Management

Business will strengthen its management

 romote Umeda 1-1 Project steadily
P(Dai Hanshin Building and Shin Hankyu
Building rebuilding project)E nhance value of the Umeda area andother areas served by the Hankyu andHanshin lines by planning and advancing new development projects andimplementing plans for renewal ofcommercial facilities
2 	Respond flexibly in anticipation ofchanges in business conditions for realestate sales business lan and develop condominiums
Pmatching customer needs and advancebusiness and sales in anticipation ofchanges in market conditions
 evelop detached houses in towns
D
while marketing residential land lots
steadily (Yamatedai, Nakajima, and Saito)
 evelop supply network and acquireDbusiness opportunities in Tokyo metropolitan area and increase brand recognition of Geo condominiums and Hapia
detached houses

44

Basic Strategy

Hankyu Hanshin Holdings • Annual Report 2016

Increase fee-based revenues from asset
and property managementbase. Centred on this area, the Real Estateand operation of the real estate leasing
business and maintain or improve thevacancy rates of owned properties. At thesame time, we will enhance the entire

4 	Strengthen business in the Tokyo metro-

politan area and develop businesses
overseasIncrease rental revenue over mediumto-long term by acquiring revenuegenerating properties and participatingin redevelopment projects in the Tokyo
metropolitan area
 ccumulate business expertise byA
developing and owning logistics warehouses and participating in condominium businesses overseas

area’s appeal and ability to attract customers. Further, through the real estate sales
business we will heighten the value ofareas served by the Hankyu and Hanshinlines. Moreover, we are developing a presence in such new markets as the Tokyo
metropolitan area and overseas markets tobroaden earnings foundations.

Real Estate

Fiscal 2016 Review of Operations
The Real Estate Business recorded year-on-year increases of 7.0%, or¥14,479 million, in revenues from operations, to ¥220,923 million,
and 34.1%, or ¥12,678 million, in operating income, to ¥49,851 mil-* Condominium unit sales in the previous fiscal year (fiscal 2015) were 1,374 units.
Condominium unit sales in the fiscal year under review (fiscal 2016) were 1,302 units.
The number of condominiums sold (number of deliveries) includes units in sharedbuildings in which the Group only owns a portion of the units.

lion, due to the sale of land for facilities in the centre of Saito (Ibaraki,
Osaka Prefecture).
Amid challenging business conditions, the real estate leasing
business took a range of measures to increase the competitivenessof commercial facilities and office buildings and to maintain andraise their occupancy rates. For example, we began a new service
based on a common cash point card, Hankyu Hanshin Odekake Card,
which can be used in the Group’s main shopping centres. Also, thebusiness launched a website, Hankyu Hanshin Workers’ Web, to provide ­information about various special offers and events aimed atthose working in the main office buildings that the Group manages
and operates. Further, in HERBIS Plaza, in Kita-ku, Osaka, we unveiled
International Medical Square, an urban clinic mall that gives peace ofmind to non-Japanese people who want to consult a doctor byoffering services in English and Chinese as well as Japanese. In theInternational Medical Square

Umeda area, in the centre of Osaka, we are proceeding with a largescale development project, the Umeda 1-1 Project (Dai Hanshin
Building and Shin Hankyu Building rebuilding projects) with a viewto completing all construction in spring 2022. In July 2015, we began
the new construction work of phase I.
In the real estate sales business, sales of condominiums* included
Geo Hankyu Rakusaiguchi North Residence / South Residence (Muko,

Hankyu Saito Garden Front

Kyoto), Geo Tower Minamihorie (Nishi-ku, Osaka), Geo Seishin Chuo
(Nishi-ku, Kobe), and Geo Akasaka Tango-cho (Minato-ku, Tokyo). As
for sales of residential land lots and detached houses, we sold
Hankyu Takarazuka Yamatedai Skyle (Takarazuka, Hyogo Prefecture),
Hankyu Saito Garden Front (Minoh, Osaka Prefecture), Osaka Nakajima

Geo Hankyu Rakusaiguchi North Residence /South Residence

Koen Toshi Hapia Garden (Nishi-Yodogawa-ku, Osaka), Hapia Garden
Tarumi Kasumigaoka (Tarumi-ku, Kobe), and Hapia Garden Yokohama
Yamate (Naka-ku, Yokohama).

Fiscal 2017 Outlook
We expect revenues from operations to grow 1.2%, or ¥2.7 billion,
year on year, to ¥223.6 billion, as a result of higher earnings from salesof condominiums. However, we anticipate a 23.4%, or ¥11.7 billion,

Real Estate Business:
Outlook for revenues from operations and operating income(¥ billion)

year-on-year decrease in operating income, to ¥38.2 billion, due tothe absence of fiscal 2016’s one-time factor: the sale of land for facilities in the centre of Saito (Ibaraki, Osaka Prefecture).

(¥ billion)

60
48
36

206.4

220.9

223.6

250
200

49.9
38.2

37.2

150

24

100

12

50

0

0

2015
Operating income

2016

2017
(Est.)(FY)

Revenues from operations (right axis)

Hankyu Hanshin Holdings • Annual Report 2016

45

Real Estate

Development Projects of the Real Estate Leasing BusinessUmeda 1-1 Project (Dai Hanshin Building and Shin Hankyu

Even by the Umeda area’s high standards, the Umeda 1-1 area has

Building Rebuilding Project)

outstanding accessibility. Therefore, we plan to exploit the advan-

In accordance with the Medium-Term Management Plan, thetages of this location not only to build multipurpose buildings for

Hankyu Hanshin Holdings Group is implementing a business strat-

commercial premises and offices but also to establish a conference

egy that will enhance value of the Umeda area and other line-side

zone that will invigorate businesses in the area by providing a venue

areas. A large-scale development project, the Umeda 1-1 Project, is afor business-related information distribution, personnel develop-

major pillar of this strategy. Aiming to complete the construction

ment, and exchanges. Also, to improve pedestrian access to the area

work of phase I in spring 2018 and all construction in spring 2022, wesurrounding the location, we will strengthen the network of pedes-

will rebuild the Dai Hanshin Building while continuing operations of

trian routes on three levels—an aboveground level, an underground

Hanshin Department Store’s Umeda Flagship Store, which occupies

level, and a deck level.

the building.
Project summary
Location

1-1 Umeda, Kita-ku, Osaka

Site area

Approx. 12,200 square metres*

Total floor space

Approx. 260,000 square metresSize

38 floors above ground and 3 below groundPurpose

Department store, offices, halls, etc.

Planned total investment¥89.7 billion

Construction completion

Around spring 2022

* Including 750 square metres of road between Dai Hanshin Building andShin Hankyu Building

A rendering of the Umeda 1-1 Project upon completion

Kobe Hankyu Building, East Building Rebuilding Project andarea at the top of the building, on the 29th floor, that will give visitors

Nishinomiya Kitaguchi Hankyu Building (Provisional Name)a breathtaking view of Kobe and its port. Also, for the office floors we

Construction Projectplan to attract a centre for exchanges between industry and aca-

The Group is rebuilding Kobe Hankyu Building, East Building and con-demia as a tenant. We are proceeding with this development plan tostructing Nishinomiya Kitaguchi Hankyu Building (provisional name)establish a landmark befitting central Kobe.

to enhance the appeal of line-side areas.
Kobe Hankyu Building, East Building is in Sannomiya, a railway
hub in central Kobe. In the building, we plan to include commercial
facilities, offices, and a REMM hotel. Under this brand, Hankyu
Hanshin Hotels operates hotels that mainly comprise guest rooms
for overnight stays. Further, we intend to establish an observation
Kobe Hankyu Building, East Building Rebuilding Project summary

46

Location

4-2-1, Kanocho, Chuo-ku, Kobe

Purpose

Offices, hotel, commercial facilities, railway station

Site area

Approx. 7,100 square metres(including area under elevated railway tracks)

Total floor space

Approx. 29,000 square metres

Leasable area

Approx. 17,600 square metres

Number of floors

29 floors above ground and 3 below groundTotal investment

Approx. ¥23.2 billion

Scheduled opening

Spring 2021

Hankyu Hanshin Holdings • Annual Report 2016

A rendering of the Kobe Hankyu
Building, East Building exterior uponcompletion

Real Estate

Nishinomiya Kitaguchi Hankyu Building (provisional name) Project summary

Nishinomiya Kitaguchi Hankyu Building (provisional name) gives
direct access to the platforms of Nishinomiya-kitaguchi Station and

Location

536, Takamatsucho, Nishinomiya

is located at the exit providing access from the railway station to

PurposeCommercial facilities, facilities for service providers, passage

Site area

Approx. 3,800 square metres

Total floor space

Approx. 12,000 square metres (including approx.
460 square metres of floor space of facilities underelevated railway tracks)

Number of floors

10 floors above ground and 1 below groundTotal investment

Approx. ¥4.5 billion

Scheduled opening

Autumn 2018

Hankyu Nishinomiya Gardens, one of the Group’s multipurpose
commercial facilities. We plan to leverage the outstanding convenience of this location to attract such tenants as restaurants, stores,
financial institutions, and providers of educational or childcare­services. Further, we will create a sense of unity by coordinating store
management with Hankyu Nishinomiya Gardens and establishing in
the new building a passage linking the railway station and Hankyu
Nishinomiya Gardens. Through this development project, we aim tofurther invigorate the area around the railway station and create acity that people of all generations, including those bringing up­children, want to live in long term.
Business Forays Overseas
In collaboration with the International Transportation Business, wedevelop and own logistics centres and sell condominiums andA rendering of the Nishinomiya Kitaguchi Hankyu Building(provisional name) exterior upon completiondetached houses overseas. (For details, please see pages 32 to 34.)

Real Estate Sales Business (Condominiums, Residential Land Lots, Detached Houses)
The real estate sales business sells condominiums, residential landestablished. In July 2016, we renewed the brand’s advertising copy,

lots, and detached houses.

and we are stepping up marketing aimed at reinforcement of the

The condominium business markets condominiums under thebrand’s high-end image. Further, we are forging ahead in accordance

Geo brand. Involved in all aspects of operations, from developmentwith the Group’s growth strategy focused on developing a presence

through to sales and management, we provide high-value-addedin new markets. For example, in April 2016 we reorganised to expand

condominiums in excellent locations mainly in areas served by thethe condominium business in the Tokyo metropolitan area to inte-

Hankyu and Hanshin lines but also in other parts of the Kansai area

grate production, sales, and management.

and in the Tokyo metropolitan area. For six consecutive years,

A brand in the detached house sales field, Hapia has an impres-Geo condominiums have received a Good Design Award fromsive track record in the Kinki region and the Tokyo metropolitan area.

the Japan Institute of Design Promotion. Moreover, the results of

We create comfortable homes through a system that integrates land

questionnaires show the favourable reputation that the brand has

acquisition, business advancement, and quality control.

Our quality control system’s 5 steps

Plan

DesignConstruction plans

Construction

Construction completion

Step 1

Step 2

Step 3

Step 4

Step 5

Share quality standards

Scrutinise design
drawings

Examine construction
plansManage construction
progress

Check completed
project

As well as complying withstandard i­nspections, Hankyu Realty

Builder’s
inspection

Construction
supervisor’s
inspection

Third-party
body’sinspection

Hankyu Realty’s
original checks

conducts original checks
throughout construction.

General buildings
GeoHankyu Hanshin Holdings • Annual Report 201647

Entertainment and Communications

Priority Tasks
1 	Maximise value of Hanshin Tigers andKoshien brands and Takarazuka brandImprove appeal of live events (create
superior attractions, train and acquirestar talent, and increase appeal of
live-event venues)
 roaden fan base and improve cusB
tomer retention (introduce customer
relationship management and establish
plan–do–check–act (PDCA) cycles,develop sales by taking maximum
advantage of content appeal, andstrengthen promotions through­external media)
 reate value chain for live events, media,
Cand secondary contents (enhanceappeal of established media, broaden
range of media channels)

48

Hankyu Hanshin Holdings • Annual Report 2016

©Takarazuka Revue Company

Basic Strategy
2 	Sustain growth of communications media

With loyal fans and fame not only in theE stablish competitive advantage andretain customers in broadcast andcommunications business throughmarketing rooted in local communities
and strengthening of the communication and media businesses

Kansai area but also nationwide, the oncentrate efforts on growth areas,Cexpand in the Tokyo metropolitan area,
and advance business growth throughM&A in information services businessbrand value as unique strengths that3 	Use leisure resources effectively

 ake maximum use of Mt. Rokko’sMpotential as a management resource

Hanshin Tigers and the Hanshin Koshien
Stadium and the Takarazuka Revue contribute significantly to the enhancementof the Hankyu Hanshin Holdings Group’s
other companies in the industry do notpossess. By continuing to develop powerful brands and high-quality performancesthat inspire and excite customers, we will
enhance customer loyalty and maximisebrand value.

Entertainment and Communications

Fiscal 2016 Review of Operations
In the Entertainment and Communications Business, revenues

In the communication and media businesses, amid intensefrom operations edged down 0.1%, or ¥142 million, year on year, tocompetition the broadcast and communications business sought¥112,490 million, while operating income increased 2.1%, or ¥308

to increase subscriber numbers by stepping up the marketing of

million, year on year, to ¥15,301 million. Although revenues

discount plans for long-term cable television contracts and mobile

declined due to the effect of divesting part of the publishing busi-

phone set-menu contracts. Further, we obtained a license for local

ness on 1st October 2014, earnings rose thanks to the high capacity

broadband wireless access services, established base stations andutilisation that respective performances in the stage businesses

other infrastructure, and began providing services.

maintained following the 100th anniversary of the Takarazuka Revue

As for the leisure business, in the Mt. Rokko area, we attracted

in fiscal 2015 as well as a favourable performance by the com-more customers through promotions integrating diverse content

munication and media businesses, which reflected more orders forwith the natural beauty of Mt. Rokko. These included a Midsummer­systems development in the information services business.

Snow Festival and Rokko Meets Art Walk 2015.

In the sports business, the Hanshin Tigers competed at the top of
the league until the end of the regular season. Also, we marked the80th anniversary of the team’s establishment through the Yellow
Magic Project, which held a range of different events that incorporated the team colours symbolically and proved popular. Further, on
consecutive days large crowds of spectators flocked to the Hanshin
Koshien Stadium, which celebrated the summer high school base-Total attendances at Hanshin Tigers home games(Thousands of people)

4,000

3,000

2,898

2,728

2,772

2,690

2012

2013

2014

2,878

2,000

ball tournament’s centenary.
As for the stage businesses, all performances of the stage revue

1,000

business were well-received. And, for the second time and for the
first time in two years, we held performances in Taiwan, which were

0

2011

again a resounding success. Meanwhile, the theatre business

2015

(CY)

produced a range of performances that attracted strong public
interest. For example, we invited celebrated actors and associatedpersonnel from Broadway to perform Prince of Broadway.

Fiscal 2017 Outlook
In the stage businesses, we expect the high level of capacity utilisation that has continued since the Takarazuka Revue’s centenary toedge down and a decline in sales of related products. Also, we antici-

Entertainment and Communications Business:
Outlook for revenues from operations and operating income(¥ billion)

112.6

112.5

15

15.0

15.3

pate fewer performances because of work to renew the Tokyo
Takarazuka Theatre’s stage machinery. Regarding the sports busi-(¥ billion)

20

120

90

12.6

ness, earnings are likely to decline because the Hanshin Tigers willplay fewer official games. As a result of the above, in fiscal 2017,

110.3

10

60

5

30

ending 31st March 2017, the Entertainment and Communications
Business is forecast to record year-on-year decreases of 2.0%, or¥2.2 billion, in revenues from operations, to ¥110.3 billion, and 17.5%,or ¥2.7 billion, in operating income, to ¥12.6 billion.

0

0

2015
Operating income

2016

2017
(Est.)(FY)

Revenues from operations (right axis)

Hankyu Hanshin Holdings • Annual Report 201649

TravelPriority Tasks
1 	Strengthen product planning

Basic Strategy
In the Travel Business, the mainstay operat-E xpand product lineup centred on
original range of core brand travel
packagesing company is Hankyu Travel International, reate products customers support,
C
incorporate diversified marketing
methods, and manage quality
rigorously

years. As well as marketing travel packages

which promotes the Trapics brand and hasearned customer endorsement for manythrough such traditional media as newspapers, the company has also been focusing efforts on mail-order sales and online

2 	Establish foundations of stable earnings

Improve structure of back-office departments, strengthen marketing to groups,
strengthen focus on tourists fromoverseas, and manage risk rigorously

sales in recent years. Through dynamic,
high-paced marketing and product roll-outs
that exploit the characteristics of mail-ordersales and online sales, we are developing an
extensive lineup of travel products that caterto diversifying travel demand.

3 	Invest for the future oll out products for individuals,R
strengthen bases of overseas subsidiaries, and develop diverse personnel forthe future

50

Hankyu Hanshin Holdings • Annual Report 2016

Never resting on our laurels, we will continue to embrace change and improve our
products even further to create travel
products that reflect customer feedback
and ensure we are a company society needs.

TravelFiscal 2016 Review of Operations
Due to the significant effect of lower revenues from overseas travel

In domestic travel, demand for travel to the Hokushinetsu region

products, the Travel Business recorded year-on-year decreases of 4.6%,

strengthened thanks to extensive media coverage of the opening ofor ¥1,462 million, in revenues from operations, to ¥30,502 million, andthe Hokuriku Shinkansen Line and related developments. Also, travel

44.5%, or ¥546 million, in operating income, to ¥680 million.

products planned and marketed through the use of regional revitali-

Demand for travel to North America remained steady. However,sation grants were well-received.

demand for travel to Europe declined amid challenging conditions

Further, for travel products for visitors to Japan, we steadily grew thestemming from yen depreciation and security concerns, exacerbated

number of overseas visitors to Japan using our travel products by step-by the November 2015 terrorist attacks in Paris.

ping up marketing activities to tap demand as it continued to increase.

Total travel billings (FY2016)
Rank Company name

Overseas travel billings (FY2016)¥ billion

Rank Company nameDomestic travel billings (FY2016)¥ billion

Rank Company name¥ billion

1JTB

1,583.3

1

JTB

433.6

1

JTB

1,074.7

2

KNT-CT Holdings

509.3

2

HIS

345.1

2

Rakuten Travel

465.2

3

Rakuten Travel

488.5

3

JTB World Vacations

220.6

3

KNT-CT Holdings

349.8

4

HIS

428.5

4

Hankyu Travel International*

201.1

4

Nippon Travel Agency

276.1

5

Nippon Travel Agency

427.7

5

KNT-CT Holdings

144.1

5

ANA Sales

180.7

6

Hankyu Travel International*

335.8

6

Nippon Travel Agency

120.6

6

Hankyu Travel International*

132.5

7

JTB World Vacations

220.6

7

JTB Business Travel Solutions

57.1

7

JALPAK

123.2

8

ANA Sales

205.0

8

JALPAK

56.3

8

Tobu Top Tour

108.1

9

JALPAK

179.5

9Travel Plaza International

46.3

9

JR TOKAI TOURS

97.0

10

Tobu Top Tour

148.1

10

DeNA Travel

44.3

10

Meitetsu World Travel

74.9

Source: Japan Tourism Agency Bulletin: Business Volume for Major Travel Agents (April 2015 to March 2016)
Note: Billings are rounded to the nearest ¥100 million.
* The total of Hankyu Travel International Co., Ltd., Hankyu Hanshin Business Travel Co., Ltd., and Hanshin Travel International Co., Ltd.

Fiscal 2017 Outlook
We expect higher demand for travel to various overseas regions withthe exception of Europe. Also, we intend to leverage topical tourist
resources to boost sales of domestic travel products. Consequently,

Travel Business:
Outlook for revenues from operations and operating income(¥ billion)

we anticipate year-on-year increases of 4.9%, or ¥1.5 billion, in revenues from operations, to ¥32.0 billion, and 114.3%, or ¥0.8 billion, in(¥ billion)

2.0

40

32.0

30.5

1.5

operating income, to ¥1.5 billion.

32.0
1.5

1.2
1.0

30

20

0.7
0.5

10

0

0

2015
Operating income

2016

2017
(Est.)(FY)

Revenues from operations (right axis)

Hankyu Hanshin Holdings • Annual Report 201651

International Transportation

Priority Tasks
1 	Reform to establish a balanced

business portfolio
S trengthen logistics and ocean transportation businesses
Promote customer-focused marketingExpand into new markets
Advance localisation
2 	Develop and implement optimal mea-sures for profit growthJ apan: Enhance productivity andimprove profit margin by reforming
operational systems
 verseas: Increase earnings throughOsales growth that matches market
growth and through cost reductions
 evelop and market high-value-addedD
services

Basic Strategy
3 	Ensure robust global governance

The Hankyu Hanshin Holdings Group’s evelop network of overseas bases
Dfurther and advance capabilities foroverall management

International Transportation BusinessS treamline operational functions andoptimise headquarters in Japan(IATA) certified freight agency. The businessE nhance personnel utilisation andmotivation

services including air freight, sea freight, uild capabilities for overall globalBmanagement
 rasp and evaluate business resultsG
properly and reflect them in activities
going forwardbegan in 1948, when it became Japan’s
first International Air Transport Association
developed a logistics business that offers
and product management. Since establishing a representative office in New Yorkin 1961, the International Transportation
Business has built a global network comprising 116 bases and spanning 26 countries and regions.
We aim to be an innovative logistics
provider that offers progressive high-valueadded services worldwide centred on Asia.
Further, the International Transportation
Business uses the global perspective andexpertise that it has developed over many
years to assist the Group’s development ofbusinesses overseas.

52

Hankyu Hanshin Holdings • Annual Report 2016

International Transportation

Fiscal 2016 Review of Operations
Due to lower revenues from subsidiaries in Japan, the International

Phnom Penh, Cambodia. Further, in Indonesia a Group company

Transportation Business recorded year-on-year declines of 7.0%, orcompleted a logistics centre and began offering logistics and ware-¥2,760 million, in revenues from operations, to ¥36,658 million, andhousing services in March 2016. The Group company was estab-

41.4%, or ¥1,265 million, in operating income, to ¥1,788 million.

lished through a joint investment by Hankyu Corporation, Hanshin

Subsidiaries in the Americas and Europe posted solid results,

Electric Railway Co., Ltd., and Hankyu Hanshin Express Co., Ltd.

mainly supported by air transportation demand. However, the per-Related initiatives include a collaboration between the International

formances of subsidiaries in East Asia and the ASEAN region flagged

Transportation and Real Estate businesses to build a logistics centre

as China’s economy decelerated. Similarly, subsidiaries in Japanin Singapore. Upon completion, this logistics centre will be thefaced challenging business conditions amid a continued slump in

Group’s largest such facility and exploit the significant advantages

demand for logistics services.

that Singapore affords as an international logistics hub. Focusing on

In response to these conditions, we expanded operations in East

Asia, we will continue expanding our global network and strength-

Asia and the ASEAN region, which promise growth, by opening aening logistics businesses. (For details about our logistics centres insales office in Pune, western India, and a representative office inIndonesia and Singapore, please see pages 32 and 33.)

Network of bases: 116 overseas bases (as of 1st July 2016)
Established new base in Cambodia
In July 2015, we opened a representative office in Phnom Penh, where many Japanesemanufacturers are beginning to open overseas bases. Working with our subsidiaries inThailand and Vietnam, the new office will conduct a market survey.

Rotterdam
Brussels
SeattleSan Francisco
Los Angeles
San Diego

ChicagoBajio

DetroitToronto
New York
Cincinnati
Atlanta
Dallas
McAllenLondonParis
Dusseldorf
PragueConstruction of new logistics centres in the ASEAN region
Having completed the construction of a logistics centre in Indonesia’s fast-growing market,
we held a ribbon-cutting ceremony in April 2016. Also, we are building a large logistics
centre in Singapore, Asia’s logistics and information hub.

Amsterdam
Frankfurt

Dubai

Sao Paulo

Strengthening business developmentin East Africa
Following on from the April 2014 establishment of a base in Johannesburg, South
Africa, we are stepping up business development in East Africa.

Local subsidiary
BranchRepresentative officeHong Kong
Seoul

Beijing
Guangzhou
Hanoi
Delhi
Bangkok

Milan

Mexico City

Established new base in Mexico
July 2016 saw our establishment of asales office in the Mexican Plateau’s
Bajio region, which is continuing to
expand as a major centre of automotive manufacturing.

Moscow

Chiang Mai
MumbaiPune
ChennaiBangalore
PenangYangonBusan

ShanghaiTaipeiHai PhongManilaPasir Gudang
Butterworth

Kuala Lumpur
Port Klang
Johor Bharu

Jakarta
Singapore

Kaohsiung
Taichung
Cebu
Laem Chabang
Dong Nai
Ho Chi Minh City
Binh Duong
Phnom Penh

Johannesburg

Fiscal 2017 Outlook
Given our expectation that subsidiaries in Japan will increase handlingvolume and improve profitability while overseas subsidiaries develop
businesses in promising markets and capture further demand forInternational Transportation Business:
Outlook for revenues from operations and operating income(¥ billion)

(¥ billion)

4100

logistics services in Asia, we anticipate revenues from operations of¥80.3 billion (a year-on-year increase of 6.0%, or ¥2.2 billion, on a net

3

3.1

80.3

basis). We also anticipate an increase of 22.2%, or ¥0.4 billion, in
operating income, to ¥2.2 billion.

2.2

2

39.4

1.8

36.7

75

50

(net: 38.9)

1

25

0

0

2015

2016

2017
(Est.)(FY)

Operating income
Revenues from operations (right axis)
Note: A s of fiscal 2017, revenues from operations will be presented on a gross basis
rather than a net basis (total transactions net of freight costs).

Hankyu Hanshin Holdings • Annual Report 2016

53

Hotels

Priority Tasks

Basic Strategy

1 	Improve profitability of existing hotels

The Hankyu-Hanshin-Daiichi Hotel GroupThe Hotels Business maximises the earn- aintain and enhance product valueMthrough appropriate investment

traces its origins to the opening of theings of existing hotels by refurbishing guest

Takarazuka Hotel in 1926. Today, we are one

rooms to maintain and enhance their prod-of Japan’s leading hotel groups and manage

uct value, developing new sales channels in

2 	Expand network by opening new hotels

many different types of hotels. Our chain

Japan and overseas, and implementingImplement plan to open new REMM
hotels centred on Tokyo metropolitan
area

comprises 45 hotels with 9,948 guest rooms

appropriate revenue management. At theas of 1st April 2016. In ­addition to above-same time, focusing on the Tokyo metropoli-mentioned hotels, The Ritz-Carlton, Osaka,tan area, the business is taking advantage of

which we manage through an alliance withan increase in business opportunities bya chain of luxury international hotels, has

opening more REMM hotels, which mainly

been held in high regard since opening.

comprise guest rooms for overnight stays.

Hotel network of the Hankyu-Hanshin-Daiichi Hotel Group
HotelsGuest rooms

Directly managed hotels (Hankyu Hanshin Hotels)

18

4,494

Other (franchises, etc.)

27

5,454

45

9,948

Total
Kyoto, Osaka, Kobe

× 11
×2
Tokyo metropolitan area

×6
×4

54

Hankyu Hanshin Holdings • Annual Report 2016

Hotels

Fiscal 2016 Review of Operations
An increase in overseas visitors to Japan and solid domestic demand

Further, we took various measures to strengthen the competitive-

led to favourable business results, primarily in the accommodation

ness of our hotels. For example, we refurbished guest rooms of Hoteland restaurant areas. Consequently, the Hotels Business achieved

new Hankyu Kyoto with the traditional charm of Kyoto and Japan as

year-on-year growth of 7.9%, or ¥5,010 million, in revenues froma motif. Also, we renewed restaurants in stages, including La Paranza

operations, to ¥68,042 million, and 171.2%, or ¥2,082 million, in oper-of Dai-ichi Hotel Annex, Grand Hakurakuten and Rainbow of Hotelating income, to ¥3,298 million.

new Hankyu Osaka, Nen of Hotel Hanshin, and Hanagatami of The

In fiscal 2016, we catered to diversifying customer needs by

Ritz-Carlton, Osaka, as well as renewed the banquet halls of suchincreasing twin-type guest rooms in Hotel Hanshin and other hotels.

hotels as Kichijoji ­Dai-ichi Hotel.

Average daily rates (ADR) and occupancy rates of Hankyu Hanshin
Hotels in the Tokyo metropolitan area1 and Kansai area2

Non-Japanese guests as a percentage of overnight-stay guests(%)(Yen)(%)

20,00086.6

15,00015,853

15,21010,000

93.9

92.2

92.6

100

40

75

30

90.5

88.6 17,221

31.4

14,619
50

20

5,000

25

10

0

0

0

2015

38.6

22.7

11,616

10,210

2014

36.9

2016

16.4

11.7

12.7

13.1
10.0

25.0

14.9
17.3
12.3

2010 2011 2012 2013 2014 2015 2016

(FY)

Tokyo metropolitan area ADR
Kansai area ADR
Tokyo metropolitan area occupancy rate (right axis)
Kansai area occupancy rate (right axis)
1. Hotels in Tokyo metropolitan area excluding Hotel new Hankyu Tsukiji
2. Hotels in Kansai area including REMM Shin-Osaka, which opened in September 2012

16.3

Tokyo metropolitan area

(FY)

Kansai area

Fiscal 2017 Outlook
Although we envisage continued favourable trends in the accommo-

we anticipate a 6.0%, or ¥0.2 billion, year-on-year rise in operating

dation area, we expect that withdrawal from the management of cer-income, to ¥3.5 billion, because more overseas visitors to Japan andtain non-hotel restaurants will cause revenues from operations tofirm domestic demand are likely to counteract costs and depreciationedge down 0.3%, or ¥0.2 billion, year on year, to ¥67.8 billion. However,

and amortisation arising from the opening of REMM Roppongi.

(%)

Hotel Business:
Outlook for revenues from operations and operating income

40.0(¥ billion)

Visitors to Japan(Millions of people)

20

19.7

15

33.8
6.2
2.1

10.4
33.3

8.4
32.6
2.7

3.5

(¥ billion)

4

100

3

35.7

63.0

35.0
2

7.9
4.8

32.5
1

0

3.5

3.3

37.5

13.4

10

5

40.0

75

67.8

68.0

50

1.2

25

0

2011

2012

2013

2014

2015

(CY)

Nationwide
Kansai area
Percentage visiting Kansai area (right axis)
Source: “Consumption Trend Survey for Foreigners Visiting Japan,” Japan National
Tourism Organization (JNTO), Japan Tourism Agency

0

0

2015
Operating income

2016

2017
(Est.)(FY)

Revenues from operations (right axis)

Hankyu Hanshin Holdings • Annual Report 201655

Directors and Audit & Supervisory Board Members(As of 30th June 2016)

Directors

56

Kazuo Sumi

Shinya Sakai

Takehiro Sugiyama

President and Representative Director

Representative Director

1973 Joined Hankyu Corporation
2000 Director, Hankyu Corporation
2002 Managing Director, Hankyu Corporation
2003 President, Hankyu Corporation2005 President, Hankyu Holdings
2006	President, Hankyu Hanshin Holdings(Current position)2008 Director, Hankyu Hanshin Hotels (Current position)2013	Director, Hankyu Travel International(Current position)2013 Director, Hankyu Hanshin Express (Current position)2014 Chairman, Hankyu Corporation (Current position)1970 Joined Hanshin Electric Railway
2002 Director, Hanshin Electric Railway
2005 Managing Director, Hanshin Electric Railway
2006 President, Hanshin Electric Railway
2006	Representative Director, Hankyu Hanshin
Holdings (Current position)2008	Chairman, Hanshin Tigers Baseball Club
(Current position)2011	Chairman, Hanshin Electric Railway(Current position)

Executive Vice President
and Representative Director

Noriyuki Inoue

Shosuke Mori

Shunichi Sugioka

Yoshishige Shimatani

Director (External*)

Director (External*)

Director (Part-time)

Director (Part-time)1957 Joined Daikin Industries
1994 President, Daikin Industries
2002 Chairman and CEO, Daikin Industries
2003 Director, Hankyu Corporation2005 Director, Hankyu Holdings
2006	Director, Hankyu Hanshin Holdings(Current position)2014	Chairman of Daikin Industries andChief Global Group Officer (Current position)

1963 Joined Kansai Electric Power2005 President, Kansai Electric Power2010	Director, Hankyu Hanshin Holdings(Current position)2010 Chairman, Kansai Electric Power
2016	Senior Advisor, Kansai Electric Power(Current position)

1964 Joined Hankyu Department Store
2000 President, Hankyu Department Store
2000 Director, Hankyu Corporation2005 Chairman, Hankyu Department Store2005 Director, Hankyu Holdings
2006	Director, Hankyu Hanshin Holdings(Current position)2007 Chairman and CEO, H2O Retailing2008 Director, Hankyu Hanshin Hotels (Current position)2008 Chairman, Hankyu Hanshin Department Stores2015	Director and Senior Corporate Advisor, H2O
Retailing (Current position)2015	Director and Senior Corporate Advisor, Hankyu
Hanshin Department Stores (Current position)

1975 Joined Toho
2011 President, Toho (Current position)2015	Director, Hankyu Hanshin Holdings(Current position)

Takaoki Fujiwara

Yoshihiro Nakagawa

Ichiro Namai

Seisaku Okafuji

Director (Part-time)

Director (Part-time)

Director (Part-time)

Director (Part-time)1975 Joined Hanshin Electric Railway
2005 Director, Hanshin Electric Railway
2007 Managing Director, Hanshin Electric Railway
2011	President, Hanshin Electric Railway(Current position)2011	Director, Hankyu Hanshin Holdings(Current position)2015	Chairman, Hanshin Hotel Systems(Current position)

1976 Joined Hankyu Corporation2005 Director, Hankyu Corporation2007 Managing Director, Hankyu Corporation2013	Representative and Senior Managing Director,
Hankyu Corporation2014 President, Hankyu Corporation (Current position)2014	Director, Hankyu Hanshin Holdings(Current position)

1971 Joined Hankyu Express International
2000 Director, Hankyu Express International
2008 Vice President, Hankyu Travel International
2008	Audit & Supervisory Board Member,
Hankyu Hanshin Hotels (Current position)2010	President, Hankyu Travel International
2013	Director, Hankyu Hanshin Holdings(Current position)2014	Chairman, Hankyu Travel International(Current position)

1974 Joined Hankyu Express International
2005 Director, Hankyu Express International
2008 Director, Hankyu Express International
2009 Director, Hankyu Hanshin Express International
2010	President, Hankyu Hanshin Express International(Current position)2013	Director, Hankyu Hanshin Holdings(Current position)

Hankyu Hanshin Holdings • Annual Report 20161982 Joined Hankyu Corporation2005 Director, Hankyu Corporation
2006 Director, Hankyu Holdings
2006 Director, Hankyu Hanshin Holdings
2007 Managing Director, Hankyu Corporation2013 President, Kobe Electric Railway Co., Ltd.
2016	Executive Vice President, Hankyu Hanshin Holdings(Current position)2016	Executive Vice President, Hankyu Corporation(Current position)2016 Director, Hanshin Electric Railway (Current position)

Directors and Audit & Supervisory Board Members

Mitsuo Nozaki

Masao Shin

Naohisa Nogami

Director
In charge of Personnel and General Affairs Div.

Director
In charge of Group Planning Div.
(Group Management Planning)

Director
In charge of Group Planning Div.
(Group Business Planning)

1981 Joined Hanshin Electric Railway
2006 Director, Hanshin Electric Railway
2006	Director, Hankyu Hanshin Holdings(Current position)2008 Managing Director, Hanshin Electric Railway
2013	Audit & Supervisory Board Member,
Hankyu Hanshin Hotels (Current position)2014	Senior Managing Director, Hanshin Electric Railway(Current position)2016 Director, Hankyu Corporation (Current position)

1982 Joined Hankyu Corporation2007 Director, Hankyu Corporation2013 Managing Director, Hankyu Corporation2014	Senior Managing Director, Hankyu Corporation(Current position)2014	Audit & Supervisory Board Member,
Hankyu Travel International (Current position)2014	Audit & Supervisory Board Member,
Hankyu Hanshin Express (Current position)2014	Director, Hankyu Hanshin Holdings(Current position)

Masayoshi Ishibashi

Koichi Kobayashi

Takaharu Dohi

Standing Audit & Supervisory Board Member

Standing Audit & Supervisory Board Member

1979 Joined Hanshin Electric Railway
2008	President and Representative Director,
Hanshin Contents Link Corporation2013	Standing Audit & Supervisory Board Member,
Hankyu Hanshin Holdings (Current position)2013	Standing Audit & Supervisory Board Member,
Hanshin Electric Railway (Current position)

1982 Joined Hankyu Corporation2005 Director, Hankyu Holdings
2006 Director, Hankyu Hanshin Holdings
2013 Director, Hankyu Corporation
2015 Managing Director, Hankyu Corporation
2016	Standing Audit & Supervisory Board Member,
Hankyu Corporation (Current position)2016	Standing Audit & Supervisory Board Member,
Hankyu Hanshin Holdings (Current position)

Audit & Supervisory Board Member(External**)1981 Joined Hankyu Corporation2005 Director, Hankyu Corporation
2006 Director, Hankyu Holdings
2006	Director, Hankyu Hanshin Holdings(Current position)2007	Managing Director, Hankyu Corporation2013	Senior Managing Director, Hankyu Corporation(Current position)2013	Chairman, Hankyu Hanshin Hotels(Current position)

Audit &
Supervisory
Board Members

Haruo Sakaguchi

Junzo Ishii

Audit & Supervisory Board Member (External**)Audit & Supervisory Board Member (External**)1958 Lawyer (Current position)
1989 Vice Chairman, Japan Federation of Bar Associations
2006	Audit & Supervisory Board Member,
Hankyu Holdings
2006	Audit & Supervisory Board Member,
Hankyu Corporation (Current position)
2006	Audit & Supervisory Board Member,
Hankyu Hanshin Holdings (Current position)2013	Audit & Supervisory Board Member,
Hankyu Hanshin Hotels (Current position)

1986	Professor of Faculty of Commerce,
Doshisha University
1989	Professor of Faculty of Business Administration,
Kobe University
1999	Professor of Faculty of Business Administration,
Graduate School of Kobe University
2008	President of the University of Marketingand Distribution Sciences
2010	Audit & Supervisory Board Member,
Hankyu Hanshin Holdings (Current position)2010	Audit & Supervisory Board Member,
Hanshin Electric Railway (Current position)2016	Director, Distribution Science Research Center(Current position)

1958 Prosecutor
1996 Prosecutor-General (until 1998)
1998 Lawyer (Current position)
2002	Audit & Supervisory Board Member,
Hankyu Corporation (Current position)2005	Audit & Supervisory Board Member,
Hankyu Holdings
2006	Audit & Supervisory Board Member,
Hankyu Hanshin Holdings (Current position)*	Mr. Noriyuki Inoue and Mr. Shosuke Morisatisfy the qualifications of external directors as provided in Article 2, Paragraph 15of the Corporate Law.
The Company has submitted notifications
to the stock exchanges on which its sharesare listed, naming Mr. Noriyuki Inoue and
Mr. Shosuke Mori as external (independent)
directors.
**	Mr. Takaharu Dohi, Mr. Haruo Sakaguchi,
and Mr. Junzo Ishii satisfy the qualificationsof external Audit & Supervisory Board
Members as provided in Article 2, Paragraph
16 of the Corporate Law.
	The Company has submitted notifications
to the stock exchanges on which its sharesare listed, naming Mr. Takaharu Dohi, Mr.
Haruo Sakaguchi, and Mr. Junzo Ishii as
external (independent) Audit & Supervisory
Board members.

Hankyu Hanshin Holdings • Annual Report 201657

Management Organisationcompany, and the conduct of operations is basically the responsibility of Group member companies. Hankyu Hanshin Holdings’ principal

Corporate Governancerole is supervision and oversight of the entire Group—meaning thatthese functions are separate from the conduct of Group businesses.
Through this system, the Company realises supervision and over-

X-X Figures in boxes correspond to the principles of Japan’s Corporate

Governance Code.

sight and enhances the overall governance of the Group by:
Making decisions regarding the Group’s management policies

Basic Approach to Corporate Governanceand strategies,

Principles 2-1

Deciding on the approval of the medium-term or annual


2-2

3-1

Based on the Group mission and values set out in its Groupmanagement plans of all core businesses,

Management Philosophy, the Company aims to remain a company

Requiring timely submission of progress reports by operatingthat customers and other stakeholders trust. To this end, thecompanies, andCompany is strengthening and increasing corporate governance byRequiring Group companies to obtain approval before taking

heightening the transparency and soundness of business manage-

actions that affect the Group’s management significantly (forexample, investments above a certain threshold).

ment and ensuring appropriate, timely disclosure.
Reflecting this basic approach, the Company has established theWith regard to the above matters, the Board of Directors, which

policies below with a view to sustaining growth and enhancing cor-

includes external directors, makes approval decisions and receives

porate value over the medium-to-long term.

reports. Moreover, to undertake preliminary reviews the Company

We shall respect shareholders’ rights and ensure equality.

has established a Group Management Committee, which includes

We shall take into consideration the interests of shareholders

representatives of the Group’s core businesses.
Further, to ensure transparency in the appointment and compen-and other stakeholders and cooperate with stakeholders
appropriately.

sation of the Company’s directors and to facilitate coordination

We shall disclose corporate information appropriately and

among external directors, the Group has established the Corporate

ensure transparency.

Governance Committee, which comprises external directors andWe shall ensure that the Board of Directors performs its roles

external Audit & Supervisory Board members who are independentand duties appropriately and ensure advanced oversight andof the Company; the president and representative director; anddecision making.

standing Audit & Supervisory Board members.

We shall have constructive dialogue with shareholders with a

In addition, as part of efforts to strengthen its overall capabilities,

view to sustaining our growth and enhancing corporate value

the Company is strengthening the governance of funding. Measuresover the medium-to-long term.

include centralising funding under the Company and distributing
funds to operating companies within the limits set out in businessCorporate Governance System
Principles 4-1

plans that the Company has approved.

4-10

Hankyu Hanshin Holdings, Inc. (the Company), is a pure holding

Corporate Governance System
General Meeting of Shareholders
Appointment / Dismissal

Appointment / Dismissal

Board of Directors
Part-time: 8(including 2
External Directors)

Full-time: 6
Consultation(appointments,
compensation)

Call / Report on
execution situation

Corporate GovernanceCommittee

Audit

Audit & Supervisory Board
Standing Audit & Supervisory
Board Members: 2

Selection / Dismissal /Supervision

President

ReportReportCall

Directors (representative of each core business)

58

Hankyu Hanshin Holdings • Annual Report 2016

Cooperation

Participate (as observer)Group Companies

ReportExternal Audit & Supervisory
Board Members: 3

Group Auditing Division

Group Management Committee
Participate

Appointment / Dismissal
Accounting audit

Audit

Cooperation

Staff of Audit &Supervisory Board
Members

Accounting Auditors(CPAs)

Management Organisation

Management Organisation(2) Audit & Supervisory Board and Audit & Supervisory Board
Members(1) Board of Directors and Directors
Principles 4-1

4-2

4-6

Principles 4-4

4-11

The Board of Directors enhances governance of the entire Group and

The Company adopts the Audit & Supervisory Board system tooversight of respective companies by deciding on matters pursuant toensure adequate management oversight. We have five Audit &statutory laws and regulations and the articles of incorporation based

Supervisory Board members, who monitor the business operations

on regulations and standards that the Board of Directors has estab-and financial position of the Company and its subsidiaries, and audit

lished, by deciding on the approval of management policies andthe performance of duties by the directors. Three of the five Audit &strategies of the Company and the Group as well as the management

Supervisory Board members are external, to provide an independent

plans of core businesses, and by requiring timely reporting from oper-

viewpoint and ensure a high degree of professionalism in Group

ating companies about Group companies’ significant investments.

auditing. In this way, we are working to further ensure sound deci-

Further, the Company has raised the standard of decision making

sion making in the conduct of operations. We provide full backup toand strengthened oversight by appointing eight of its 14 directors as

Audit & Supervisory Board members, for example by involving them

part-time directors, including two external directors who are inde-

in the Group Management Committee and other meetings withinpendent of the Company and have abundant experience in corpo-

the Group. The Audit & Supervisory Board meets once a month, inrate management.

principle, to discuss and pass resolutions on important matters.

Also, investigative interviews were conducted concerning theIn addition, as part of the auditing of the Group’s business opera-

fiscal 2016 management of the Board of Directors, particularly with

tions, the Audit & Supervisory Board members peruse when appro-

respect to the accountability and appropriateness of the conduct ofpriate auditing plans and results of audits of the Group Auditing

meetings. As a result, the Board of Directors was found to be appro-

Division, composed of internal audit staff. The Audit & Supervisory

priately managed and effective overall. However, recommendations

Board members also receive from the Group Auditing Division regu-

included increasing the provision of information about the individual

lar reports (and ad hoc reports when required) on internal audits atmanagement issues of Group companies. In light of this evaluation,

the Company and its subsidiaries, including on the state of operation

the Company will enhance the Board of Directors’ oversight andof the whistle-blowing system.
At the same time, the Audit & Supervisory Board members receive

decision making even further.
Notes:
1. Number of members of the Board of Directors
	The articles of incorporation of the Company stipulate that the number of members of
the Company’s Board of Directors shall be three or more.
2. Requirements for the election of directors
	The articles of incorporation of the Company stipulate that the approval of resolutions
for the election of directors shall require the attendance of shareholders that have atleast one-third of the voting rights of shareholders for which voting rights can be exercised and shall require a majority of these voting rights. Further, the articles of incorporation stipulate that such resolutions shall not be approved through cumulative voting.

regular status reports from the accounting auditors (CPAs), and takepart in on-site audits by the accounting auditors including those ofGroup companies.

Breakdown of the Board of Directors

Breakdown of the Audit & Supervisory Board(As of 14th June 2016)(As of 14th June 2016)

2
6

3

2

6

Directors concurrently responsible for execution of operations
Internal directors not concurrently responsible for execution of operations
External directors

Standing Audit & Supervisory Board members
External Audit & Supervisory Board members

Hankyu Hanshin Holdings • Annual Report 201659

Management Organisation(3) Roles and Functions of External Directors and External Audit& Supervisory Board Members
Principles 4-7

4-9

is a company. Same hereinafter.) (This item applies when external Audit & Supervisory Board members are to be appointed as
independent external Audit & Supervisory Board members.)

The Company appoints independent external directors and Audit &(c) Executing persons of the Company’s subsidiaries

Supervisory Board members with the aim of further enhancing the(d) Accounting advisors of the Company’s subsidiaries or directors ofgovernance of the Group through their contributions to meetings of

the Company’s subsidiaries who are not executing persons (Thisthe Board of Directors and the Audit & Supervisory Board, as well as

item applies when external Audit & Supervisory Board membersother activities.

are to be appointed as independent external Audit & Supervisory

The external directors appointed to the Board are selected fromamongst persons with extensive experience in corporate manage-

Board members.)(e) Executing persons of the Company’s parent company or directors ofment, with the aim of strengthening the management oversightthe Company’s parent company who are not executing persons

function of the Board of Directors with respect to the Group as a(f ) Audit & Supervisory Board members of the Company’s parent

whole, and also in the expectation that the external directors willcompany (This item applies when external Audit & Supervisory

provide advice to the Company’s management from a broad per-Board members are to be appointed as independent external

spective. Similarly, the external Audit & Supervisory Board members

Audit & Supervisory Board members.)

whom we appoint are selected from amongst persons possessing(g) Executing persons of the Company’s fellow subsidiaries

high-level specialist expertise in the fields of compliance and busi-(h) Persons who have recently belonged to the categories (b) throughness administration.

(d) above or who have been executing persons of the Company

Further, to ensure that it assesses the independence of external(This includes directors who are not executing persons when

directors and external Audit & Supervisory Board members objectively,

external Audit & Supervisory Board members are to be appointed

in light of the Tokyo Stock Exchange’s independence requirements,
the Company has established the Independence Criteria below.
Independence Criteria
To be deemed independent, external directors and external Audit &Supervisory Board members must not belong to any of the following
categories.
1.	Executing persons1 of the Company’s major shareholders (shareholders owning 10% or more of the Company’s total voting rights)
2.	Executing persons of entities for which the Company is a major
business partner2 or executing persons of the Company’s major
business partners
3.	Consultants, accounting experts, or legal experts receiving significant amounts of money or property3 from the Company that areother than executive compensation (or if a company, union, orother organisation receives the said property, this refers to persons belonging to the said organisation)
4.	Persons4 who have recently belonged to any of the categories (a)through (d) below

as independent external Audit & Supervisory Board members.)
6. Executing persons of the Hankyu Hanshin Toho Group
1.	Executing persons refers to executive directors, executive officers, corporate officers,
managers, and other employees.
2.	Major business partners refers to entities belonging to any of the following categories.
(1) Entities that in their most recent fiscal year have received payments equivalent
to 2% or more of total annual consolidated sales from the Company or its corecompanies (Hankyu Corporation, Hanshin Electric Railway Co., Ltd., Hankyu
Travel International Co., Ltd., Hankyu Hanshin Express Co., Ltd., Hankyu Hanshin
Hotels Co., Ltd.)(2) Entities that in the Company’s most recent fiscal year have made payments to theCompany or its core companies equivalent to 2% or more of total annual consolidated sales(3) Regardless of (1) and (2) above, entities that, in relation to financial institutions fromwhich the Company borrows funds, are indispensable in fund-raising of theCompany and upon which it is reliant to the extent that there are no substitutes forthe said entities
3.	Significant amounts of money or property refers to money or property equivalent toan average of ¥10 million or more per year over the previous three fiscal years.
4.	“Persons who have recently belonged to any of the categories (a) through (d) below”
refers to persons who can be deemed equivalent to persons who at present materiallybelong to any of the categories (a) through (d). For example, this includes persons who
belong to any of the categories (a) through (d) when the General Meeting of
Shareholders approves resolutions appointing the said independent Board members
as external directors or external Audit & Supervisory Board members.

(a) Persons stated in 1, 2, or 3 above(b) Executing persons of the Company’s parent company or directorsof the Company’s parent company who are not executing persons(c) Audit & Supervisory Board members of the Company’s parent

and Audit & Supervisory Board Members
Principles 3-1

company (This item applies when external Audit & Supervisory

Policy for the Appointment of Directors

Board members are to be appointed as independent external

As well as appointing executive directors who are thoroughly famil-

Audit & Supervisory Board members.)

iar with the Group’s businesses, the Company appoints as directors(d) Executing persons of the Company’s fellow subsidiaries

60(4) Policies and Procedures for the Appointment of Directors

the representatives of each core company to reflect the viewpoints

5.	Close relatives (within the second degree of kinship) of any of theof each core business in business management. Further, topersons stated in (a) through (h) below (excluding persons whostrengthen collaboration in the Hankyu Hanshin Toho Group, theare not significant)Company appoints directors from H2O Retailing Corporation and(a) Persons stated in 1, 2, 3, or 4 above

Toho Co., Ltd. In addition, to raise the standard of decision making(b) Accounting advisors of the Company (This includes employ-and strengthen oversight, the Company appoints independentees conducting required duties if the said accounting advisor

external directors who have abundant experience and expertise.

Hankyu Hanshin Holdings • Annual Report 2016

Management Organisation

Policy for the Appointment of Audit & Supervisory Board Members

Relations with External Directors

To ensure Audit & Supervisory Board members conduct audits effec-

Principles 3-1

tively and efficiently, the Company has established the Audit &Name

Supervisory Board and appoints internal standing Audit & Supervisory
Board members and external Audit & Supervisory Board members.
The Company appoints internal Audit & Supervisory Board members
who have appropriate expertise in finance, accounting, or law andNoriyuki
Inoue(Independent
Director)

abundant experience in business fields. Also, the Company appoints
external Audit & Supervisory Board members who are independentof the Company and have abundant experience and expertise.
Appointment Procedure
Following consultation with the Corporate Governance Committee,

Shosuke Mori
(Independent
Director)

the Board of Directors decides on the appointment of candidates forthe positions of Audit & Supervisory Board member and director
based on the abovementioned appointment policies.
Positions Held Concurrently by Audit & Supervisory Board Members
and Directors
Principles 4-11
Name

Positions held concurrently at other listed companies

Kazuo Sumi

Director, H2O Retailing Corporation
External director (Audit & Supervisory Board
member, etc.), Toho Co., Ltd.
External director, Tokyo Rakutenchi Co., Ltd.

Shinya Sakai

External director, Asahi Broadcasting Corporation
External director, Sanyo Electric Railway Co., Ltd.

Noriyuki
InoueChairman and Chief Global Group Officer,
Daikin Industries, Ltd.
External director, Kansai Electric Power Co., Inc.

Shosuke Mori

Senior advisor, Kansai Electric Power Co., Inc.
External director, ANA HOLDINGS INC.
External director, The Royal Hotel, Ltd.

Shunichi
Sugioka

Director and senior advisor,
H2O Retailing Corporation

Yoshishige
Shimatani

President and representative director, Toho Co., Ltd.
External director, Tokyo Rakutenchi Co., Ltd.

TakaokiFujiwara

External director, Shinki Bus Co., Ltd.

Naohisa
NogamiExternal director (Audit & Supervisory Board
member, etc.), OS Co., Ltd.
External Audit & Supervisory Board member,Tokyo Rakutenchi Co., Ltd.

Takaharu
Dohi

External Audit & Supervisory Board member, etc.,
Sekisui House, Ltd.
External Audit & Supervisory Board member, etc.,
Kansai Electric Power Co., Inc.

Junzo Ishii

External Audit & Supervisory Board member, etc.,
Rengo Co., Ltd.

Reasons for appointment

Representative director for many years at Daikin
Industries, Ltd. Also served as vice-chairman of
Kansai Economic Federation. Appointed for his
wealth of management experience, perspectivefrom top business circles, and ability to provide
independent input.
Representative director for many years at Kansai
Electric Power Co., Inc., a company whose operations, like those of the Hankyu Hanshin HoldingsGroup, are closely bound up with the public good.
Also served as chairman of Kansai Economic
Federation. Appointed for his wealth of management experience, perspective from top businesscircles, opinions from the viewpoint of CSR, andability to provide independent input.

Relations with External Audit & Supervisory Board Members
Principles 3-1
Name

Reasons for appointment

Takaharu
Dohi

Former prosecutor-general, currently a lawyer.
Appointed to advise on more compliance-based
management and for his ability to provide independent input.

(Independent
Board Member)

Haruo
Sakaguchi(Independent
Board Member)

Junzo Ishii(Independent
Board Member)

Currently a lawyer. Appointed to advise on more
compliance-based management and for his ability
to provide independent input.
Former Professor of Business Administration within
the Graduate School of Kobe University and former
President of the University of Marketing andDistribution Sciences. Appointed for his ability to
express useful opinions based on his high-levelspecialist expertise in business administration andfor his ability to provide independent input.

Attendance at Meetings of the Board of Directors and the Audit &Supervisory Board (Figures for Fiscal 2016)
External Directors
Name

Attendance at meetings of theBoard of Directors

Noriyuki
Inoue

Attended 8 of 10
meetings

Shosuke Mori

Attended all 10
meetings

External Audit & Supervisory Board Members
Attendance at meetings of the

Attendance at meetings of theBoard of Directors

Audit & Supervisory Board

Takaharu
Dohi

Attended all 10
meetings

Attended all 12
meetings

Haruo
Sakaguchi

Attended all 10
meetings

Attended all 12
meetings

Junzo Ishii

Attended 9 of 10
meetings

Attended 11 of 12
meetings

Name

Hankyu Hanshin Holdings • Annual Report 201661

Management Organisation

Other Deliberative Bodies

Further, stock options are granted to directors who concurrently(1) Group Management Committee

serve as directors of Hankyu Corporation and Hanshin Electric

The Group Management Committee comprises full-time directors—

Railway Co., Ltd., as part of compensation from the Company. Thus,

the president, representative directors, the head of the Personnel andas with other shareholders, directors who concurrently serve as

General Affairs Division, and the head of the Group Planning Division—

directors of these two core companies of the Group benefit if shareand representatives of each core business. The committee convenes

prices rise but incur losses if they decline. The intention of the system

to deliberate and decide on the approval of resolutions of the Board ofis to motivate directors to improve companies’ business perfor-

Directors; the management strategies and business plans of Group

mances and thereby enhance the enterprise value of the entire

companies; systems and rules for maintenance of the holding com-

Group over the medium-to-long term.

pany system; and significant Group management matters, such as
investments above a certain threshold and reorganisation.

(2) Procedure
Following consultation with the Corporate Governance Committee(2) Core Business Strategy Councils

with respect to the compensation system and content of compensa-

Each core business has a Core Business Strategy Council, comprisingtion, the Board of Directors decides on compensation based on the

the Company’s president, representative directors, and the director

abovementioned policy.

in charge of the Group Planning Division as well as representatives ofeach core business. In relation to respective core businesses, thecouncils deliberate significant matters concerning future businessdevelopment as well as the preparation and progress management(performance evaluation) of business plans.
(3) The Group Presidents’ Meeting—Initiatives to Foster Solidarity
within the GroupThe Hankyu Hanshin Holdings Group comprises over 150 Group
companies. The Group Presidents’ Meeting, held twice a year, brings
together presidents of those Group subsidiaries and affiliates. It is
designed to foster a deeper sense of solidarity within the Group andensure that the Group philosophy and management policies permeate the entire organisation. The Group Presidents’ Meeting aims toencourage a joint sense of commitment to the Medium-Term
Management Plan. Awards are made to companies that boost earnings or individuals and groups that successfully launch initiatives ormake significant contributions at their units.
Number of Meetings of Deliberative Bodies Held (Figures for Fiscal 2016)
Group Management Committee

15 meetings

Core Business Strategy Councils

2 meetings

The Group Presidents’ Meeting

2 meetings

Compensation of Directors
Principles 3-1(1) Policy
The Company’s compensation system for directors motivates themto enhance the Company’s enterprise value and business performance. Compensation comprises two elements: basic monetarycompensation paid according to position and compensation linked
to business performance.
However, the compensation of external directors and other parttime directors only comprises monetary compensation paid basedon the type of duties positions entail.
Note:	The payment of retirement benefits to directors was discontinued in April 2004 toheighten transparency of the compensation system.

62

Hankyu Hanshin Holdings • Annual Report 2016(3) Compensation Paid to Directors and Audit & Supervisory
Board Members
Total paid out in fiscal 2016

Category

No. of recipients

Directors

14
(2)

118
(18)

5
(3)

17
(6)

19
(5)

135
(24)

(external)

Audit & Supervisory
Board Members(external)

Total(external)(Millions of yen)

Notes
1.	Recipients of compensation in fiscal 2016 include one director who retired at the conclusion of the General Meeting of Shareholders held on 16th June 2015.
2.	In addition to the above, compensation received by external directors and external Audit& Supervisory Board members from subsidiaries of the Company for their duties as directors and Audit & Supervisory Board members amounted to ¥27 million for fiscal 2016.
3.	Of the Company’s full-time directors and Audit & Supervisory Board members, directors
Kazuo Sumi, Mitsuo Nozaki, and Naohisa Nogami and Audit & Supervisory Board
member Tsunenori Kawashima are also senior officers of the Company’s subsidiary
Hankyu Corporation. Directors Shinya Sakai and Masao Shin and Audit & Supervisory
Board member Masayoshi Ishibashi are also senior officers of the Company’s subsidiary
Hanshin Electric Railway Co., Ltd. The abovementioned persons received additional
compensation from the abovementioned companies.

Shares Held for Strategic Reasons
Principles 1-4

The Company acquires shares held for strategic reasons with a view
to building relationships of trust with various stakeholders andenhancing corporate value over the medium-to-long term by maintaining business relationships or strengthening collaborations withpartner companies and maintaining relationships with regional
companies. In exercising voting rights associated with the shares,
the Company’s criterion is whether proposals will contribute to theenhancement of the investee’s corporate value over the medium-tolong term. Further, from fiscal 2017 onward the Board of Directors
will verify the economic rationality and aims of owning shares held
for strategic reasons.

Management Organisation

Introduction of Measures to Prevent Takeovers

Investor Relations Activities

Principles 1-5

Principles 5-1

The Company aims to secure and further enhance its enterprise

The director in charge of the Group Planning Division is responsible

value and the common interests of its shareholders. To this end, con-

for and exercises overall control of general investor relations activi-

ducting business operations from a medium-to-long-term perspec-

ties. The Group Planning Division has an investor relations manager

tive, building and maintaining a relationship of trust with local

and promotes cohesive investor relations activities by sharing infor-

government institutions and residents in the areas served by themation regularly with divisions responsible for finance and account-Company’s railway lines, and conducting business management

ing, general and legal affairs, and public relations.

that is focused on strengthening cohesion and collaboration within

As a rule, twice a year in Japan the Company holds briefings on

the Group to enhance its collective strength are indispensable. For

earnings results for analysts and institutional investors, in which thethis reason, we have introduced measures to prevent a takeover ofpresident explains earnings results and business plans.

the Company. In the event of the appearance of a potential buyer of

The Company is increasing and improving disclosure via its web-

the Company that wishes to raise their stake to 20% or more of thesite (http://www.hankyu-hanshin.co.jp/ir/) by posting a range ofCompany’s outstanding shares, to confirm the potential buyer’s

documents that aid investment decisions, such as earnings results,

intention, new share subscription rights will be granted to share-

securities reports, timely disclosure documents, and documents

holders who are de facto shareholders other than the potentialfrom briefings on earnings results. (Most of these documents are inbuyer. The General Meeting of Shareholders held on 16th June 2015

Japanese.) Also, for individual investors the website includes an over-approved this system, which will remain in effect for three years.

view of the Group and its competitive advantages.

For more details about the Company’s basic policies regarding gov-

In addition, as required, the Company organises interviews withernance of joint-stock companies, which include the abovementioned

shareholders and institutional investors that are primarily themed on

measures to prevent takeovers, please see: http://www.hankyu-­hanshin.

the enhancement of corporate value over the medium-to-longco.jp/ir/library/others/data/bouei.pdf (Available only in Japanese).

term. In principle, the investor relations manager participates inthese interviews. However, in light of the number of shares that

Dialogue with Shareholders and Investors

shareholders own or their areas of interest, directors responsible forother areas of the Company participate as required. Further, theMeasures to Enhance the Effectiveness of the Company’s General
Meeting of Shareholders and Facilitate the Exercise of Voting Rights

investor relations manager prepares reports, as required, that are

Principles 1-2

summaries of questions and answers, and submits them to the
Remarks

Early dispatchof notices ofconvocation

To allow shareholders sufficient time to examine the items for resolution at the shareholders’meeting before exercising their voting rights,
the Company sends out notices of convocation
at the earliest possible date. For the General
Meeting of Shareholders held in June 2016, theCompany sent out notices of convocation on
24th May 2016, 21 days before the meeting.

Avoidance of
the “busiest day”
for shareholder
meetings

To enable as many shareholders as possible toattend its General Meeting of Shareholders, theCompany held its 2016 General Meeting of
Shareholders on 14th June 2016, 15 days before
the “busiest day” on which a large proportion ofJapanese companies hold their general shareholders’ meetings.

Online andelectronic voting

To enable shareholders who cannot attend theCompany’s General Meeting of Shareholders to
exercise their voting rights and to make voting
more convenient, the Company accepts votes
exercised via the Internet. Also, the Company
participates in the electronic voting platform
operated by ICJ Inc.

Other

On its website, the Company posts notices of convocation of the General Meeting of Shareholders
and notices of resolutions passed at the meetingin Japanese and English.

based on feedback from the interviews, including opinions stated or
senior management team.
Number of interviews in fiscal 2016: 148

Hankyu Hanshin Holdings • Annual Report 201663

Management Organisation

Internal Control System

Principles 2-1

2-2

4-3

Compliance

As a system to ensure compliance-focused management, the Group

Recognising the importance of ensuring that the business opera-

has set up a dedicated compliance office, and is working to raisetions of the Company are conducted in an appropriate manner, weawareness of compliance issues among executives and employees

have established an internal control system for the entire Group, andby means of the measures detailed below.

revise it when deemed necessary. As things stand, our internal control system is characterised as follows:

Compliance Manual and Training Programmes

A Group Management Philosophy was compiled following the

The Company’s Compliance Manual and Compliance Card express

management­integration of Hankyu Holdings, Inc., and Hanshin

the determination of the Company not to tolerate violation of laws

Electric Railway Co., Ltd., along with a Group mission (what weor social norms or betrayal of customer trust by any of its Groupare trying to achieve), statement of values (what we consider

companies’ approximately 22 thousand officers and employees. It

important), and a code of conduct (what actions to take toalso aims to raise awareness by pointing out cases where compli-

realise them). We ensure that all employees from executive

ance errors can easily be made. The Company provides intensive

down understand them.

compliance training on a Groupwide basis for new employees, mid-We ensure compliance-focused management by compilingcareer hires, and newly appointed executives. In addition, all Groupand distributing a Compliance Manual, and have establishedcompanies arrange their own training programmes tailored to job

a dedicated whistle-blowing system. (For further information

grade and function, with the aim of further increasing complianceon the Company’s compliance activities, please refer to theawareness.

following section.)internal audit staff under the direct control of the president, for

Corporate Ethics Consultation Desk (Internal WhistleBlower Procedures)independent monitoring of Groupwide business activities. It car-

Principles 2-5

ries out internal audits into the Hankyu Hanshin Holdings GroupWe have set up a dedicated whistle-blower hotline enabling all

and all its operating companies.

employees to discuss or quickly bring to management’s notice sus-

To create a structure for ensuring appropriate operations, thepected or known legal violations and unethical conduct. BusinessGroup vests Audit & Supervisory Board members of each Group

partners are also welcome to use this consultation and notificationcompany with authority not only in accounting but also in opera-

facility, and when necessary we will use lawyers and other outside

tional audits, and at the same time provides guidance to smaller

specialists to improve its effectiveness.

We have established the Group Auditing Division, composed ofGroup companies on Board of Directors’ resolutions for the creation of an internal control system.
Audit & Supervisory Board members and the Group Auditing

Corporate Ethics Consultation Desk

Division receive regular reports from the Risk Management Officewith regard to creation and operation of internal controls at theCompany and its subsidiaries (including implementation status forrisk management and promotion of compliance-based manage-

Reports

Audit &
Supervisory
Board
MemberReports

Audit &
Supervisory
Board
Memberment measures). Through such measures, they deepen their links
with, and strengthen the role of, internal control divisions.
With regard to systems for “Management Assessment and Audit
Concerning Internal Control Over Financial Reporting,” a section of
the Financial Instruments and Exchange Act, the Company
responds appropriately by carrying out management evaluations
on a consolidated basis, in line with in-house rules.

64

Hankyu Hanshin Holdings • Annual Report 2016

Consultation
Desk

Reports

President

Directs

Consultation
Desk

Reports

President
Approves /Directs

Reporting of investigation progress and findings

Consultation
DeskManagement Organisation

Establishment of Risk Management Committees
In the case of identification of a major compliance issue during
the course of an Ethics Consultation, a risk management com-

Risk Management

mittee is convened as soon as possible to discuss and decide on
appropriate responses.
In addition, we are setting up compliance promotion offices at

Principles 4-3

major Group companies such as Hankyu Corporation, Hanshin

At the Company, risks to which many different divisions are exposed

Electric Railway Co., Ltd., Hankyu Travel International Co., Ltd., Hankyu

are managed by the Risk Management Office, while risks arising inHanshin Express Co., Ltd., and Hankyu Hanshin Hotels Co., Ltd. At

the business operations of individual divisions are managed by riskother companies we are appointing “compliance leaders,” to ensure

management units within the divisions themselves. In both cases,

our response is on a Groupwide basis.

risks are identified and analysed, and risk management systems areoverhauled from time to time. We evaluate the likelihood of materialisation of each risk and its frequency, as well as the extent of impact

Overview of Group Compliancein the event of materialisation and its importance. On that basis, wedraw up measures to prevent the materialisation of risk or to miti-[Symbols]● Information to Group companies

gate its impact (“risk mitigation measures”). These measures are● Guidance and training for Group companies●R isk management●R isk Management Committee secretariat●C orporate Ethics Consultation Desk(­internal whistle-blower procedures)

Compliance promotion officeInternal whistle-blowing, responsible
for planning and organising seminars
and other awareness-raising activities● Internal auditing

Hankyu Hanshin Holdings

Hankyu Corporation

Hanshin Electric Railway

Hankyu Travel
International

Hankyu Hanshin Express

documented in the form of risk management manuals, and theresults of risk analysis and how such a risk is being handled when arisk arises are reported, as appropriate, to the Board of Directors.
We have also established a liaison system enabling the effective
transmission of information in the event of unforeseen circumstances.

Compliance leaders
Liaise with compliance departmentsof higher-level companies

Under this system, in the event of materialisation of a risk, executives
and employees immediately take risk-mitigation measures as specified in the abovementioned documentation and other measures toprevent the further spread of the impact. They also submit reports toGroup Company

orGroup Company

orGroup Company

orso that the same system is operated by them all, and has set up aGroup Company

orsystem enabling transmission to the Company of accurate informa-

pre-appointed risk management liaison personnel.
The Company provides supervision to all companies in the Grouption in the event of an unforeseen development.

Group Company

A particular area of importance in this regard is the Company’sGroup Company

core railway business, which entails direct risk to people’s lives

Group Company

through accidents. Even in the event of minor mistakes and prob-

Group Company

lems where no individual responsibility arises, it is important to makeevery effort to bring the number of problems and mistakes that

Hankyu Hanshin Hotels

Group Company

could cause an accident as close to zero as possible, by continuing to
meticulously train railway business staff, and share and analyse data.

Group Company
Cross-Organisational Companies

orSuch painstaking efforts to forestall even one human error are one of
the building blocks on which the Company ensures safety of operations and meets public expectations.
Pages 68 to 72 explain measures to ensure the safety of the railway businessof Hankyu Corporation and Hanshin Electric Railway Co., Ltd.

Hankyu Hanshin Holdings • Annual Report 2016

65

Principal Risks and Countermeasures

The Hankyu Hanshin Holdings Group’s approaches to risks related to businesses and other risks that may be of concern toinvestors are stated below.
Further, forward-looking statements in this report reflect the Group’s assessments as of 31st March 2016. Moreover,these statements do not negate the possibility of the said risks affecting the Group’s business results or financial position.

Principal risks

The Group’s countermeasures

Risks related to economic conditionsB orrowing rates could increase due to changes in financial
markets or fund-raising from markets could become difficult.
Sudden changes in financial markets could affect the Group’sbusiness results or financial position.

Changes in the economic climate could cause exchange rate
volatility.
G reater-than-expected volatility could affect the Group’s business results or financial position.

T he Group limits exposure to the risk of interest rate increases bygiving priority to the undertaking of long-term loans with fixedinterest rates.
T he Group secures financing by establishing backup lines ofcredit based on commitment lines set up with correspondent
financial institutions.
The Group uses forward exchange contracts, currency swap
contracts, and currency option contracts to mitigate exchange
rate fluctuation risk associated with certain foreign currencydenominated monetary payables and receivables.
	  Further, the Group’s overseas sales were less than 10% ofconsolidated revenues from operations as of 31st March 2016.

Risks related to businesses
The further aging of society is expected to increase capital investment for safety countermeasures and construction to make facilities barrier-free.
Due to population decline resulting from lower birthrates, the Group’s
railways, buses, and taxis could see demand for passenger transportation decrease. Also, demand could decrease in other business.

Through continuous initiatives to heighten the value of the
Umeda area and other areas served by the Hankyu and Hanshinlines, the Group creates line-side areas in which people want tolive in long term or visit frequently.
The Group has set its sights on growing by developing suchnew markets as the Tokyo metropolitan area market and overseas markets.
For details about business strategies for medium-to-long-term growth, please see
pages 18 to 21.

An accident in the railway business could cause customers great
suffering.

The Group is keenly aware that being entrusted with passengers’
lives is a serious responsibility. Therefore, placing first priority on
ensuring the safety of customers is the basis of its business
management.
Based on its strong commitment to putting customers first andgiving the highest priority to safety, the Group is implementing awide range of measures to upgrade tangible and intangible infrastructure and provide customers with improved safety.
For details about safety measures in the Urban Transportation Business, please see
pages 68 to 72.

P ower supply shortages could disrupt train operations and otherservices. Also, higher electric utility rates could increase power andother costs.

T he Group is steadily introducing energy-saving equipment tocurb power consumption as much as possible.
T he Group takes rigorous measures to ensure employees areaware of the importance of cost reductions.
For details about the introduction of energy-saving rolling stock in the Urban
Transportation Business, please see page 43.

66

Hankyu Hanshin Holdings • Annual Report 2016

Principal Risks and Countermeasures

Principal risks

The Group’s countermeasuresA loss of trust in the quality and safety of products and services
that the Group sells and offers or in the information it provides
about them could lower revenues and lead to a deterioration inbusiness results.

T he Group ensures the quality and safety of its products and services
and the appropriateness of the information it provides about them byconfirming compliance with relevant laws and regulations andchecking quality and hygiene management and food labelling.

Natural disasters, such as earthquakes, typhoons, or floods, or actsof terrorism could significantly damage the Group’s businesses ortransportation network infrastructure.

In the areas alongside their railway lines, Hankyu Corporation andHanshin Electric Railway have installed water meters for rivers andrain and wind gauges for collecting observation data. Also, they
use real-time information from meteorological observatories toensure safe train operations.
If seismographs detect an earthquake with a seismic intensity offour or above, or if earthquake early warning systems forecast an
earthquake of the same seismic intensity, the Group immediately
begins procedures for the emergency suspension of the operations of all trains on line segments in earthquake zones.
If the Group recognises that continued vigilance is required withrespect to acts of terrorism or other acts, or if suspicious items or
persons are discovered or damage is incurred, it conducts crisis
management appropriate to the threat level.
T he Group has established emergency response systems for minimising the effect on society in the unlikely event of an incident
that causes a long disruption to transportation services or results
in a large number of casualties.

An outbreak or epidemic of an infectious disease such as severe
acute respiratory syndrome (SARS) or a new strain of influenza
could restrict economic activities or discourage customers fromgoing out.

In preparation for the spread of an infectious disease, such as a newstrain of influenza, the Group’s core companies have directed theestablishment of business continuity plans for each business division.
	  During the outbreak of a new strain of influenza in 2009 and 2010,
the Group minimised the effect on its businesses by determining thelevel of risk through ongoing surveys of each business division in relation to infection rates among employees and their families.
In the railway business, which provides a particularly importantpart of society’s transportation infrastructure, the Group has established specific response plans in advance. For example, it has
prepared multiple timetables based on scenarios envisaging
shortages of transportation personnel due to the sudden spreadof an infectious disease.

For further information on risks related to businesses and other risks, please see page 77.

Hankyu Hanshin Holdings • Annual Report 201667

Safety Initiatives in the Railway Business

The shared mission of Hankyu Corporation and Hanshin Electric Railway is to ensure the absolutesafety of railway transportation. All day-to-day safety enhancement measures as well as measures
to ensure safety in emergencies reflect the safety policy and safety objective below.

Safety Policy and
Safety Objective
Hankyu Corporation 
Safety Objective• Maintaining the elimination of accidents for which we bear responsibility
For the fiscal years from fiscal 2016 onward, we again set elimination of accidents for which we bear responsibility as our safety objective.
This has been our safety objective since 2006, and we will continue to do our utmost to achieve it.
Safety Policy and Safety Priority Measures
Provide safe, high-quality transportation services that fully justify public trust—Hankyu Corporation: Safety and comfort
1. Promote awareness to prevent accidents caused by customers
2. P revent accidents by using accident precursor information andaccident examples
3. U
 pgrade and introduce equipment and facilities to realise evensafer railways
4. Identify risks that threaten business continuity and prepare andimplement countermeasures
5. C onduct highly effective training to realise rapid, reliable
emergency responses

Positions and Roles

Safety Management System
President
Directors
Head of Urban Transportation Business(Chief Safety Manager: director)
Deputy Head of
Urban Transportation Business

Manager, Urban
Transportation
Planning(Head of Investment
and Financing Team)Manager,
Transport Division(Chief Train
Operations Manager)

Manager,
Technical Division(Chief Civil
Engineering
Facilities Manager)

Manager,
Kobe LineOperations

Manager,
Takarazuka LineOperations

Manager,
Kyoto LineOperations

Deputy Operations
Manager (CrewTraining Manager)

Deputy Operations
Manager (CrewTraining Manager)

Deputy Operations
Manager (CrewTraining Manager)

Manager,
Technical Division(Chief Electrical
Facilities Manager)

Manager,
Technical Division(Chief Rolling
Stock Manager)

Business Division Safety
Management Promotion Committee

68

Technical Division (civilengineering facilities)
Safety Management
Promotion Committee

Investigative Committee for
Measures to Prevent Accidents

Technical Division(electrical facilities)
Safety Management
Promotion Committee

Hankyu Hanshin Holdings • Annual Report 2016

Chief Safety Manager
In order to prioritise securing the safety of railway facilities and rolling stockand the handling of operations, and to control and manage transportation
operations in each division, the Chief Safety Manager works to disseminate
safety management regulations and to ensure compliance with related laws
and ordinances; to increase awareness of safety as the Group’s most important priority; to confirm the implementation of transportation operations,management conditions, and the progress made in implementing the safety
improvement measures stipulated in the Medium-Term Management Plan;
and to implement improvement measures.

Chief Crew Training Manager
Based on the instructions and orders of the Chief Train Operations Manager,
the Chief Crew Training Manager maintains and manages the capabilities oftrain crews and periodically confirms and submits reports on the progress
being made in improving their capabilities.

Group Safety Management
Promotion Committee

Investigative Committee to Improve
the Safety and Security of Operations

President
The President determines the implementation, management organisation,and rules of the railway business. In addition, when formulating the MediumTerm Management Plan, which includes facilities and transportation, per­sonnel, investment, and budget, the President verifies and ascertains thesituation from the perspectives of safety and feasibility and instructs on
improvements.

Chief Train Operations Manager
The Chief Train Operations Manager manages operations-related duties,
including utilising the employees involved in operations, railway facilities, androlling stock; setting and revising the operations plan; managing train crews,
the operations of rolling stock, and train operations; and providing training fortrain crews and maintaining their capabilities.

The Safety Management Promotion Committees

Transport Division
Safety Management
Promotion Committee

6. Facilitate transition to new Total Traffic Control (TTC) systemand enhance emergency responses that are compatible with
the new system
7. Conduct training to heighten employees’ safety awarenesseven further
8. Continue training aimed at ensuring personnel development
and the passing on of skills
9. Establish workplaces with an open atmosphereTechnical Division(rolling stock)
Safety Management
Promotion Committee

Other Managers and Responsible Persons
In each division, other managers and responsible persons maintain andmanage the facilities they are responsible for in order to ensure there are no
obstacles to realising safe transportation.

Safety Management Promotion Committee
The Safety Management Promotion Committee discusses, investigates, andreports on a variety of proposals for transportation safety. This committee
includes the Group Safety Management Promotion Committee, on which the
President serves as chairperson; the Business Division Safety Management
Promotion Committee, on which the Chief Safety Manager serves as chairperson; and the divisional safety management promotion committees.

Safety Initiatives in the Railway Business

Hanshin Electric Railway 
Safety Objective• Maintaining the elimination of accidents for which we bear responsibility
We have maintained elimination of accidents for which we bear responsibility as our safety objective since April 1985.

Safety Policy

Maximum priority on safety

Compliance with laws and regulations

The President, directors, and employees
shall do everything possible to ensure safetyof operations, based on the understandingthat putting the highest priority on ensuringsafety is the mission of railway businesses.

T he Company shall comply with all laws andregulations related to safety and apply themrigorously and sincerely in its operations.

President
The President has the ultimate responsibility for ensuring transport safety.

President

Chief Safety Manager (Head of Urban Transportation Business)

The Railway Safety Council has been established
as an organisation that specialises in promoting
safety management.

Directors

The Chief Safety Manager is responsible for overseeing all activities related toensuring transport safety.

Urban Transportation
Business

Chief Train Operations Manager (Transportation Division Manager)
Under the direction of the Chief Safety Manager, the Chief Train Operations
Manager is responsible for operations including train operations, maintaining
the capabilities of train crews, and other related operations.

Railway Safety Council
Chief Safety Manager(Head of Urban
Transportation Business)
Deputy Head of Urban
Transportation Business

Manager,
Electrical Division

Chief Crew Training Manager(Head, East Rolling Stock Yard)(Head, West Rolling Stock Yard)

T he Company shall implement continuous verification procedures to ensure thatsafety management systems are operating
appropriately.

Positions and Roles

Safety Management System

Chief Train
Operations Manager(Manager,Transportation Division)

Maintenance of safety management
systems

Manager,
Rolling Stock
DivisionManager,Engineering
Division Chief Crew Training Manager (the Heads of the East Rolling Stock Yardand the West Rolling Stock Yard)
Under the direction of the Chief Train Operations Manager, the Chief Crew
Training Manager is responsible for ensuring all crew are properly qualified.
Electrical Division Manager
Under the direction of the Chief Safety Manager, the Electrical Division
Manager has overall control of items relating to electrical facilities.
Rolling Stock Division Manager
Under the direction of the Chief Safety Manager, the Rolling Stock Division
Manager has overall control of items relating to rolling stock.
Engineering Division Manager
Under the direction of the Chief Safety Manager, the Engineering Division
Manager has overall control of items relating to track, civil engineering, andconstruction facilities.

Hankyu Hanshin Holdings • Annual Report 201669

Safety Initiatives in the Railway BusinessInitiatives to Reinforce the Safety
Management System (Using the
PDCA Cycle)

By applying our safety management system (the PDCA cycle) to a range of safety
initiatives, we are aiming to create a virtuous cycle of improvement based on even higher
safety goals.

Revisions to the Railway Business Law in October 2006 required railway
companies to create new safety management systems dedicated toDOtransport safety. Under our new safety management system,
we are realising even higher levels of safety by applying the plan–

Safety management
implementationand operation

do–check–act (PDCA) cycle, ensuring compliance with all related
laws and regulations, conducting operations that place the highest
priority on safety, and fostering greater awareness of safety issues
among employees from directors down.

PLAN
Creation of safetycontrol plans
and systems

Continuous
improvement

CHECK
Safety management
and operational checks

ACT
Improvements (proposals
for improvements) andrevisions to safety
management plans
and systems

Safety Enhancement Initiatives

To ensure the safety of customers, we are proactively taking personnel-related measures toenhance education and training as well as infrastructure-related measures to improveequipment and facilities.

1. Training and Education 
At government designated in-house training centres, Hankyu

on-site training. Even after personnel have passed certification

Corporation and Hanshin Electric Railway foster train drivers andexams, we maintain and heighten the skills, awareness, and quali-

train conductors. During the training period, trainees receive edu-

fications of drivers, conductors, and operations personnel bycation on academic subjects and practical skills in accordance

holding safety workshops and seminars and by conducting train-with a national curriculum. Also, experienced drivers and train

ing based on a range of scenarios.

conductors act as instructors and provide rigorous one-on-one,

70

Hankyu Hanshin Holdings • Annual Report 2016

Safety Initiatives in the Railway Business

Renewal of the Total Traffic Control System
Hankyu Corporation is renewing its control centre with a view tocontribute to the safety of train operations by enabling the control

beginning full-fledged operations at the end of fiscal 2017. The

centre to monitor the status of railway crossings and platforms.

main aim of the renewal of the operations control centre—which
controls train operations, signals, the provision of information on

We intend to continue improving services with safe transportation as our first priority.

train services, and a range of other functions—is to introduce thelatest Total Traffic Control (TTC) system to Hankyu Corporation’s
Kobe, Takarazuka, and Kyoto lines.
In renewing the TTC system, we undertook development
aimed at (1) improving control capabilities, (2) improving the provision of information on train services to passengers, and (3)strengthening monitoring capabilities. For example, the new
system will enable train controllers to organise train services
rapidly when accidents or other events disrupt timetabled train
services. Also, when timetabled train services are disrupted, the
new system will provide passengers with more information on train
services than the current system. In addition, the system will

2. Initiatives for Natural Disasters 
1. Responding to rain storms
During rain storms, we direct trains to reduce speed or suspend

3. Responding to actions of third parties, such asacts of terrorism

operations based on information obtained from the rain gauges, wind

If there is a warning that the actions of third parties, such as acts ofgauges, and water meters installed alongside our railway lines andterrorism, could cause serious incidents with extremely significant

meteorological information from the Japan Meteorological Agency.

effects on society, or if such a warning calls for continued vigilance,
or if suspicious items or persons are discovered or damage is

2. Responding to earthquakes
If earthquake early warning systems forecast an earthquake with aseismic intensity of four or above, or if seismographs that we haveincurred, we take measures appropriate to the threat level.
Further, we have installed security cameras in railway stations andstation concourses to prevent crime.

installed alongside our railway lines detect an earthquake of thesame seismic intensity, we immediately begin procedures for the
emergency suspension of operations of trains on line segments inearthquake zones.

Hankyu Hanshin Holdings • Annual Report 201671

Safety Initiatives in the Railway Business

3. Maintenance Work: Indispensable for Safe, Comfortable Operations 
1. Inspecting electrical equipment

We have many different types of electrical equipment, including signal safety equipment, secure communication equipment, railway
crossing safety equipment, power equipment, railway track equipment, and substation equipment, which we inspect regularly basedon prescribed inspection schedules.

Scheduled inspection of a signal

Scheduled inspection of secure communication equipment

Abrasion measurement by an overheadwire inspection vehicle

Inspection of substation equipment

2. Inspecting railway tracks

Inspection of railway tracks is indispensable to ensuring the safe operation of trains. Further, we implement corrective grinding of slightly
uneven parts of rail surfaces to improve ride comfort and implement corrections to reduce noise and vibration.

Railway track inspection vehicle

Vehicle for the corrective grinding of rails

3. Inspecting structures
We inspect elevated tracks, bridges, tunnels, and other railway civil engineering structures regularly.

A structure inspection

A scheduled inspection of a tunnel

4. Inspecting rolling stock
We conduct inspections at our plants and train depots to maintain the safety of rolling stock. Regular inspections include train inspections,monthly status and function inspections, main component inspections, and overall inspections. In addition, we conduct unscheduledinspections as required.

A monthly status and function inspection

72

An overall inspection

Hankyu Hanshin Holdings • Annual Report 2016

Consolidated Six-Year Summary

FY2011FY2012FY2013

FY2014FY2015FY2016FY2016¥  682,439¥  679,157¥  685,906¥  707,359$ 6,259,814

Result of Operations (millions of yen and thousands of U.S. dollars)1:
Revenues from operations¥   638,770¥  649,703

Operating income

64,74373,80987,921

91,82894,026110,293

976,044

EBITDA2

127,100

133,500

145,100

149,200

150,100

166,500

1,473,451

Ordinary income

46,49465,39374,914

81,191

85,590104,479

924,593

Income before income taxes

32,76043,41962,192

83,542

77,62096,087

850,327

Net income attributable to owners of the parent

18,06839,25239,702

46,352

54,201

69,971

619,212Comprehensive income

14,72844,99254,081

55,941

71,034

63,842564,973

Capital expenditure

68,431

55,26759,51280,722

68,11566,639589,726

Depreciation and amortisation

59,66956,96854,54054,474

53,14353,701

475,230

Cash Flows (millions of yen and thousands of U.S. dollars):
Cash flows from operating activities¥   103,252¥  124,525¥  127,655¥  146,991¥  131,881¥  124,838$ 1,104,761

Cash flows from investing activities(62,516)(44,295)(58,923)(45,517)(52,529)(78,843)(697,726)

Cash flows from financing activities(39,544)(78,978)(69,195)(105,079)(81,746)(47,278)(418,389)

474

767

817

(1,840)(1,125)(1,978)(17,504)

22,592

23,57225,581

24,49723,49722,363

197,903¥2,314,669¥2,274,380¥2,281,007¥2,286,928¥2,279,638¥2,282,180$20,196,283

Total net assets

486,947

524,801

573,154

617,598

679,482

724,237

6,409,177

Interest-bearing debt

1,251,665

1,183,647

1,126,633

1,032,307

955,828

916,570

8,111,239

Net income attributable to ownersof the parent—Basic¥    14.32¥    31.13¥    31.48¥    36.76¥    42.98¥    55.58$      0.49

Net income attributable to ownersof the parent—Diluted

14.27

31.13

31.47

36.75

42.95

55.53

0.49

Net assets

377.17407.01443.63477.69525.56563.19

4.98

Dividend

5.00

5.00

5.00

6.00

6.00

7.00

0.06

Operating income margin (%)

10.1

11.4

12.9

13.5

13.7

15.6

—

ROA (%)

3

2.0

2.8

3.3

3.6

3.7

4.6

—

ROE (%)4

3.8

7.9

7.4

8.0

8.6

10.3

—

Interest-bearing debt/EBITDA (Times)

9.8

8.9

7.8

6.9

6.4

5.5

—

Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at end of year

Financial Position (millions of yen and thousands of U.S. dollars):
Total assets

Per Share Data (yen and U.S. dollars):

Ratios:Equity ratio (%)

20.6

22.6

24.5

26.3

29.1

31.0

—

Debt/equity (D/E) ratio (Times)5

2.6

2.3

2.0

1.7

1.4

1.3

—

Interest coverage ratio (Times)

4.6

6.0

6.7

8.8

9.2

9.9

—

1,271,406

1,271,406

1,271,406

1,271,406

1,271,406

1,271,406—

21,302

20,811

20,751

20,913

21,037

21,607—

6

Others:Number of outstanding shares (Thousands)
Number of employees

1. The U.S. dollar amounts have been translated, for convenience only, at ¥113 = $1, the prevailing exchange rate on the Tokyo Foreign Exchange Market as of 31st March 2016.
2. EBITDA = operating income + depreciation expenses + amortisation of goodwill
EBITDA figures are rounded to the nearest ¥100 million.
3. ROA = ordinary income/total assets (average of period-start and period-end totals)
4. ROE = net income attributable to owners of the parent/equity (average of period-start and period-end totals)
5. D/E ratio = interest-bearing debt/equity
6. Interest coverage ratio = cash flows from operating activities/interest expense

Hankyu Hanshin Holdings • Annual Report 201673

Consolidated Financial Review

Analysis of Operating Results for Fiscal 2016 (year ended 31st March 2016)
Revenues from operations increased 3.1%, or ¥21,452 million, year
on year, to ¥707,359 million. This rise reflected favourable performances by the Urban Transportation Business and the Hotels
Business and the sale of land for facilities by the Real Estate Business.
Operating income rose 17.3%, or ¥16,266 million, year on year, to¥110,293 million, thanks to the abovementioned increase in revenues from operations and the curbing of expenses in each businesssegment.

Further, ordinary income was up 22.1%, or ¥18,889 million, year
on year, to ¥104,479 million, because of higher equity in income ofaffiliates and a decrease in interest expense accompanying lower
interest-bearing debt.
Net income attributable to owners of the parent grew 29.1%, or¥15,769 million, year on year, to ¥69,971 million, due to a revision of
the tax system and other factors.
Note: For a summary of consolidated business results, please also see To Our Stakeholders
on pages 16 to 17.

Analysis of operating income(¥ million)

94,026FY2015

Increase in revenues from operations+21,452

Increase in operating expenses and cost of sales*–3,317

Increase in personnel expenses–562

Increase in expenses–1,036

Increase in taxes–280

Increase in depreciation and amortisation–451

Decrease in amortisation of goodwill+458

Increase in selling,
general andadministrative
expenses*–1,871

110,293

FY2016

YoY difference +16,266* Retirement benefit expenses are included in cost of revenues from operations, with the change being –377.

Segment Information
The following table shows business performance for each core business segment. For a review of these results, please refer to the page indicatedat the foot of the table.
(¥ million)
Urban
Transportation

Real EstateEntertainment andCommunications

FY2016

239,544

220,923

112,490

30,502FY2015

233,419

206,444

112,632

YoY difference+6,124+14,479

FY2016

41,270FY2015

TravelInternational
Transportation

HotelsOther

Adjustment

Consolidated

36,65868,04238,859(39,660)

707,359

31,96539,41963,031

41,678(42,684)

685,906–142–1,462–2,760+5,010–2,819+3,024+21,452

49,851

15,301

680

1,788

3,298

967

(2,866)110,293

38,55337,173

14,993

1,227

3,053

1,216

1,032

(3,223)94,026

YoY difference+2,717+12,678

+308

–546

–1,265+2,082–64+356+16,266

Reference page

P.41

P.45

P.49

P.51

P.53

P.55

—

—

—

Revenues fromoperations

Operating income

74

Hankyu Hanshin Holdings • Annual Report 2016

Consolidated Financial Review

Review of Financial Position
1. Assets, Liabilities, and Net Assets
Total assets at the end of the fiscal year under review stood at¥2,282,180 million, a rise of ¥2,542 million from the previous fiscal
year-end. This mainly stemmed from increases in land and buildings for sale and investment securities, which counteracted adecrease in trade receivables.
Total liabilities decreased ¥42,213 million from the previous
fiscal year-end, to ¥1,557,942 million, due partly to a reduction ininterest-bearing debt.
Net assets increased ¥44,755 million from the previous fiscal yearend, to ¥724,237 million, due mainly to higher retained earnings.
As a result, the equity ratio stood at 31.0%, and ROE was 10.3%.

2. Cash Flows
Cash and cash equivalents decreased ¥1,134 million from theprevious fiscal year-end, to ¥22,363 million.
(1) Cash Flows from Operating Activities
Net cash provided by operating activities was ¥124,838 million(down 5.3% year on year). The main factors were income before
income taxes of ¥96,087 million, depreciation and amortisation of¥53,701 million, and income taxes paid of ¥29,656 million.
(2) Cash Flows from Investing Activities
Net cash used in investing activities was ¥78,843 million (up50.1% year on year). This primarily reflected purchases of non­current assets of ¥92,686 million, purchases of investment­securities of ¥14,228 million, and receipt of contributions for construction of ¥20,623 million.
(3) Cash Flows from Financing Activities
Net cash used in financing activities was ¥47,278 million (down
42.2% year on year). This was due partly to a net decrease in borrowings of ¥32,368 million, dividends paid of ¥8,227 million, andpurchase of treasury stock of ¥3,779 million.

Trends in cash flow indicators
FY2012FY2013

FY2014FY2015FY2016Equity ratio (%)

22.6

24.5

26.3

29.1

31.0

Equity ratio (%) (Market value basis)

20.0

31.5

31.0

41.1

39.5

Cash flows/interest-bearing debt ratio (Times)

9.5

8.8

7.0

7.2

7.3

Interest coverage ratio (Times)

6.0

6.7

8.8

9.2

9.9

Notes: Equity ratio = equity/total assets
Equity ratio (market value basis) = market capitalisation/total assets
Cash flows/interest-bearing debt ratio = interest-bearing debt/cash flows from operating activities
Interest coverage ratio = cash flows from operating activities/interest expense* Each index has been calculated in accordance with financial indicators on a consolidated basis.
* Market capitalisation has been calculated as follows: year-end closing stock price × total shares issued at year-end (after deduction of treasury stock).

3. Fund Procurement
The outstanding balance of consolidated interest-bearing debt at
the end of the fiscal year under review amounted to ¥916,570 million, a decrease of ¥39,258 million from the previous fiscal year-end.
This was because net cash provided by operating activities morethan compensated for capital expenditure for the Umeda 1-1 Project
and the building of new rolling stock.

The ratio of consolidated interest-bearing debt/EBITDA (­operating
income + depreciation expenses + amortisation of goodwill), whichis the benchmark the Company uses for assessing the soundness of
its financial position, stood at 5.5 times (compared with 6.4 times in
the previous fiscal year).

Hankyu Hanshin Holdings • Annual Report 201675

Consolidated Financial Review

Consolidated Capital Expenditure and Depreciation and Amortisation
Capital expenditure in the fiscal year under review (consolidated basis; including intangible assets) decreased ¥1,476 million (2.2%) year on year,to ¥66,639 million.

The following is a breakdown for each business segment.
FY2016YoY

Urban Transportation

27,977 millions of yen–12.8%

Real Estate

28,287

9.5

Entertainment and Communications

5,919

–2.8

507

–23.1

International Transportation

1,049

120.4

Hotels

2,233

49.2

Other

717

–25.3

Total

66,691–1.3

Adjustment(52)–109.9Consolidated

66,639–2.2

TravelUrban Transportation
The railway business carried out capital investment with a focus onsafety and service improvement, built new rolling stock, andimproved existing rolling stock.
Real Estate
The Real Estate Business implemented the Umeda 1-1 Project.
Entertainment and Communications
The Entertainment and Communications Business renewed thetransmission lines of main lines.
TravelIn the Travel Business, Hankyu Travel International stepped-up
Internet sales and invested in systems for in-house operations.

76

Hankyu Hanshin Holdings • Annual Report 2016

International Transportation
In the International Transportation Business, Hankyu Hanshin Express
invested in systems to establish global IT-enabled alliances.
HotelsIn the Hotels Business, Hankyu Hanshin Hotels refurbished the guest
rooms of its hotels.
Depreciation and amortisation increased ¥558 million (1.0%)
from the previous year (consolidated basis), to ¥53,701 million.

Business Risks

The various categories of risk to which the business performance, stock price, financial position, and other aspects of operationsof the Hankyu Hanshin Holdings Group are subject are detailed below. Nevertheless, these dangers do not encompass all risks
attendant on Group activities and there are risks other than those stated below which are difficult to foresee.
Information about future events that appears in this annual report was determined by the Group to be current as of 31st March 2016.

Legal Risk

Affiliated Companies

In accordance with the stipulations of Article 3 of the Railway
Business Law, the Group must obtain separate permissions from the
Ministry of Land, Infrastructure, Transport and Tourism (MLIT) for
each category of railway operations on each route that it intends tooperate. Moreover, under Article 16 of the Law, a railway operator
must obtain the Ministry’s approval for the passenger fares it intends
to set and on each occasion when it wishes to change the fares.
Consequently, there is a certain risk that the Group’s railway operations may be constrained in some way by the MLIT’s administrationof these regulations.

In order to ensure greater convenience for users of the Hokushin
Kyuko Railway Line (run by consolidated subsidiary Hokushin Kyuko
Railway Co., Ltd.), Hankyu Corporation (a consolidated subsidiary)
has agreed to a plan transferring railway facilities held by Hokushin
Kyuko Railway to Kobe Rapid Transit Railway Co., Ltd. (a consolidated
subsidiary), and retaining railway business as a tier 2 railway operator.
To facilitate the plan, in fiscal 2003 Hankyu Corporation provided
Kobe Rapid Transit Railway with financing for part of the funds necessary to purchase the facilities.
In September 2007, Kobe Electric Railway Co., Ltd. (an equitymethod affiliate), temporarily suspended support for the rehabilitation of Hokushin Kyuko Railway. To uphold the rehabilitation project,
additional financing was extended to Hokushin Kyuko Railway by
Hankyu Corporation. We will continue to provide assistance toensure that Hokushin Kyuko Railway can conduct smooth and efficient operations as a tier 2 railway operator. However, the businessperformance and financial position of the Group could be affectedby changes in this plan.

Progress in Large-Scale Development Projects
The Group seeks to utilise its working assets more effectively to facilitate the development of areas served by the Hankyu and Hanshinlines. To raise its asset effectiveness, the Group is pursuing the following initiatives: The Umeda 1-1 Project (rebuilding of the Dai Hanshin
Building and the Shin Hankyu Building) and further development of
the International Culture Park “Saito” (a new town). These projects are
all seen as key to the Group’s future growth, and management will
be working to steadily complete them. However, in the event of
rapid and major changes in the business environment, affecting land
prices or urban development plans, the business performance andfinancial position of the Group could be adversely affected.

Interest-Bearing Debt
The balance of interest-bearing debt held by the Group as of the endof March 2016, on a consolidated basis, was ¥916,570 million. As aresult of the acquisition of shares in Hanshin Electric Railway througha successful public tender offer (takeover bid) on 27th June 2006,
Hanshin Electric Railway has become a consolidated subsidiary ofHankyu Holdings. This acquisition has resulted in an increase in thebalance of interest-bearing debt of the Group. On the other hand,management integration between the Hankyu Holdings Group and
Hanshin Electric Railway Group has increased cash flows, so theGroup is not expected to have any significant difficulty in repaying
its debts.
The Group will take measures to diversify its fund procurement
methods to deal with an increase in interest-bearing debt resulting
from the integration, and will use all possible means to minimise thenegative impact of interest rate movements. But in the unlikely
event that interest rates rise suddenly and in excess of our projections, this could exert an adverse effect on the business performanceand financial position of the Group.

Decline in the Market Value of Assets Held by Members ofthe Hankyu Hanshin Holdings GroupIn the case of a substantial decline in the market value of inventory
assets, property and equipment and intangible assets, investment
securities, and other assets, the recording of impairment losses orvaluation losses would likely have a negative impact on the earnings
performance and financial position of the Hankyu Hanshin HoldingsGroup.

Natural Disasters
Operating as it does across an extremely wide range of businesses
in its Urban Transportation, Real Estate, Entertainment andCommunications, Travel, International Transportation, and Hotels
segments, the Group has a correspondingly large assortment offacilities necessary for the conduct of business, such as railway installations and buildings and retail outlets for rent. In the event of earthquakes or other major disasters, the business performance andfinancial position of the Group could be adversely affected bydamage to these facilities.

Hankyu Hanshin Holdings • Annual Report 201677

Consolidated Balance Sheets
As of 31st March 2015 and 2016

Millions of yen

Thousands of U.S. dollars

2015

2016

2016

   Cash and deposits¥   25,614¥   24,225$   214,381

Assets:Current assets:   Trade receivables

80,67373,141

647,265   Land and buildings for sale

97,587103,060

912,035   Finished products and merchandise

2,300

2,605

23,053   Work in progress

4,440

4,656

41,204   Materials and supplies

4,321

4,466

39,522   Deferred tax assets

6,195

6,427

56,876  Other

33,34737,188329,097

(291)

(234)

(2,071)

254,188

255,535

2,261,372

580,155

572,227

5,063,956   Allowance for doubtful receivables   Total current assets

Noncurrent assets:
Property and equipment:   Buildings and structures—net [NOTE 6 ③]   Machinery, equipment and vehicles—net [NOTE 6 ③]

49,57653,529473,708  Land [NOTES 6 ③ and ⑤]

919,147

931,355

8,242,080   Construction in progress

119,077

120,589

1,067,159  Other—net [NOTE 6 ③]

18,806

19,369171,407

1,686,763

1,697,070

15,018,319  Goodwill

30,84523,295

206,150  Other [NOTES 6 ② and ③]

16,72017,211

152,310   Total intangible assets

47,56540,507358,469

244,626

248,097

2,195,549

4,245

4,323

38,257   Total property and equipment [NOTES 6 ① and ②]
Intangible assets:

Investments and other assets:  Investment securities [NOTES 6 ③ and ④]   Deferred tax assets   Net defined benefit asset

8,709

5,947

52,628  Other [NOTE 6 ③]

33,871

31,046

274,743   Allowance for doubtful receivables

(332)

(347)

(3,071)   Total investments and other assets

291,120

289,0662,558,106

2,025,449

2,026,644

17,934,903

2,279,638

2,282,180

20,196,283

Total noncurrent assets
Total assets

78

Hankyu Hanshin Holdings • Annual Report 2016

Consolidated Balance Sheets

Millions of yen

Thousands of U.S. dollars

2015

2016

2016

$   331,681

Liabilities:
Current liabilities:¥   42,429¥   37,480  Accrued expenses

18,93818,199161,053  Short-term borrowings [NOTE 6 ③]

239,566

205,909

1,822,204   Trade payables—

30,000265,487  Lease obligations

1,831

1,794

15,876   Income taxes payable

15,2206,188

54,761   Provision for bonuses

4,148

4,638

41,044  Other [NOTE 6 ③]

149,639

151,924

1,344,460   Total current liabilities

471,774

456,134

4,036,584  Long-term debt [NOTE 6 ③]

594,047

589,100

5,213,274  Bonds

112,000

82,000725,664

8,382

7,765

68,717   Current portion of bonds

Long-term liabilities:  Lease obligations

189,698

189,812

1,679,752   Deferred tax liabilities related to land revaluation [NOTE 6 ⑤]

5,277

5,152

45,593   Net defined benefit liability

56,95061,839547,248   Long-term deferred contribution for construction

44,941

54,614

483,310   Deferred tax liabilities  Other

117,082

111,521986,912   Total long-term liabilities

1,128,381

1,101,807

9,750,504

1,600,155

1,557,942

13,787,097

Total liabilities

Net assets:  Shareholders’ equity:  Common stock

99,474

99,474880,301  Capital surplus

150,027

145,974

1,291,805  Retained earnings

389,511449,535

3,978,186   Less treasury stock, at cost

(4,534)(8,289)(73,354)   Total shareholders’ equity

634,479

686,695

6,076,947

Accumulated other comprehensive income:
18,052

17,684

156,496   Deferred gains or losses on hedges

(143)

(896)

(7,929)   Revaluation reserve for land [NOTE 6 ⑤]

5,417

5,598

49,540   Foreign currency translation adjustments

1,756

1,072

9,487

   Valuation difference on available-for-sale securities   Cumulative adjustments related to retirement benefit plans

3,033(2,818)(24,938)   Total accumulated other comprehensive income

28,116

20,639182,646

318

424

3,752

Subscription rights to shares
Non-controlling interests [NOTE 6 ⑤]

16,566

16,478145,823

Total net assets

679,482

724,237

6,409,177

2,279,638

2,282,180

20,196,283

Total liabilities and net assets

Hankyu Hanshin Holdings • Annual Report 201679

Consolidated Statements of Income
Years ended 31st March 2015 and 2016

Millions of yen

Revenues from operations
Costs of revenues from operations:Operating expenses and cost of sales of transportation [NOTE 7 ①]
Selling, general and administrative expenses [NOTE 7 ②]
Total costs of revenues from operations [NOTE 7 ③]
Operating income
Non-operating income:Interest income
Dividend income
Equity in income of affiliates
Miscellaneous income
Total non-operating income
Non-operating expenses:
Interest expenses
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on contributions for construction
Other
Total extraordinary income
Extraordinary loss:
Loss on reduction of noncurrent assets
Loss on valuation of investment securities
Other
Total extraordinary loss
Income before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

Thousands of U.S. dollars

2015

2016

2016

¥685,906¥707,359$6,259,814

562,762
29,116591,879
94,026566,079
30,987597,066
110,293

5,009,549
274,221
5,283,770
976,044

124
1,399
4,543
2,358
8,425

106
1,017
5,748
2,285
9,158

938
9,000
50,867
20,221
81,04414,013
2,848
16,86285,59012,5062,465
14,972
104,479

110,673
21,814132,496924,593

4,557
4,692
9,249

37,820982
38,802

334,690
8,690
343,381

4,408
12
12,72817,21977,62025,095(3,246)
21,84855,772
1,570
54,20137,8184,979
4,397
47,19496,087
20,495
4,043
24,53871,5491,577
69,971

334,673
44,062
38,912
417,646
850,327
181,372
35,779217,150
633,177
13,956619,212

Consolidated Statements of Comprehensive Income
Years ended 31st March 2015 and 2016
Millions of yen

Net income

Thousands of U.S. dollars

2015

2016

2016

¥55,772¥71,549$633,177

Other comprehensive income:
Valuation difference on available-for-sale securities

5,920

598

5,292

Deferred gains or losses on hedges

(627)

(786)

(6,956)

Revaluation reserve for land

279

124

1,097

Foreign currency translation adjustments

1,564

(855)

(7,566)

Remeasurements of defined benefit plans

4,594(6,336)(56,071)

3,531

(451)

(3,991) Share of other comprehensive income of associates accounted
for using equity method
Total other comprehensive income [NOTE 8 ①]

15,262(7,706)(68,195)

71,034

63,842564,973

Owners of the parent

69,29962,494

553,044

Non-controlling interests

1,735

1,348

11,929Comprehensive income
Comprehensive income attributable to:80

Hankyu Hanshin Holdings • Annual Report 2016

Consolidated Statements of Changes in Net Assets
Years ended 31st March 2015 and 2016

Millions of yen
Shareholders’ equity

Balance as of 31st March 2014
 Cumulative effect of changes in accounting policies
Balance at beginning of the current fiscal year
reflecting changes in accounting policies
Changes of items during the period:
Dividends from surplus
Net income attributable to owners of the parent
Reversal of revaluation reserve for land
Purchase of treasury stock
Disposal of treasury stock 
Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Change in scope of consolidation Changes in equity in affiliates accounted
for by equity-method treasury stock Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of 31st March 2015
 Cumulative effect of changes in accounting policies
Balance at beginning of the current fiscal year
reflecting changes in accounting policies
Changes of items during the period:
Dividends from surplus
Net income attributable to owners of the parent
Reversal of revaluation reserve for land
Purchase of treasury stock
Disposal of treasury stock 
Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Change in scope of consolidation Changes in equity in affiliates accounted
for by equity-method treasury stock Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of 31st March 2016

Total
shareholders’equityCommon stock

CapitalsurplusRetainedearnings

Less treasury
stock, at cost

¥99,474¥150,027¥344,020(398)¥(4,553)¥588,969(398)

99,474150,027

343,622(4,553)

588,570(169)
2(8,229)54,2010(169)
2(8,229)54,201
0
0

—
(83)

(83)
186

186

—
99,4740
150,027(4,500)45,889389,511(527)

19(4,534)45,908634,479(5,027)

99,474

145,527

388,984(4,534)629,452(3,779)24(8,227)
69,9710(3,779)23(8,227)
69,971
0
(0)

(0)

447

447
(1,192)(1,192)——
99,474447
145,974

60,550449,535(3,755)(8,289)57,242686,695
Millions of yen

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Balance as of 31st March 2014
Cumulative effect of changes in accounting policies
Balance at beginning of the current fiscal year
reflecting changes in accounting policies
Changes of items during the period:
Dividends from surplus
Net income attributable to owners of the parent
Reversal of revaluation reserve for land
Purchase of treasury stock
Disposal of treasury stock 
Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Change in scope of consolidation Changes in equity in affiliates accounted
for by equity-method treasury stock Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of 31st March 2015
 Cumulative effect of changes in accounting policies
Balance at beginning of the current fiscal year
reflecting changes in accounting policies
Changes of items during the period:
Dividends from surplus
Net income attributable to owners of the parent
Reversal of revaluation reserve for land
Purchase of treasury stock
Disposal of treasury stock Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Change in scope of consolidation Changes in equity in affiliates accounted
for by equity-method treasury stock Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of 31st March 2016

Deferred gains
or losses onhedges

Revaluation
reserve for land

Foreigncurrencytranslation
adjustments

Cumulative
adjustments related
to retirement
benefit plans

Total
accumulated
othercomprehensive
incomeSubscription Non-controllingrights to sharesinterests

Total
net assets¥ 8,885¥ 480¥5,060¥  366¥(1,712)¥13,081—¥208¥15,338(30)¥617,598
(429)

8,885

480

5,060

366

(1,712)

13,081

208

15,307617,168(8,229)54,201
0
(169)
2
—
(83)
186

9,166
9,166
18,052

(624)
(624)
(143)

357
357
5,417

1,389
1,389
1,756

4,745
4,745
3,033

15,03515,035
28,116
—

109
109
318

1,259
1,259
16,566

16,40462,313
679,482(5,027)

18,052

(143)

5,417

1,756

3,033

28,116318

16,566674,454(8,227)
69,9710(3,779)23
447(1,192)
—

(368)
(368)
17,684

(752)
(752)
(896)

180
180
5,598

(684)
(684)
1,072

(5,851)(5,851)(2,818)(7,476)(7,476)
20,639

105
105
424

(88)
(88)
16,478(7,459)49,783
724,237

Hankyu Hanshin Holdings • Annual Report 201681

Consolidated Statements of Changes in Net Assets

Thousands of U.S. dollars
Shareholders’ equity

Balance as of 31st March 2015
 Cumulative effect of changes in accounting policies
Balance at beginning of the current fiscal year
reflecting changes in accounting policies
Changes of items during the period:
Dividends from surplus
Net income attributable to owners of the parent
Reversal of revaluation reserve for land
Purchase of treasury stock
Disposal of treasury stock Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Change in scope of consolidation Changes in equity in affiliates accounted
for by equity-method treasury stock Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of 31st March 2016

Total
shareholders’equityCapitalsurplusRetainedearnings

Less treasury
stock, at cost

$880,301$1,327,673(39,823)$3,447,000(4,664)$(40,124)$5,614,858(44,487)

880,301

1,287,850

3,442,336(40,124)

5,570,372(33,442)212(72,805)
619,2120(33,442)
204

Common stock(72,805)
619,212
0
(0)

(0)

3,956

3,956
(10,549)(10,549)——
880,301

3,956
1,291,805

535,841
3,978,186(33,230)(73,354)506,566
6,076,947

Thousands of U.S. dollars
Accumulated other comprehensive income

Balance as of 31st March 2015
 Cumulative effect of changes in accounting policies
Balance at beginning of the current fiscal year
review reflecting changes in accounting policies
Changes of items during the period:
Dividends from surplus
Net income attributable to owners of the parent
Reversal of revaluation reserve for land
Purchase of treasury stock
Disposal of treasury stock Change in treasury stock of parent arising fromtransactions with non-controlling interest shareholders
Change in scope of consolidation Changes in equity in affiliates accounted
for by equity-method treasury stock Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance as of 31st March 201682

Hankyu Hanshin Holdings • Annual Report 2016

Total
accumulated
othercomprehensive
incomeDeferred gains
or losses onhedges

Revaluation
reserve for land

Foreigncurrencytranslation
adjustments

Cumulative
adjustments related
to retirement
benefit plans$159,752$(1,265)$47,938$15,540$26,841$248,814—$2,814$146,602$6,013,115(44,487)

159,752(1,265)47,93815,54026,841

248,814

2,814

146,602

5,968,619

Valuationdifference on
available-for-salesecurities

Subscription Non-controllingrights to sharesinterests

Total
net assets(72,805)
619,2120(33,442)204
3,956(10,549)—(3,257)(3,257)
156,496(6,655)(6,655)(7,929)

1,593
1,593
49,540(6,053)(6,053)
9,487(51,779)(51,779)(24,938)(66,159)(66,159)
182,646

929
929
3,752

(779)
(779)
145,823(66,009)440,558
6,409,177

Consolidated Statements of Cash Flows
Years ended 31st March 2015 and 2016

Millions of yen

Thousands of U.S. dollars

2015

2016

2016

Income before income taxes¥   77,620¥ 96,087$  850,327

Depreciation and amortisation

53,14353,701

475,230

Cash flows from operating activities:

Amortisation of goodwill

2,929

2,471

21,867

Equity in (income) losses of affiliates(4,543)(5,748)(50,867)

Increase (decrease) in net defined benefit liability(4,485)(2,077)(18,381)

Increase (decrease) in allowance for doubtful receivables

(137)

(42)

(372)

Interest and dividend income(1,523)(1,124)(9,947)

Interest expense

14,013

12,506110,673

Loss on reduction of noncurrent assets

4,408

37,818334,673

Gain on contributions for construction(4,557)(37,820)(334,690)

12

4,979

44,062

Decrease (increase) in trade receivables

(216)

6,129

54,239Decrease (increase) in inventories

8,362(1,174)(10,389)(44,496)

Loss (gain) on valuation of investment securities(48)(5,028)

Other

9,227

3,252

28,779Subtotal

154,204

163,930

1,450,708

Increase (decrease) in trade payables

Interest and dividends received
Interest paid

2,876

3,156

27,929(14,363)(12,591)(111,425)

Income taxes (paid) refunded(10,836)(29,656)(262,442)

Net cash provided by operating activities

131,881

124,838

1,104,761(86,970)(92,686)(820,230)

5,588

5,064

44,814(125,912)

Cash flows from investing activities:
Purchases of noncurrent assets
Proceeds from sales of noncurrent assets
Purchases of investment securities(10,353)(14,228)

Proceeds from sale of investment securities

19,747618

5,469

Receipt of contributions for construction

21,098

20,623

182,504

Other(1,640)1,765

15,619Net cash used in investing activities(52,529)(78,843)(697,726)

2,363(21,628)(191,398)

Cash flows from financing activities:
Net increase (decrease) in short-term borrowings
Proceeds from long-term debt

90,10065,830582,566

Repayment of long-term debt

(153,170)(76,570)(677,611)

Proceeds from new bonds issued

9,930

—

—

(20,000)——

Purchase of treasury stock(169)(3,779)(33,442)Dividends paid

(8,229)(8,227)(72,805)

Dividends paid to non-controlling shareholders of consolidated subsidiaries

(485)

(331)

(2,929)

Redemption of bonds

Other(2,085)(2,571)(22,752)

Net cash used in financing activities(81,746)(47,278)(418,389)

1,270

(694)

(6,142)

Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents(1,125)(1,978)(17,504)

Cash and cash equivalents at beginning of year

24,49723,497

207,938

125

844

7,469

23,49722,363

197,903

Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of year

Hankyu Hanshin Holdings • Annual Report 201683

Notes to the Consolidated Financial Statements

1 Framework for Preparing Consolidated Financial Statements 
1 Method of preparation for consolidated financial statements
The Company’s consolidated financial statements were prepared in accor-

3 Special measures to ensure the appropriateness of consolidated
financial statements and other reports

dance with the “Regulations Concerning the Terminology, Forms and

The Company makes special efforts to ensure the appropriateness of its con-

Preparation Method of Consolidated Financial Statements” (Finance Ministrysolidated financial statements and other reports. In addition to subscribing to

Ordinance No. 28 of 1976, hereinafter, “Regulations for Consolidated Financial

related publications, it has joined the Financial Accounting Standards

Statements”).

Foundation and participates in seminars and other events held by theFoundation, audit firms and other relevant organisations to establish a system

2 Audit verification

for understanding the accounting standards in detail and responding suitably

The Company’s consolidated financial statements for the current fiscal year

to changes made to them. The Company also compiles and provides common(1st April 2015 to 31st March 2016) were audited by KPMG AZSA LLC, as per

manuals for preparing the consolidated financial information on a group

Article 193-2 (1) of the Financial Instruments and Exchange Act.

basis, and arranges training courses for accounting staff at affiliates.

4 Translation into U.S. dollars
The U.S. dollar amounts have been translated, for convenience only, at ¥113 =$1, the prevailing exchange rate on the Tokyo Foreign Exchange Market as of
31st March 2016.

2 Basis of Preparation of Consolidated Financial Statements 
1 Scope of consolidation

3 Items related to fiscal year-ends, etc., for consolidated subsidiaries(a) Number and names of consolidated subsidiaries

The account closing date for Hankyu Hanshin Express (USA) Inc., Hankyu

Number of consolidated subsidiaries—93.

Hanshin Express (Deutschland) GMBH and 20 other consolidated subsidiaries

		

Names of primary consolidated subsidiaries are listed on page 109.

is 31st December. The consolidated financial statements have been prepared		

HANKYU HANSHIN EXPRESS SOUTHEAST ASIA PTE. LTD. has beenusing the financial statements based on the closing date of each company,

included in the scope of consolidation due to its establishment.
		 Hankyu Style Labels CO., Ltd. and another company have been
included in the scope of consolidation due to its increased significance.
		and major transactions conducted between the individual closing dates andthe consolidated closing date have been adjusted for as necessary for the
consolidation.

KYOEIKOSAN Co., LTD. has been excluded from the scope of consoli-

dation as its liquidation was completed.

4 Accounting policies(a) Valuation standards and method for major assets(b) Names of major nonconsolidated subsidiaries
Hankyu Mediax Co., Ltd.
		

Nonconsolidated subsidiaries have been excluded from the scope of

I. Securities
Available-for-sale securities
Available-for-sale securities with fair market values:

consolidation because the total amounts of their entire assets, sales, net

	The market value method is applied based on the market price, etc., at theincome or loss (amount equivalent to equity interests), retained earnings

fiscal year-end. (Related valuation differences are directly included under(amount equivalent to equity interests) and other figures are limited, andnet assets and the cost of securities sold is determined by the moving

the effect on the consolidated financial statements as a whole is negligible.

average method.)
Available-for-sale securities without fair market values:

2 Items related to application of equity-method accounting(a) Number and names of affiliates for which equity method is applied
Number of affiliates for which equity method is applied—10.
		Names of the major affiliates for which equity method is applied are

The moving average cost method is applied.
		

For investments in limited liability investment partnerships and similar

investments, however, the Company’s share of assets held by such partnerships is recorded.

listed on page 109.
II. Derivatives(b)	Names of nonconsolidated subsidiaries and affiliates for which equity

The market value method is applied.

method is not applied
	The nonconsolidated subsidiaries (Hankyu Mediax Co., Ltd., etc.) and affiliates (OS Co., Ltd., etc.) to which the equity method does not apply use thecost method rather than the equity method because the total amounts of
their net income or loss (amount equivalent to equity interests), retained
earnings (amount equivalent to equity interests) and other figures arelimited, and the effect on the consolidated financial statements as awhole is negligible.

84

Hankyu Hanshin Holdings • Annual Report 2016

III. Inventories
Land and buildings for sale:	The identified cost method is applied. (Balance sheet values are calculated
by writing down book values based on decreased profitability.)
Other inventories:
	The moving average cost method is applied. (Balance sheet values arecalculated by writing down book values based on decreased profitability.)

Notes to the Consolidated Financial Statements(b) Depreciation methods for major depreciable assets
I. Property and equipment (excluding leased assets)
Replacement assets of railway operations:Replacement method (mainly declining-balance method) is applied.
Other property and equipment:	While property and equipment (excluding leased assets) are depreciatedfor the most part using the declining balance method, there is also some(f ) Significant hedge accounting methods
I. Method of hedge accounting
Deferred hedge accounting is applied.
		

Exceptional accounting applies to interest rate swaps that satisfy therequirements for exceptional accounting for interest rate swaps.
		Designation accounting applies to foreign currency denominatedreceivables and payables with foreign exchange forward contracts.

use of the straight-line method.
		

Depreciation of buildings acquired after 1st April 1998 (excluding facili-ties attached to buildings) is calculated using the straight-line method.
II. Intangible assets (excluding leased assets)	Intangible assets (excluding leased assets) are amortised using thestraight-line method.
		Internal-use software is amortised by the straight-line method over its

II. Hedging instruments and hedged items
Hedging instruments
Foreign exchange contracts
Currency swap contracts
Currency option contracts

Hedged items
Foreign currency receivables and payables and future foreign currencytransactions

Interest rate swap contracts Interest on bonds andInterest rate option contracts  loans payableuseful life (mainly 5 years).
III. Lease assets
	Lease assets are depreciated using the straight-line method with the leaseterm as the useful life and the residual value as zero.
(c) Accounting standards for significant transactions
I. Allowance for doubtful receivables
	Allowance for doubtful receivables is provided based on the ratio of pastloan loss experience for general accounts and individually estimatedIII. Hedging policy
	The Group is exposed to the risk of foreign exchange and interest rate
fluctuations and uses derivatives as a means of hedging these risks.
IV. Method for evaluating the effectiveness of hedges
	
Other than when the effectiveness of hedges is obvious, hedge
effectiveness is evaluated semiannually using the comparison andanalysis method.

uncollectible amounts for certain individual accounts.
V. Other risk management methods concerning hedge accounting
II. Provision for bonuses
	The Company recognises as provision for bonuses the amount expected
to be paid to employees as bonuses for the fiscal year.

	Internal rules regarding the segregation of duties, maximum transaction
amounts, etc., have been established for the use of derivative transactions
based on which derivative transactions are used. The implementation andmanagement of derivative transactions are carried out by the accounting(d) Accounting methods for retirement benefits

department with the approval of the decision makers in each Group	When calculating retirement benefit obligations, the benefit formulacompany. An internal control system has been developed to ensure thatmethod is used to distribute the estimated amount of retirement benefits

the contract signing and termination comply with the internal rules.

into the period up to the end of the current fiscal year.
		Prior service cost is recorded in expenses using the straight-line(g) Method and period of amortisation of goodwill

method over a certain number of years (mainly 10 years), which is within

	Goodwill is amortised, in general, in equal amounts over five years. The

the average remaining years of service of the employees at the time when

goodwill resulting from the management integration with Hanshin

these costs are incurred.

Electric Railway Co., Ltd. in the fiscal year ended 31st March 2007 is being		

Actuarial differences are recorded in expenses using the straight-line

amortised in equal amounts over 20 years.

method over a certain number of years (mainly 10 years), which is within
the average remaining years of service of the employees at the time when(h) Scope of cash included in consolidated statements of cash flows

these costs are incurred.

	In preparing the consolidated statements of cash flows, cash on hand,readily available deposits and short-term highly liquid investments(e)	Basis for converting significant assets and liabilities in foreign currency
into Japanese yen
	The assets, liabilities, income and expenses of overseas subsidiaries arewithout material risk of changing their value and with maturities notexceeding three months at the time of purchase are considered to be
cash and cash equivalents.

converted to yen based on the spot exchange rate on the balance sheet
date. Differences in conversion are included in foreign currency translation adjustments and non-controlling interests in the net assets section.

Hankyu Hanshin Holdings • Annual Report 201685

Notes to the Consolidated Financial Statements(i) Other significant matters for preparing consolidated financial statements		In the consolidated statements of income, gain on contributions forI. Accounting for contributions for construction in railway operations

construction is recognised in extraordinary income, and the acquisition

	The Company accepts contributions for construction from local govern-

cost of noncurrent assets, after deducting the amounts equivalent to thements and other organisations that cover a portion of construction

contributions for construction, is recognised in extraordinary loss as loss

expenses arising from the construction of continuous grade separations

on reduction of noncurrent assets.

in railway operations. When construction is completed, noncurrent assets
acquired as a result of accepting these contributions for construction are

II. Accounting for consumption tax

recognised at acquisition cost after deducting the amounts equivalent to

Accounting for consumption tax is based on the tax exclusion method.

the said contributions for construction.
III. Adoption of consolidated tax payment system
A consolidated tax payment system has been adopted.

3 Changes in Accounting Policies 
1 Application of Accounting Standard for Business Combinations

scope of consolidation or costs related to acquisition or disposal of shares of

The Company has adopted “Revised Accounting Standard for Businesssubsidiaries with no changes in the scope of consolidation are included in

Combinations” (ASBJ Statement No. 21, 13th September 2013 (hereinafter,“Cash flows from operating activities.”“Statement No. 21”)), “Revised Accounting Standard for Consolidated Financial

With regard to the application of the Business Combination Accounting

Statements” (ASBJ Statement No. 22, 13th September 2013 (hereinafter,

Standards, the Company followed the provisional treatments in article 58-2 (3)“Statement No. 22”)) and “Revised Accounting Standard for Businessof Statement No. 21, article 44-5 (3) of Statement No. 22 and article 57-4 (3) ofDivestitures” (ASBJ Statement No. 7, 13th September 2013 (hereinafter,

Statement No. 7 and recognised in capital surplus or retained earnings the“Statement No. 7”)) (together, the “Business Combination Accounting

cumulative effect as of the beginning of the current fiscal year that resulted

Standards”) from the current fiscal year. As a result, the Company changed its

from the retrospective application of the new accounting policies for all of theaccounting policies to recognise in capital surplus the differences arising fromprevious fiscal years.

changes in the Company’s ownership interest of subsidiaries over which the

As a result, goodwill decreased by ¥5,027 million ($44,487 thousand),Company continues to maintain control and to record acquisition related

capital surplus decreased by ¥4,500 million ($39,823 thousand), and retained

costs as expenses in the fiscal year in which the costs are incurred. In addition,

earnings decreased by ¥527 million ($4,664 thousand) as of the beginning of

the Company changed its accounting policy for the reallocation of acquisition

the current fiscal year. Operating income and ordinary income for the current

costs due to the completion following provisional accounting to reflect such

fiscal year increased by ¥439 million ($3,885 thousand), respectively, andreallocation in the consolidated financial statements for the fiscal year in which

income before income taxes for the current fiscal year decreased by

the business combination took place. The Company also changed the presen-¥8 million ($71 thousand).

tation of net income and of the term “non-controlling interests” is used instead

Since the cumulative effect is reflected in net assets as of the beginningof “minority interests”. Certain amounts in the prior year comparative informationof the current fiscal year, the beginning balance of capital surplus decreased

were reclassified to conform to such changes in the current year presentation.

by ¥4,500 million ($39,823 thousand), and retained earnings decreased by

In the consolidated statement of cash flows, cash flows from acquisition¥527 million ($4,664 thousand) in the consolidated statement of changes

or disposal of shares of subsidiaries with no changes in the scope of consolidation are included in “Cash flows from financing activities” and cash flows

in net assets.
The effects on earnings per share are negligible.

from acquisition related costs for shares of subsidiaries with changes in the

4 Accounting Standard Not Applied as Yet “Revised Implementation Guidance on Recoverability of Deferred Tax Assets”(ASBJ Guidance No. 26, 28th March 2016 (hereinafter, “Guidance No. 26”)

4. Treatment for the period which an entity classified as type 3 is able toreasonably estimate with respect to future taxable income before consideration of taxable or deductible temporary differences that exist at(a) Overview
	Following the framework in Auditing Committee Report No. 66 “Audit
Treatment regarding the Judgment of Recoverability of Deferred Tax

the end of the current fiscal year; and5. Treatment when an entity classified as type 4 also meets the criteria fortypes 2 or 3.

Assets”, which prescribes estimation of deferred tax assets according to
the classification of the entity by one of five types, the following treatments were changed as necessary:(b) Effective date
Effective from the beginning of the fiscal year ending 31st March 2017.

1. Treatment for an entity that does not meet any of the criteria in types
1 to 5;
2. Criteria for types 2 and 3;
3. Treatment for deductible temporary differences which an entity classified
as type 2 is unable to schedule;

86

Hankyu Hanshin Holdings • Annual Report 2016(c) Effects of application of the Guidance	The Company is currently evaluating the effect of application of the
Guidance on consolidated financial statements.

Notes to the Consolidated Financial Statements

5 Changes in Presentation 
1 Consolidated Statements of Income“Gain on sales of noncurrent assets” of ¥973 million ($8,611 thousand)“Gain on sales of noncurrent assets” and “Gain on sales of investment securi-“Gain on sales of investment securities” of ¥3,436 million ($30,407 thousand)ties” in extraordinary income and “Loss on impairment of fixed assets” andwere included in “Other” in extraordinary income, and “Loss on impairment of“Loss on sales of investment securities” in extraordinary loss were classified

fixed assets” of ¥5,125 million ($45,354 thousand) and “Loss on sales of invest-

separately in the previous fiscal year.

ment securities” of ¥4,886 million ($43,239 thousand) were included in “Other”

In the current year, they are included in “Other” in extraordinary income

in extraordinary loss.

and extraordinary loss respectively because the significance was negligible.

6 Consolidated Balance Sheets 
1 Accumulated depreciation of property and equipment
Millions of yen

2 Accumulated contributions for construction directly deductedfrom the acquisition cost of noncurrent assets

Thousands of U.S. dollars

2015

2016

2016

¥1,066,829¥1,097,585$9,713,142

Millions of yen

Thousands of U.S. dollars

2015

2016

2016

¥377,460¥413,614$3,660,301

3 Pledged assets and secured liabilities
The following table shows the assets pledged as collateral.
Millions of yen

Thousands of U.S. dollars
2016

2015

2016

Property and equipment:[$1,868,230]¥209,800[¥209,800]¥211,110[¥211,110]$1,868,230

Machinery, equipment and vehicles

39,320[39,320]

42,841[42,841]

379,124[379,124]

Land

255,956[255,956]

255,924[255,924]

2,264,814[2,264,814]

Other

1,564

[1,564]2,297[2,297]

20,327[20,327]

128

[128]

128

[128]

1,133

[1,133]

9,287

[—]

3,033

[—]

26,841

[—]

24

[—]

24

[—]

212

[—]

516,082[506,770]

515,360[512,302]

4,560,708[4,533,646]

Buildings and structures

Intangible assets:
Other
Investment and other assets:
Investment securities
Other  Total

In addition to the above, the Company pledged investment securities (previous fiscal year: ¥0 million, curremt fiscal year: ¥800 million ($7,080 thousand)) as
collateral for loans of third parties.
The following table shows the secured liabilities.
Millions of yen

Thousands of U.S. dollars
2016

2015

2016

Current liabilities:
Short-term borrowings
Other¥ 14,270[¥  8,159]¥ 11,118[¥  9,108]$   98,389[$   80,602]

77

[—]

75

[—]

664

[—]

Long-term liabilities:
Long-term debt

111,846[109,143]

110,598[110,065]

978,743[974,027]  Total126,194[117,303]

121,793[119,173]

1,077,814[1,054,628]

The amounts in brackets are the amounts for the Railway Foundation within the total of each category.

Hankyu Hanshin Holdings • Annual Report 201687

Notes to the Consolidated Financial Statements

4 The following table shows the securities of nonconsolidated subsidiaries and affiliates.
Thousands of
U.S. dollars

Millions of yen

Investment securities

2015

2016

2016

¥184,730¥197,131$1,744,522

5 Two consolidated subsidiaries and an equity-method affiliate
revaluated land for business use based on the Law Concerning	Revaluations of Land (Law No. 34, promulgated on 31st March
1998) and the Law to Partially Modify the Law Concerning
Revaluations of Land (Law No. 19, promulgated on 31st March
2001). Of the valuation differences identified as a result of this, theconsolidated subsidiaries recorded the amount corresponding to
the taxes on the valuation difference in the liability section as“Deferred tax liabilities related to land revaluation” and theamount attributable to non-controlling interests shareholders as“non-controlling interests.” The amount remaining after subtracting these was recorded in the net assets section as “Revaluation
reserve for land.” The equity-method affiliate recorded theamount corresponding to its equity in the valuation difference(after subtracting taxes) in the net assets section as “Revaluation
reserve for land.”• Revaluation method

after revaluation at the end of the previous fiscal year and current fiscal year:
Millions of yen

Thousands of U.S. dollars

2015

2016

2016

¥(6,515)¥(6,069)$(53,708)

6 Contingent liabilities
The Company and its subsidiaries provide a liability guarantee for loans of thecompanies, etc., listed below.
Fiscal year ended 31st March 2015
Millions of yen

Nishi-Osaka Railway Co., Ltd.

¥21,067

Borrowers on loans for purchaseof land and buildings

2,115

Other (one company)

40

Total

23,223Fiscal year ended 31st March 2016
Millions of yen

Thousands of
U.S. dollars

Nishi-Osaka Railway Co., Ltd.

¥20,376$180,319

Borrowers on loans for purchaseof land and buildings

14,039124,239

The revaluation amounts were determined based on the revaluated value of
noncurrent assets provided for in Article 2, Paragraph 3 of the Enforcement
Ordinance for the Law Concerning Land Revaluation (Ordinance No. 119,
promulgated on 31st March 1998).
• Date of revaluation: 31st March 2002
• The difference between the market value of the land and the book value

67

593

34,483

305,159

Other (two companies)
Total

7 Consolidated Statements of Income 
1 Closing inventory is the amount after write-down of book3 The retirement benefit expenses and the main expense items andvalue due to a decline in profitability. As a result, valuation lossof inventory included in operating expenses and cost of sales wereas follows:
Millions of yen
2016

2016

¥4,454¥8,856$78,372

2 The breakdown of selling, general and administrative expenses isshown below.
Thousands of
U.S. dollars

Millions of yen

88

Millions of yen

Thousands of U.S. dollars

2015

2015

2016

2016

¥15,121¥15,683$138,788

Expenses

9,933

10,96997,071

Taxes

628

908

8,035

Depreciation andamortisation

503

954

8,442

Personnel expenses

monetary amounts within the amounts of allowance and provision
included in the costs of revenues from operations are shown below.

Amortisation of goodwill

2,929

2,471

21,867

Total

29,11630,987274,221

Hankyu Hanshin Holdings • Annual Report 2016

Thousands of
U.S. dollars

2015

2016

2016

Retirement benefit
expenses¥6,746¥6,369$56,363

Provision for bonuses

4,250

4,694

41,540Notes to the Consolidated Financial Statements

8 Consolidated Statements of Comprehensive Income 
1 Reclassification adjustments and tax effects related to other comprehensive income
Millions of yen

Thousands of U.S. dollars

2015

2016

2016

¥ 6,399¥(4,997)$(44,221)

1,443

5,069

44,858   Subtotal, before tax

7,843

72

637

   Tax (expense) or benefit(1,923)

526

4,655

   Valuation difference on available-for-sale securities

5,920

598

5,292

(1,143)(1,272)(11,257)

147

72

637

(996)

(1,199)(10,611)

Valuation difference on available-for-sale securities:
Increase (decrease) during the year
Reclassification adjustments

Deferred gains or losses on hedges:
Increase (decrease) during the year
Reclassification adjustments   Subtotal, before tax   Tax (expense) or benefit

368

413

3,655

   Deferred gains or losses on hedges

(627)

(786)

(6,956)

Increase (decrease) during the year

—

—

—

Reclassification adjustments

—

—

—

   Subtotal, before tax

—

—

—

   Tax (expense) or benefit

279

124

1,097

   Revaluation reserve for land

279

124

1,097

Increase (decrease) during the year

1,456

(855)

(7,566)

Reclassification adjustments

107

—

—

1,564

(855)

(7,566)

Revaluation reserve for land:

Foreign currency translation adjustments:   Subtotal, before tax   Tax (expense) or benefit   Foreign currency translation adjustments

—

—

—

1,564

(855)

(7,566)(75,469)

Remeasurements of defined benefit plans:
Increase (decrease) during the year

7,467

(8,528)

Reclassification adjustments(425)(1,104)(9,770)Subtotal, before tax

7,041(9,633)(85,248)

Tax (expense) or benefit(2,447)

3,296

29,1684,594(6,336)(56,071)

3,469(1,576)(13,947)

62

1,125

9,956

   Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted
for using equity method:
Increase (decrease) during the year
Reclassification adjustments  Share of other comprehensive income of associates accounted
for using equity method

3,531

(451)

(3,991)    Total other comprehensive income

15,262(7,706)(68,195)

9 Consolidated Statements of Changes in Net Assets 
1 Items related to type and total number of shares issued and type and number of shares of treasury stock
Fiscal year ended 31st March 2015


(Thousands of shares)

No. of shares as of 1st April 2014

Increase in number of shares

Decrease in number of shares

No. of shares as of 31st March 2015

1,271,406——

1,271,406

1,271,406——

1,271,406

11,057266

661

10,663

11,057266

661

10,663

No. of shares issued
Common stock  TotalTreasury stock, at cost
Common stock (Notes 1 and 2)  Total(Overview of reasons for fluctuations)
Notes:
1. The increase of 266 thousand shares of treasury stock was due to the purchase of odd-lot shares.
2.	The decrease of 661 thousand shares of treasury stock was due to a decrease of 656 thousand shares due to the change of interest for equity-method affiliates and a decrease of 4
thousand shares due to the sale of odd-lot shares.

Hankyu Hanshin Holdings • Annual Report 201689

Notes to the Consolidated Financial Statements

Fiscal year ended 31st March 2016

No. of shares as of 1st April 2015

Increase in number of shares(Thousands of shares)

Decrease in number of shares

No. of shares as of 31st March 2016

No. of shares issued
Common stock  Total1,271,406——

1,271,406

1,271,406——

1,271,406

10,6634,846

42

15,466

10,6634,846

42

15,466

Treasury stock, at cost
Common stock (Notes 1 and 2)  Total(Overview of reasons for fluctuations)
Notes:
1. The increase of 4,846 thousand shares of treasury stock was due to the purchase of 4,608 thousand shares of treasury stock based on a resolution of the Board of Directors and the purchaseof 238 thousand odd-lot shares.
2. The decrease of 42 thousand shares of treasury stock was due to a decrease of 38 thousand shares due to the exercise of stock option rights and a decrease of 4 thousand shares due tothe sale of odd-lot shares.

2 Items related to subscription rights to sharesFiscal year ended 31st March 2015

The Company(Parent company)

Number of shares subject to share subscription rights

Type of sharessubject to sharesubscription rights

As of 1st
April 2014

Increase

Decrease

As of 31st
March 2015

Subscription rights
as stock options

—

—

—

—

—

¥318

Total

—

—

—

—

—

318

Type of sharessubject to sharesubscription rights

As of 1st
April 2015

Increase

Subscription rights
as stock options

—

—

Total

—

—

Breakdown of new sharesubscription rights

Classification

Balance as of 31st March 2015
(Millions of yen)

Fiscal year ended 31st March 2016
Breakdown of new sharesubscription rights

Classification

The Company(Parent company)

Number of shares subject to share subscription rights

Balance as of 31st March 2016

Decrease

As of 31st
March 2016

(Millions of yen)(Thousands of
U.S. dollars)

—

—

—

¥424

$3,752

—

—

—

424

3,752

3 Items related to dividends
Fiscal year ended 31st March 2015(a) Dividends paid
(Resolution)

Type of shares

Dividends paid
(Millions of yen)

Dividend per share (Yen)Record date

Effective date

13th June 2014
General meeting ofshareholders

Common stock¥4,431¥3.5

31st March 2014

16th June 2014

29th October 2014
Board of Directors

Common stock

3,797

3

30th September 2014

1st December 2014(b) Dividends whose effective date falls in the fiscal year following the fiscal year of the record date

90

(Resolution)

Type of shares

Dividends paid
(Millions of yen)

Source of dividends

Dividend per share(Yen)

Record date

Effective date

16th June 2015
General meeting ofshareholders

Common stock¥3,797Retained earnings¥3

31st March 2015

17th June 2015

Hankyu Hanshin Holdings • Annual Report 2016

Notes to the Consolidated Financial Statements

Fiscal year ended 31st March 2016(a) Dividends paid
Dividends paid
(Resolution)

Type of shares

16th June 2015
General meeting ofshareholders
30th October 2015
Board of Directors

Dividend per share
Record date

Effective date

$0.03

31st March 2015

17th June 2015

$0.03

30th September 2015

1st December 2015

(Millionsof yen)(Thousands of
U.S. dollars)(Yen)(U.S. dollars)Commonstock¥3,797$33,602¥3

Commonstock¥4,430$39,204¥3.5(b) Dividends whose effective date falls in the fiscal year following the fiscal year of the record date
Dividends paid
(Resolution)

Type of shares

14th June 2016
General meeting ofshareholders

Commonstock

Dividend per share(Millionsof yen)(Thousands of
U.S. dollars)

Source of dividends¥4,413$39,053

Retained earnings(Yen)(U.S. dollars)

¥3.5

$0.03

Record date

Effective date

31st March 2016

15th June 2015

10 Consolidated Statements of Cash Flows 
Relationship between cash and cash equivalents at fiscal year-end and amounts shown on consolidated balance sheets
Millions of yen

Cash and deposits in the consolidated balance sheets

Thousands of
U.S. dollars

2015

2016

2016

¥25,614¥24,225$214,381

Deposits with maturities over 3 months(2,117)(1,862)(16,478)Cash and cash equivalents in the cash flow statements

23,49722,363

197,903

11 Lease Transactions <As lessee><As lessor>

Future lease payments for non-cancellable leases in connection with
operating lease transactions

Future lease receivables for non-cancellable leases in connection
with operating lease transactions

Millions of yen

Thousands of
U.S. dollars

Millions of yen

2015

2016

2016

Due within one year

¥ 3,992¥ 4,211$ 37,265

Due within one year

Due after one year

12,813

10,341

91,513Due after one year

16,806

14,552

128,779

Total

Total

Thousands of
U.S. dollars

2015

2016

2016

¥  606¥  606$ 5,363

6,459

5,853

51,796

7,065

6,459

57,15912 Financial Instruments 
1 Matters regarding financial instruments		Investment securities consist mainly of stocks and bonds and are(a) Policy on financial instruments

exposed to market price fluctuation risk. However, fair values and the	It is the Group’s policy to limit the investment of its funds to short-term

financial condition of the issuers are checked periodically, and the risk

deposits which are highly secure, and the Group raises funds mainly
through loans from financial institutions, bonds and commercial paper.

management system is confirmed.
		Almost all trade payables, namely note payables and trade account

Derivative transactions are used to avoid risk, as discussed later, and it ispayables, have a payment date that falls within one year. Some assets andour policy to refrain from speculative transactions.

liabilities denominated in foreign currency are exposed to exchange rate
fluctuation risk (market risk), which is limited through forward exchange(b)	Details of the financial instruments used, the risk involved, and the risk
management system		

contracts.
		

Short-term borrowings and commercial paper are used mainly to raise

Trade receivables, namely note receivables and trade account receiv-

short-term funds for working capital, and long-term debt and bonds are

ables, are exposed to the credit risk of customers. The Group limits its

used mainly to raise the long-term funds necessary for capital investment

exposure to this credit risk by controlling due dates and balances by cus-

plans. Some floating-rate debt is exposed to interest rate fluctuation risk

tomer and by making periodical checks of the credit conditions of major(market risk), which is limited by fixing interest rates through interest rate

customers pursuant to the internal regulations of each company.

swap transactions. In addition, liquidity risk, the risk that payment will not
be made by the due date, is limited by the timely preparation of financing

Hankyu Hanshin Holdings • Annual Report 201691

Notes to the Consolidated Financial Statements

plans and proper fund management. Also, surplus funds of the Grouppurpose of interest rate swap transactions is to hedge the interest ratecompanies are concentrated and used effectively through centralisation

fluctuation risk of certain loans. These derivative transactions involveof Group funds by using a cash management system. The immediate

credit risk because, if the other party to a transaction defaults under theraising of funds from financial institutions became possible through theterms of contract or becomes bankrupt, the benefit that would have been

establishment of backup financing such as commitment lines. In addition,

obtained in the future if the transaction had continued will not be

the Company maintained a proper balance between direct financing andreceived. However, credit risk is limited by carrying out transactions only

indirect financing and diversifies the raising of funds by using multiple
financial institutions, thus securing liquidity.
		with financial institutions with high credit ratings.
		More information regarding the means and objectives of hedging,

Regarding the use of derivative transactions, internal regulations pre-hedging policy and the method of evaluating the effectiveness of hedges

scribe the division of duties and transaction limits. Forward exchange

related to hedge accounting for derivative transactions, is described in “④contracts are used to hedge exchange rate fluctuation risk involved in a

Notes on Accounting Policies” “(f) Significant hedge accounting methods”
outlined in “ 2 Basis of Preparation of Consolidated Financial Statements.”

portion of foreign currency-denominated assets and liabilities. The

2 Matters regarding fair values of financial instruments
Book value, fair value and the differences between them as of the end of the previous fiscal year and current fiscal year are as shown below.
Millions of yen

Thousands of U.S. dollars
2016

2015

2016

Book value

Fair value

DifferenceBook value

Fair value

DifferenceBook value

Fair value

Difference(a) Cash and deposits¥ 25,614¥ 25,614¥    —¥ 24,225¥ 24,225¥    —$  214,381$  214,381$     —(b) Trade receivables

80,67380,673—73,141

73,141—

647,265

647,265—(c) Investment securities

43,87643,876

0

38,91638,916

0344,389344,389$0—AssetsLiabilities(d) Trade payables

42,42942,429—37,48037,480—331,681

331,681(e) Short-term borrowings (*1)

156,950

156,950—

135,322

135,322—

1,197,540

1,197,540—(f ) Bonds (*2)

112,000

116,270

4,270

112,000

116,753

4,753

991,150

1,033,212

42,062(g) Long-term debt (*1)

676,663

706,764

30,100659,687

685,991

26,304

5,837,938

6,070,717

232,779—(10,531)——(16,240)——(143,717)—(h) Derivative transactions(*1) Current portion of long-term debt is included in (g) Long-term debt.
(*2) Current portion of bonds is included.
Notes:
1. Method for calculating the fair values of financial instruments and matters regarding securities and derivative transactions(a) Cash and deposits, (b) Trade receivables
		 The fair values of these are almost equal to their book values because they will be settled within a short period of time. As a result, their fair values are based on their book values.
(c) Investment securities
		The fair values of investment securities are based on prices quoted by stock exchanges, and the fair values of bonds are based on prices quoted by stock exchanges or prices presented
by trading financial institutions. Securities categorised by the purpose for which they are held are described in “ 13 Securities.”(d) Trade payables, (e) Short-term borrowings
		 The fair values of these are almost equal to their book values because they will be settled within a short period of time. As a result, their fair values are based on their book values.
(f ) Bonds
		 The fair values of bonds are based on market prices.
(g) Long-term debt
		The fair value of fixed-rate long-term debt is based on a method of calculation whereby the total principal and interest is discounted at an interest rate that is assumed for the introduction of similar new debt. The fair value of floating-rate long-term debt is based on the book value because the fair value of floating-rate long-term debt reflects market interest rates
within a short period of time and closely approximates the book values.
(h) Derivative transactions
		 Described in “ 14 Derivatives.”
2. The book value of financial instruments whose fair value is extremely difficult to ascertain
Millions of yen

Thousands of
U.S. dollars

Classification

2015

2016

2016

Non-listed equity securities and bonds¥4,873¥5,823$51,531

Investments in limited liability investment partnerships andsimilar investments

2,333

3,682

32,584

Negotiable certificates of deposit

8,813

2,543

22,504

It is extremely difficult to ascertain the fair value of these financial instruments because market prices are not available and future cash flows cannot be estimated. As a result, they are notincluded in (c) Investment securities.

92

Hankyu Hanshin Holdings • Annual Report 2016

Notes to the Consolidated Financial Statements

3. The securities of nonconsolidated subsidiaries and affiliated companies are not included in (c) Securities.
4.	Supplementary explanation regarding fair value of financial instruments
The fair value of financial instruments is based on market price. If market prices are not available, the fair value of financial instruments is reasonably calculated. Certain assumptions areused to calculate the value. As a result, if different assumptions are used, the values may differ. For derivative contracts, the amount of the contract which is indicated in “ 14 Derivatives”
does not indicate the market risk involved in derivative transactions themselves.
5. Redemption and repayment schedule of monetary claims and investment securities with maturities
Fiscal year ended 31st March 2015
Millions of yen
Due within
one year

Due after
one yearthroughfive years

Due after
five years
throughten years

Due after
ten years

Cash and deposits¥ 25,614

¥   —

¥   —

¥—

Trade receivables

80,673——— Held-to-maturity debt securities(government bonds, etc.)

—

9

—

—

 Available-for-sale securities with maturities(government bonds, etc.)

—

185

288

—

106,287

195

288

—

Due within
one year

Due after
one yearthroughfive years

Due after
five years
throughten years

Due after
ten years

Cash and deposits¥24,225¥ —¥ —Trade receivables

73,141

—

—

—

9

—

Investment securities:  TotalFiscal year ended 31st March 2016
Millions of yen

Thousands of U.S. dollars
Due within
one year

Due after
one yearthroughfive years

Due after
five years
throughten years

Due after
ten years¥ —$214,381

$   —

$   —

$   —

—

647,265

—

—

—

—

—

80

—

—

Investment securities: Held-to-maturity debt securities(government bonds, etc.) Available-for-sale securities with maturities(government bonds, etc.)  Total

10

237

242

300

88

2,097

2,142

2,655

97,376

247

242

300

861,735

2,186

2,142

2,655

Due after
five years
throughten years

Due after
ten years$   88,496

6. Amount of planned redemption and repayment of bonds and long-term debt after the consolidated closing dateFiscal year ended 31st March 2015
Millions of yen
Due within
one year

Due after
one yearthroughfive years

Due after
five years
throughten years

Due after
ten years

Bonds¥     —

¥ 60,000¥ 42,000¥ 10,000

Long-term debt

82,615

187,687

236,116

170,244

82,615

247,687

278,116

180,244

Due within
one year

Due after
one yearthroughfive years

Due after
five years
throughten years

Due after
ten years

Due within
one year

Due after
one yearthroughfive years¥ 30,000¥ 55,000¥ 17,000¥ 10,000$265,487$  486,726$  150,442

70,586

151,945

255,164

181,990624,655

1,344,646

2,258,088

1,610,531

100,586

206,945

272,164

191,990

890,142

1,831,372

2,408,531

1,699,027

Total

Fiscal year ended 31st March 2016
Millions of yen

Bonds
Long-term debt
Total

Thousands of U.S. dollars

Hankyu Hanshin Holdings • Annual Report 201693

Notes to the Consolidated Financial Statements

13 Securities 
1 Held-to-maturity debt securities
Millions of yen

Thousands of U.S. dollars
2016

2015
Classification

2016

Book value

Fair value

DifferenceBook value

Fair value

DifferenceBook value

Fair value

Difference

¥9

¥9

¥0

¥9

¥10

¥0

$80

$88

$0

Securities with fair value
exceeding book value

2 Available-for-sale securities
Millions of yen

Classification

Securities with book value exceedingacquisition cost:Thousands of U.S. dollars

2015

2016

2016

Book value

Acquisition
cost

DifferenceBook value

Acquisition
cost

DifferenceBook value

Acquisition
cost

Difference$106,646¥34,791¥19,792¥14,998¥31,140¥19,089¥12,051$275,575$168,929(b) Bonds

459

439

19

490

464

25

4,336

4,106

221

Subtotal

35,25020,23215,01831,63019,554

12,076279,912173,044

106,867

8,600

12,749(4,149)

7,275

8,420

(1,144)64,381

74,513(10,124)

15

15

(0)

—

—

—

—

—

—

8,615

12,764(4,149)

7,275

8,420

(1,144)64,381

74,513(10,124)

43,86632,997

10,86838,90627,974

10,931

344,301

247,558

96,735(a) Equity securities(a) Equity securities
Securities with book value not exceed- (b) Bonds
ing acquisition cost:
Subtotal
Total

Note: Unlisted equity securities and others (previous fiscal year: ¥16,020 million, current fiscal year: ¥12,049 million ($106,628 thousand)) are not included in the above table due to the factthat establishing their fair values is extremely difficult because they do not have market values, and estimating future cash flows is not possible.

3 Available-for-sale securities sold during previous fiscal year andcurrent fiscal year

Fiscal year ended 31st March 2016
Omitted as the significance was negligible.

Fiscal year ended 31st March 2015

4 Impairment of securities

Millions of yen
Classification

Equity securities

Amount soldTotal gains
on saleTotal losses
on sale¥19,681¥3,436¥4,879Fiscal year ended 31st March 2015
Omitted as the significance is negligible.
Fiscal year ended 31st March 2016
Impairment loss on investment securities (other securities) of ¥4,979 million($44,062 thousand) was recognised.

94

Hankyu Hanshin Holdings • Annual Report 2016

Notes to the Consolidated Financial Statements

14 Derivatives 
1 Derivative transactions for which hedge accounting has not been applied(a) Currency
Fiscal year ended 31st March 2015
No items
Fiscal year ended 31st March 2016
Millions of yen
Classification

Type

Thousands of U.S. dollars

Contract
amountPortion of contract
amount exceeding
one year

Fair value(Note)

Contract
amountPortion of contract
amount exceeding
one year

Fair value(Note)¥1,846

¥   —

¥  2

$16,336

$   —

$  18

Forward exchange contracts
Transactions other than market
transactions

Buy contract  U.S. dollar
Currency swap contracts
Receive yen, pay U.S. dollars   Total

598

598

(47)

5,292

5,292

(416)

2,444

598

(45)

21,628

5,292

(398)

Notes:
1. Fair value calculation
Fair value is based mainly on prices quoted from counterparty financial institutions.
2.	The above currency swap contracts are hedged monetary receivables and payables arising from transactions among consolidated subsidiaries, and designated accounting is applied in
non-consolidated financial statements.

2 Derivative transactions for which hedge accounting has been applied(a) Currency
Fiscal year ended 31st March 2015
Millions of yen
Contract
amountPortion of contract
amount exceeding
one year

Fair value(Note)¥   840¥—¥  (0)

23—(0)  EuroDesignation  U.S. dollar of forward  Pound sterlingexchange
contracts, etc.   Swiss franc

16,057

—

(896)

7,839

—

779

21

—

(0)

1,757

—

156
(34)

Classification

Type

Main hedged
items

Forward exchange contracts
Sell contract

Trade
receivables  U.S. dollar  Japanese yen
Buy contract

Tradepayables  Canadian dollar

1,198

—

   New Zealand dollar

150

—

9

  Australian dollar

308

—

(7)

   Hong Kong dollar

67

—

(0)

  Singapore dollar

236

—

(9)

   Thai baht

80

—

0

  Japanese yen

889

—

(13)

29,471—(17)   Total

Hankyu Hanshin Holdings • Annual Report 201695

Notes to the Consolidated Financial Statements

Fiscal year ended 31st March 2016
Millions of yen
Classification

Main hedged
items

Type

Thousands of U.S. dollars

Contract
amountPortion of contract
amount exceeding
one year

Fair value(Note)

Contract
amount¥   194¥—¥    1$  1,717$—$       9

8

—

0

71

—

0

Portion of contract
amount exceeding
one year

Fair value(Note)

Forward exchange contracts
Trade
receivables

Sell contract  U.S. dollar  Japanese yen

TradepayablesBuy contract  EuroDesignation  U.S.
dollar of forward  Pound sterlingexchange
contracts, etc.   Swiss franc

13,525—(564)

119,690—(4,991)

8,476

—

(543)

75,009—(4,805)  Canadian dollar

17

—

0

150

—

0

1,726

—

(87)

15,274

—

(770)

1,201

—

(65)

10,628—(575)   New Zealand dollar

220

—

(12)

1,947

—

(106)

  Australian dollar

291

—

(1)

2,575

—

(9)

   Hong Kong dollar

77

—

(0)

681

—

(0)

  Singapore dollar

3,330

—

(170)

29,469—(1,504)

79

—

(0)

699

—

(0)

  Japanese yen

1,227

—

5

10,858—44   Total

30,378—(1,438)268,832—(12,726)   Thai baht

Note: 	Fair value calculation
Fair value is based mainly on prices quoted from counterparty financial institutions.

(b) Interest rate
Fiscal year ended 31st March 2015
Millions of yen
Classification

Type

Deferral hedge accounting andInterest rate swap contracts
exceptional Pay fixed rate/accounting ofReceive floating rateinterest rate swaps

Main hedged
items

Contract
amountPortion of contract
amount exceeding
one year

Fair value(Note)

Long-term
debt¥255,235¥226,437¥(10,514)

255,235

226,437(10,514)Main hedged
items

Contract
amountPortion of contract
amount exceeding
one year

Fair value(Note)

Contract
amountPortion of contract
amount exceeding
one year

Fair value(Note)

Long-term
debt¥222,592¥201,188¥(14,757)$1,969,841$1,780,425$(130,593)

222,592

201,188(14,757)

1,969,841

1,780,425(130,593)

Total

Fiscal year ended 31st March 2016
Millions of yen
Classification

Type

Exceptional
Interest rate swap contracts accounting of Pay fixed rate/interest rate swaps
Receive floating rate

Total

Note:	Fair value calculation
Fair value is based mainly on prices quoted from counterparty financial institutions.

96

Hankyu Hanshin Holdings • Annual Report 2016

Thousands of U.S. dollars

Notes to the Consolidated Financial Statements

15 Retirement Benefits 
1 Overview of retirement benefit plans(c)	At the end of the year, reconciliation from retirement benefit obligations

Some consolidated subsidiaries of the Company provide a defined benefit

and plan assets to net defined benefit liability (asset) recorded in the con-plan (defined benefit pension plan and lump-sum payment plan) or a definedsolidated balance sheets

contribution plan. Hankyu Corporation has also established a retirement
In addition, some consolidated subsidiaries subscribe to the employees’
pension funds plan in the multi-employer plan. Among them, the Company
has used the same accounting treatment as it used for defined contributionplans when the amount of plan assets corresponding to contributions by theCompany cannot be rationally calculated.

2 Defined benefit plan(a) Movement in retirement benefit obligations
Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

benefits trust.

2015

2016

2016

Funded retirement
benefit obligations¥ 66,970¥ 71,030$ 628,584

Plan assets(77,249)(77,281)(683,903)(10,278)(6,251)(55,319)

Unfunded retirement
benefit obligations

58,52062,143549,938

Total net defined benefit
liability and asset

48,24155,892494,619

Net defined benefit
liability

56,95061,839547,248

2015

2016

2016

Net defined benefit asset(8,709)(5,947)(52,628)¥126,263¥125,490$1,110,531

48,24155,892494,619 Cumulative effect of changes inaccounting policies

Total net defined benefit
liability and asset

(625)

—

—

Balance at beginning of the year reflectingchanges in accounting
policies

125,638

125,490

1,110,531

Balance at beginningof the year

2015

2016

2016

¥ 7,342¥7,231$63,991

67,319Interest cost

1,048

1,046

9,257

Expected returnon plan assets(1,244)(929)(8,221)

Amortisation of actuarial
differences

403

(192)

(1,699)Amortisation of priorservice cost

(900)

(912)

(8,071)

Other

141

76

673

Retirement benefit
expenses

6,790

6,319

55,9207,231

63,991

1,048

1,046

9,257

 Actuarial loss (gain)

105

7,607

(7,999)(8,300)(73,451)

—

3

27

(645)

95

841

125,490

133,174

1,178,531 Loss (gain) in priorservice cost
Balance at end of the year

Thousands of
U.S. dollars

Service cost

7,342

 Interest cost

 Other(d) The breakdown of retirement benefit expenses
Millions of yen Service cost

 Retirement benefits paid

Note:	Amounts in the table include the retirement benefit obligations and plan assets ofconsolidated subsidiaries using simplified methods.

Note:	Amounts in the table include the retirement benefit obligations of consolidated
subsidiaries using simplified methods.

(b) Movements in plan assets
Thousands of
U.S. dollars

Millions of yen
2015

2016

2016

Balance at beginningof the year

¥68,565¥77,249$683,619 Expected returnon plan assets

1,244

929

8,221

Notes:
1.	Amounts in the table include the retirement benefit expenses of consolidated subsidiaries using simplified methods.
2.	In addition to the retirement benefit expenses shown above, the Company made extra
retirement payments of ¥52 million in the previous fiscal year and ¥9 million ($80 thousand) in the current fiscal year, which it recorded as costs of revenues from operations
and extraordinary loss.

 Actuarial loss (gain)

7,573

(917)

(8,115)(e) Remeasurements of defined benefit plans Contribution paidby the employer

4,805

4,802

42,496

	The breakdown of items related to remeasurements of defined benefit Retirement benefits paid

(4,519)(4,783)(42,327) Other

(419)

(0)

(0)

77,24977,281

683,903

Balance at end of the year

Note:	Amounts in the table include the plan assets of consolidated subsidiaries using
simplified methods.

plans (prior to the deduction of the tax effect) is as follows:
Thousands of
U.S. dollars

Millions of yen
2015

2016

2016

Prior service cost

¥ (900)¥  (916)$ (8,106)

Actuarial differences(77,142)

7,870(8,717)

Other

71

—

—

Total

7,041

(9,633)(85,248)

Hankyu Hanshin Holdings • Annual Report 201697

Notes to the Consolidated Financial Statements(f ) Cumulative adjustments of retirement benefit plans

II. Method of determining the long-term expected rate of return on plan	The breakdown of items related to cumulative adjustments of retirement
benefit plans (prior to the deduction of the tax effect) is as follows:
Thousands of
U.S. dollars

Millions of yen
2015

2016

2016

Unrecognised priorservice cost¥(1,534)¥ (618)$ (5,469)

Unrecognised actuarial
differences(4,405)

4,311

38,150Total(5,940)3,692

32,673

Note: The above relates to consolidated subsidiaries. In addition to the above items, theremeasurements of defined benefit plans include unrecognised items (the amountcorresponding to equity) of equity-method affiliates.

assetsCurrent and target asset allocations and historical and expected returns
on various categories of plan assets have been considered in determining
the long-term expected rate of return on plan assets.
(h) Items related to actuarial assumptions
The major actuarial assumptions at the end of the fiscal year
2015

2016

Discount rate

Mainly 1.0%

Mainly 0.0%

Long-term expected rateof return on plan assets

Mainly 2.0%

Mainly 2.0%

Expected rate of salary increase

Mainly 2.5%

Mainly 2.5%

3 Defined contribution plan(g) Items related to plan assets

The required contribution for the consolidated subsidiaries’ defined contribu-

I. Breakdown of major plan assets
	The ratios of the major types of assets to total plan assets were as follows:tion plan (including employees’ pension funds plan in the multi-employer
plan to which the same accounting method is applied as for the defined

%
2015

2016

Bonds

33

35

Equity securities

36

33

Cash and deposits

33General accountsof life insurance

28

28

Other

1

1

Total

100

100

contribution plan) was ¥48 million for the previous fiscal year and ¥49 million($434 thousand) for the current fiscal year.

Note: The retirement benefits trust established for the Company’s pension plan constituted 10% of total plan assets in the previous fiscal year and 10% of total plan
assets in the current fiscal year.

16 Stock Options, etc. 
1 Cost amount and account associated with stock options
Millions of yen

Operating expenses and cost of sales oftransportation andcost of sales

Thousands of
U.S. dollars

2015

2016

2016

¥109

¥124

$1,097

Resolution date
Classification and numberof eligible persons
Class and number of shares (Note)
Grant date
Vesting conditions
Service period
Exercise period

2 Details and size of stock options and changes therein(a) Details of stock options
Resolution date
Classification and numberof eligible persons
Class and number of shares (Note)
Grant date
Vesting conditions
Service period
Exercise period

98

16th June 2011
10 directors of subsidiaries
104,000 shares of common stock
25th July 2011
Not definedNot defined
From 26th July 2011
to 25th July 2041

Hankyu Hanshin Holdings • Annual Report 2016

Resolution date
Classification and numberof eligible persons
Class and number of shares (Note)
Grant date
Vesting conditions
Service period
Exercise period

29th March 2012
11 directors of subsidiaries
112,000 shares of common stock
25th April 2012
Not definedNot defined
From 26th April 2012
to 25th April 2042
14th June 2012
8 directors of subsidiaries
102,000 shares of common stock
25th July 2012
Not definedNot defined
From 26th July 2012
to 25th July 2042

Notes to the Consolidated Financial Statements

Resolution date
Classification and numberof eligible persons
Class and number of shares (Note)
Grant date
Vesting conditions

29th March 2013

II. Unit price information

18 directors of subsidiaries

Resolution date

192,000 shares of common stock
25th April 2013
Not defined

Exercise priceService period

Not defined

Exercise period

From 26th April 2013
to 25th April 2043

Resolution date
Classification and numberof eligible persons
Class and number of shares (Note)
Grant date
Vesting conditions

27th March 2014

Average stock
price at exercise
Fair value unit price at the
grant date

16th June 29th March 14th June 29th March 27th March 27th March
2011
2012
2012
2013
2014
2015

¥1

¥1

¥1

¥1

¥—

¥—

¥—

¥—

¥311

¥361

¥387

¥615

options granted during the current fiscal year.
(a) Valuation method used: Black–Scholes modelService period

Not defined

Exercise period

From 26th April 2014
to 25th April 2044

Resolution date
Volatility of stock price (Note 1)
Expected life (Note 2)
Expected dividends (Note 3)
Risk-free interest rate (Note 4)Service period

Not defined

Exercise period

From 25th April 2015
to 24th April 2045

¥718
[US$6.35]

The following method was applied to fairly valuate the unit price of stock

203,000 shares of common stock
25th April 2014
Not defined

27th March 2015

¥541

3 Estimation method for fair value unit price of stock options

20 directors of subsidiaries

Resolution date
Classification and numberof eligible persons
Class and number of shares (Note)
Grant date
Vesting conditions¥1[US$0.01]¥—¥—[US$—]¥1(b) Major basic data and estimation method
27th March 201522.40%
2.481 years¥6 [US$0.05] / share0.001%

Notes:
1.	Volatility of stock price is based on the closing prices in regular transactions for theCompany’s common stock on individual transaction dates during the period of 2.481
years (from 30th October 2012 to 24th April 2015).
2.	Expected life is based on the actual length of service of eligible directors of subsidiaries
who had resigned in the past, and on the actual length of service of eligible persons asof the grant date.
3.	Expected dividends are based on the actual dividends paid for the fiscal year ended
31st March 2014.
4.	Risk-free interest rate is the yield of government bonds for the period corresponding to
the expected life.

22 directors of subsidiaries
174,000 shares of common stock
24th April 2015
Not definedNote: Indicated in the equivalent number of shares.

(b) Size of stock options and changes therein
The covered stock options are those which existed during the fiscal year
ended 31st March 2016, the number of which is indicated in the equivalent
number of shares.

4 Estimation method for the number of vested stock options
Since the stock options were vested on the grant date, vested and granted
stock options are the same in number.

I. Number of stock options
Resolution date
Before vested (shares) At the end of the previous
fiscal year
GrantedExpired
VestedUnvested
After vested (shares) At the end of the previous
fiscal year
VestedExercised
Expired
Unexercised

16th June 29th March 14th June 29th March 27th March 27th March
2011
2012
2012
2013
2014
2015

—

—

—

—

—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

— 174,000——— 174,000——

72,00080,000 102,000 192,000 203,000———
72,000———80,000————— 174,000
14,000 13,000 11,000
—
—
—
—
—
88,000 179,000 192,000 174,000

Hankyu Hanshin Holdings • Annual Report 201699

Notes to the Consolidated Financial Statements

17 Deferred Tax 
1 Significant components of the Company’s deferred tax assets and liabilities
Thousands of
U.S. dollars

Millions of yen
2015

2016

2016

Deferred tax assets: Loss on revaluationof real estate for sale¥   24,497$  216,788

Net defined benefit liability

16,323

18,335

162,257

Tax loss carryforwards

18,964

16,482

145,858 Loss on impairmentof fixed assets

10,213

10,695

94,646 Loss on adjustmentof transferred profit and loss

6,667

5,451

48,239Unrealised profit from assets

4,095

4,658

41,221

Provision for bonuses

1,783

1,979

17,513 Losses on revaluationof investment securities

1,855

1,475

13,053 Enterprise taxes and businessoffice taxes

1,117

937

8,292
103,991

12,666

11,751

100,609

96,264

851,894(46,068)(42,500)(376,106) Less amounts offset against
deferred tax liabilities(44,100)(43,012)(380,637)   Total deferred tax assets

10,44010,75095,133

Other
Valuation allowance

2015

2016

35.6%

33.0%

14.4

11.2

 Valuation allowance

1.4

0.9

 Per capita amount of inhabitants’ tax

0.5

0.4

 Nondeductible expenses

0.6

0.4

 Nontaxable income(15.6)(11.1) Equity in (income) losses of affiliates

(2.1)

(2.0)

5.4

(0.4)

(16.4)(5.8)

Statutory tax rate
 Elimination of dividends fromconsolidated subsidiaries

Valuation allowance Downward adjustment of deferred tax assets (liabilities) at end of year
due to tax rate change Other

4.4

(1.1)

Effective tax rate

28.2

25.5

3 Amendments to the amount of deferred tax assets and liabilities
due to changes to the effective tax rate
The Diet enacted the “Act for Partial Amendment of the Income Tax Act, etc.”(Act No. 15 of 2016) and the “Act for Partial Amendment of the Local Tax Act,etc.” (Act No. 13 of 2016) on 29th March 2016. As a result, the income tax rate
was lowered for consolidated fiscal years beginning on or after 1st April 2016.

Deferred tax liabilities: Gain on reversal of difference
from land revaluation(124,437)(131,091)(1,160,097) Revaluation of assets
on consolidation(84,615)(79,928)(707,327) Net unrealised holding gains
on securities(16,300)(13,776)(121,912) Gain on valuation of propertiesof business reorganisation(1,995)(1,858)(16,442)(6,499)(6,181)(54,699)   Subtotal of deferred tax liabilities(233,849)(232,836)(2,060,496)  Less amounts offset against
deferred tax assets

44,10043,012

380,637   Total deferred tax liabilities(189,748)(189,823)(1,679,850)   Net deferred tax liabilities(179,307)(179,073)(1,584,717)

OtherNote:	The Company reversed the “Surplus from land revaluation” when, as a result of a(physical) absorption-type corporate split on 1st April 2005, it handed over all of its
land to Hankyu Corporation (which changed its name from Hankyu Corporation
Spin-Off Preparation Inc. to Hankyu Corporation on the same day). As a result,“Deferred tax liabilities related to land revaluation” has been recorded as Deferred tax
liabilities starting from the fiscal year ended 31st March 2006.

18 Asset Retirement Obligations 
Omitted as the significance was negligible.

100

tory tax rate and the effective tax rate reflected in the accompanying consolidated statements of income(Adjustment)¥   26,923   Subtotal of deferred tax assets

2 A reconciliation of the significant differences between the statu-

Hankyu Hanshin Holdings • Annual Report 2016

Accordingly, the effective statutory tax rate used to calculate deferred tax
assets and liabilities is to be lowered from the previous fiscal year’s effective
statutory tax rate of 32.2% to 30.8% for the fiscal year that began on 1st April
2016 and for the fiscal year that will begin on 1st April 2017, in relation to
the temporary differences that are expected to be cancelled. Further, theeffective statutory tax rate will be lowered to 30.6% for fiscal years beginningon or after 1st April 2018, in relation to the temporary differences that are
expected to be cancelled.
This change in tax rates resulted in decreases of ¥6,225 million ($55,088
thousand) in deferred tax liabilities (net of deferred tax assets), ¥5,530 million($48,938 thousand) in income taxes—deferred and ¥8 million ($71 thousand)in deferred gains or losses on hedges and ¥0 million ($0 thousand) incumulative adjustments related to retirement benefit plans and an increase of¥704 million ($6,230 thousand) in valuation differences on available-for-salesecurities.
Furthermore, deferred tax liabilities related to land revaluation decreased¥124 million ($1,097 thousand), and revaluation reserve for land increased by
the same amount.

Notes to the Consolidated Financial Statements

19 Rental Property 
Some consolidated subsidiaries own rental property, such as office buildings
for lease and commercial facilities for lease in the Kita Ward of Osaka and otherareas. Rental income related to such rental property in the fiscal year ended
31st March 2015 was ¥31,048 million (significant rental revenues are recorded
in revenues from operations and significant rental expenses are recordedin costs of revenues from operations). Rental income related to such rental
properties in the fiscal year ended 31st March 2016 was ¥30,194 million($267,203 thousand) (significant rental revenues are recorded in revenues
from operations and significant rental expenses are recorded in costs of revenues from operations).
Book value, increase/decrease and fair value were as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2016

2016

¥712,891¥625,822$5,538,248

Book value (Note 1): Balance at the beginningof yearIncrease/decrease (Note 2)(87,068)(2,465)(21,814)

Balance at the end of year

625,822623,357

5,516,434

782,787

805,355

7,127,035

Fair value at the endof year (Note 3)

Notes:
1.	Book value is acquisition cost less accumulated depreciation.
2.	For changes in amounts in the fiscal year ended 31st March 2015, the main increases
were acquisitions of real estate of ¥10,822 million. The main decreases were exclusionof properties for which development began of ¥78,334 million, depreciation of ¥14,111
million, and sales of real estate of ¥4,635 million. For changes in amounts in the fiscal
year ended 31st March 2016, the main increase was acquisitions of real estate of¥17,796 million ($157,487 thousand). The main decreases were depreciation of ¥13,159
million ($116,451 thousand), sales of real estate of ¥3,564 million ($31,540 thousand),and changes in reason for ownership from rental property, etc., to property for theCompany’s use of ¥3,127 million ($27,673 thousand).
3.	Fair value as of the end of the fiscal year is the appraisal value according to an outside
real estate appraiser based on Japanese Real Estate Appraisal Standards in the case of
key properties and the fair value based on indicators such as the assessed value of
noncurrent assets and road tax rating in the case of other properties.
4.	Property under development has not been included in the above table because of the
difficulty of ascertaining the market value of property that is in the process of development. Furthermore, property under development recognised in the consolidatedbalance sheets for the previous fiscal year and for the current fiscal year were ¥86,101
million and ¥90,367 million ($799,708 thousand), respectively.

20 Segment Information 
1 Segment information(a) Summary of reportable segments
	The Company’s reportable segments are regularly reviewed using the segment specific financial information available to enable the Board of Directors todetermine the allocation of management resources and evaluate business results.
		

The Group comprises six core businesses: “Urban Transportation,” “Real Estate,” “Entertainment and Communications,” “Travel,” “International Transportation”

and “Hotels.” The businesses are operated by five core companies: Hankyu Corporation, Hanshin Electric Railway Co., Ltd., Hankyu Travel International Co., Ltd.,
Hankyu Hanshin Express Co., Ltd. and Hankyu Hanshin Hotels Co., Ltd., under the leadership of the Company, which manages the Group.
		

The nature of business in each reportable segment is as follows:		 Urban Transportation: railway operations, automobile, retailing and advertising businesses		 Real Estate: rental real estate, real estate sales and other businesses		 Entertainment and Communications: sports related businesses, stage events, communications and media, and other businesses		 Travel: travel services		 International Transportation: international cargo services		 Hotels: hotel ownership and management business(b) Method used to calculate revenues from operations, income (loss), assets and other items for each reportable segment
	The accounting treatment for each reportable business segment is based on the methods described in “ 2 Basis of Preparation of Consolidated Financial
Statements,” and internal transactions (land and structure leases and rental transactions, etc.) that are calculated through management accounting at companies with businesses spanning multiple segments are included and recorded.
		

Income (loss) for each reportable segment refers to operating income (loss).

		Intersegment revenues from operations and transfers are based mainly on similar data as those of general transaction conditions.

Hankyu Hanshin Holdings • Annual Report 2016101

Notes to the Consolidated Financial Statements(c) Information regarding totals for revenues from operations, income (loss), assets and other items by reportable segment
Fiscal year ended 31st March 2015
Millions of yen

Total

Adjustment(Note 2)

Amounts
appearing in
the consolidated
financialstatements(Note 3)

Reportable segment

Revenues from operations:
I. Customers
II. Intersegment   Total
Segment income (loss)
Segment assets
Other items  Depreciation andamortisation  Increase in property and equipment andintangible assets

Other(Note 1)

Urban
Transportation

Real EstateEntertainment
andCommunications

TravelInternational
Transportation

HotelsSubtotal¥228,306
5,112
233,419
38,553
778,565¥189,680
16,763
206,444
37,173
993,303¥104,768
7,864
112,632
14,993
143,239¥31,93628
31,965
1,227
68,037¥39,411
7
39,4193,053
45,828¥62,344687
63,031
1,216
82,199¥  656,449
30,463686,912
96,2172,111,174¥28,976
12,701
41,678
1,032
43,769¥  685,425
43,165728,591
97,2502,154,943¥    480(43,165)(42,684)(3,223)
124,694¥  685,906—
685,906
94,0262,279,638

25,433

17,218

7,010

809

738

2,035

53,247479

53,726(582)

53,14332,07225,828

6,092

660

476

1,497

66,627960

67,587527

68,115Adjustment(Note 2)

Amounts
appearing in
the consolidated
financialstatements(Note 3)¥   527(40,188)(39,660)(2,866)98,899¥  707,359—
707,359
110,2932,282,180

Fiscal year ended 31st March 2016
Millions of yen
Reportable segment

Revenues from operations:
I. Customers
II. Intersegment   Total
Segment income (loss)
Segment assets
Other items  Depreciation andamortisation  Increase in property and equipment andintangible assets

Other(Note 1)

Urban
Transportation

Real EstateEntertainment
andCommunications¥234,410
5,133
239,544
41,270794,261¥  203,413
17,509220,923
49,851
1,022,570¥105,351
7,138
112,490
15,301
142,705¥30,492
930,502680
65,239¥36,6508
36,658
1,788
39,899¥67,304
737
68,042
3,298
82,754¥  677,622
30,538708,160
112,191
2,147,431

25,691

17,916

6,656

773

730

1,838

53,607537

54,144(443)

53,701

27,97728,287

5,919

507

1,049

2,233

65,974717

66,691(52)

66,639Adjustment(Note 2)

Amounts
appearing in
the consolidated
financialstatements(Note 3)

TravelInternational
Transportation

HotelsSubtotal

Total¥29,209 ¥  706,831
9,649
40,18838,859747,019967
113,159
35,849 2,183,280

Thousands of U.S. dollars
Reportable segment
Urban
Transportation

Revenues from operations:
I. Customers$2,074,425
II. Intersegment
45,425   Total
2,119,858
Segment income (loss)
365,221
Segment assets
7,028,858
Other items  Depreciation and
227,354
amortisation  Increase in property and equipment and
247,584
intangible assets

Other(Note 1)

Real EstateEntertainment
andCommunications

TravelInternational
Transportation$1,800,115
154,947
1,955,071
441,159
9,049,292$  932,310
63,168995,487
135,407
1,262,876$269,841
80
269,929
6,018
577,336$324,33671
324,407
15,823353,088

158,549

58,903

6,841

6,460

16,265474,398

4,752

479,150(3,920)475,230

250,327

52,381

4,487

9,283

19,761

583,841

6,345

590,186(460)

589,726

HotelsSubtotal$595,611 $ 5,996,655
6,522
270,248
602,1426,266,903
29,186
992,841
732,336 19,003,814

Total$258,487 $ 6,255,142
85,389355,646
343,885 6,610,788
8,558 1,001,407
317,248 19,321,062$   4,664 $ 6,259,814(355,646)—(350,973)
6,259,814(25,363)
976,044875,212
20,196,283

Notes:
1.	The “Other” segment is a business segment not included in the reportable segments and includes construction, etc.
2.	The main item in the adjusted amount of segment profit and loss for the fiscal year was amortisation of goodwill (¥(2,666) million in the previous fiscal year and ¥(2,238) million ($(19,805)
thousand) in the current fiscal year) (refers mainly to the amortisation of goodwill arising from the management integration with Hanshin Electric Railway Co., Ltd. in the fiscal year ended
31st March 2007).
	  In addition to the balance of unamortised goodwill (refers mainly to the goodwill arising from the management integration with Hanshin Electric Railway Co., Ltd. in the fiscal year
ended 31st March 2007) of ¥22,939 million ($203,000 thousand), the segment assets’ adjusted amount consists mainly of surplus working capital (cash and deposits); unallocated assets
such as long-term investment funds (investment securities) and land, etc.; and intersegment eliminations at the Company, Hankyu Corporation and Hanshin Electric Railway Co., Ltd.
3.	Segment profit and loss is adjusted with the operating income in the Consolidated Statements of Income.

102

Hankyu Hanshin Holdings • Annual Report 2016

Notes to the Consolidated Financial Statements

2 Related information(a) Information about product and service categories
	Information about product and service categories is the same as that described in “① Segment information”“(c) Information regarding totals for revenues fromoperations, income (loss), assets and other items by reportable segment.”(b) Information by region
I. Revenues from operations
	Since over 90% of revenues from operations in the consolidated statements of income are revenues from external customers in Japan, a description of regional
breakdown is omitted.
II. Property and equipment
	Since over 90% of the total value of property and equipment in the consolidated balance sheets relates to property and equipment in Japan, a breakdown by
region is omitted.
(c) Information about important customers
No single external customer accounts for more than 10% of the revenues from operations reported in the consolidated statements of income.

3 Information regarding loss on impairment of fixed assets by reportable segment
Omitted as the significance is negligible.

4 Information regarding amortisation of goodwill and the balance of unamortised goodwill by reportable segment
Omitted as the significance is negligible.

5 Information regarding gains from negative goodwill by reportable segment
Omitted as the significance is negligible.

21 Related Party Transactions 
1 Related party transactions(a) Transactions between the company submitting the consolidated financial statements and related parties
No items(b) Transactions between consolidated subsidiaries of the company submitting the consolidated financial statements and related parties
Directors and principal shareholders (only individual shareholders) of the company submitting the consolidated financial statements
Fiscal year ended 31st March 2015
Type

Name ofrelated party

Address

Amount ofcapital(Millions of yen)

Business

Voting interest

Relationshipwith related
party

Details oftransaction

Transaction
amounts(Millions of yen)

Item

Balance as of
31st March 2015
(Millions of yen)

Audit & Supervisory
Board Member

Haruo Sakaguchi—¥ —Auditor of theCompany

Directly
0.0%

Lease of realestateLease ofreal estate¥47

Deposit¥33

35

Accounts
receivable

3

Company in which director or close
Tateishi Sangyo
family thereof holds
Co., Ltd.
majority of voting
rightsIkeda City,
Osaka

100

Real estatebusiness

0.1%

Operation andOperation andmanagementof real estate, management ofreal estate
concurrent post
(director)

Notes:
1. The transaction amount does not include consumption tax, etc., and the balance, excluding deposit, at the end of the fiscal year does not include consumption tax, etc.
2.	Transaction terms and conditions, and method of determining transaction terms and conditions, etc.
	  The terms and conditions of the property lease and operation and management are determined with reference to similar transactions in the neighbouring area.
3. Director of a consolidated subsidiary of the Company, the Hankyu Corporation, Koichi Kobayashi and his close family own 77% of the voting rights in Tateishi Sangyo Co., Ltd.

Hankyu Hanshin Holdings • Annual Report 2016103

Notes to the Consolidated Financial Statements

Fiscal year ended 31st March 2016
Amount of capital
Type

Name ofrelated party

Address

Audit & Supervisory
Board Member

Haruo Sakaguchi—

Company in which director or closefamily thereofholds majorityof voting rights

Tateishi Sangyo
Co., Ltd.

Ikeda City
Osaka

(Millions ofyen)(Thousandsof U.S.
dollars)

¥—

$—

¥100

$885

Business

Voting interest

Relationshipwith related
party

Auditorof theCompany

Directly
0.0%

Lease of realestateReal estatebusiness

0.1%

Operation andmanagement,
sale, purchase,and brokerageof real estate,concurrent post
(director)

Balance as of 31st
March 2016

Transaction amounts
Details oftransaction(Millionsof yen)(Thousandsof U.S.
dollars)

Item

Lease of realestate¥47$416

Operationand management of realestate¥34$301

Sale of realestate——Purchase ofreal estate¥5,222

Real estate
brokerage¥156(Millionsof yen)(Thousandsof U.S.
dollars)

Deposit¥33$292

Accounts
receivable¥0$0Advance¥698$6,177

Deposit¥10$88$46,212———$1,381———

Notes:
1. The transaction amount does not include consumption tax, etc., and the balance, excluding deposit, at the end of the fiscal year does not include consumption tax, etc.
2. Transaction terms and conditions, and method of determining transaction terms and conditions, etc.
	  The terms and conditions of the property lease and operation and management are determined with reference to similar transactions in the neighbouring area.
	  The terms and conditions of the purchase of real estate are determined with reference to the appraised values of real estate appraisers.
	  The terms and conditions of real estate brokerage are determined in the same manner as used for general transaction conditions.
3. Director of a consolidated subsidiary of the Company, the Hankyu Corporation, Koichi Kobayashi and his close family own 77% of the voting rights in Tateishi Sangyo Co., Ltd.

2 Notes about parent company and major affiliated companies
No items

22 Per Share Information 
The following tables show net assets per share, net income attributable to owners of the parent per share, diluted net income attributable to owners of the parent
per share, and the basis for their respective calculations.
① Net assets per share (yen / U S. dollars)(Basis for the calculation)
Total net assets (Millions of yen / Thousands of U.S. dollars)
Amount to be deducted from total net assets(Millions of yen / Thousands of U.S. dollars)(Of the amount, subscription rights to shares)(Of the amount, non-controlling interests)
Net assets at the end of the fiscal year related to common shares(Millions of yen / Thousands of U.S. dollars)Common shares issued (Thousands of shares)
Treasury stock shares (Thousands of shares)
Common shares held by consolidated subsidiaries and equity-method affiliates(Thousands of shares)
Common shares used to calculate net assets per share (Thousands of shares)

104

Hankyu Hanshin Holdings • Annual Report 2016

2015

2016

¥525.56¥563.19$4.98¥679,482¥724,237$6,409,177¥16,885¥16,902$149,575¥[318]¥[16,566]¥[424]¥[16,478]$[3,752]$[145,823]$6,259,593¥662,596¥707,334

1,271,406
5,573

1,271,406
10,376

5,089

5,089

1,260,743

1,255,940

2016

Notes to the Consolidated Financial Statements

2015

2016

¥42.98¥55.58$0.49

Net income attributable to owners of the parent(Millions of yen / Thousands of U.S. dollars)¥54,201¥69,971$619,212

Amount not belonging to common stockholders(Millions of yen / Thousands of U.S. dollars)

¥—

¥—

$—

¥54,201¥69,971$619,212

1,261,127

1,259,005¥42.95¥55.53

$0.49

¥(7)

¥(11)

$(97)

¥[(7)]¥[(11)]$[(97)]

634

772

[634]

[772]

—

—

② Net income per share (yen / U.S. dollars)

2016(Basis for the calculation)

Net income attributable to owners of the parent related to common shares(Millions of yen / Thousands of U.S. dollars)
Average number of common shares during term (Thousands of shares)③ Net income per share—diluted (yen / U.S. dollars)(Basis for the calculation)
Adjustment to net income attributable to owners of the parent(Millions of yen / Thousands of U.S. dollars)(Equity in income of affiliates)
Increase in number of common shares (Thousands of shares)(Of the amount, subscription rights to shares)
Summary of potential shares that were not included in the calculation ofdiluted income per share because their effect was not dilutive

23 Subsequent Events 
1 Acquisition of Treasury Stock2 Details of change

Based on Article 156 of the Companies Act of Japan, as applied mutatis

The number of shares constituting a trading unit will be changed from 1,000

mutandis pursuant to Paragraph 3, Article 165 of the Companies Act of Japan,

shares to 100 shares as of 1st August 2016.

a meeting of the Board of Directors convened on 13th May 2016 decided the(Reference)

following items in relation to the acquisition of treasury stock.

On the Tokyo Stock Exchange, the number of shares constituting a trading
unit shall change to 100 shares as of 27th July 2016.

(a) Reason for acquisition of treasury stock
To enhance shareholder returns and enhance capital efficiency(b) Consolidation of Shares

1 Reason for consolidation of shares(b) Details of items related to acquisition
1 Type of shares acquired: Shares of common stock of the Company

Given the “(a) Change in Number of Shares Constituting a Trading Unit” above,

2 Total number of shares available for acquisition: 9,000,000 shares (upper limit)

thousand to 100 shares, the Company will consolidate shares to adjust the   (0.71% of issued shares (excluding treasury stock))3 Total amount of acquisition: 5,100,000,000 yen (upper limit)

investment unit to an appropriate level in light of medium-to-long-term share

which will change the number of shares constituting a trading unit from one

price trends.

4 Period of acquisition: From 16th May 2016 to 30th June 2016

2 Details of consolidation of shares
2 Change in Number of Shares Constituting a Trading Unit andConsolidation of Sharesa Type of shares to be consolidated: Common sharesb Method and ratio of the Consolidation of shares: On 1st August 2016, shares

A meeting of the Board of Directors convened on 13th May 2016 decided toheld by shareholders recorded in the shareholder registry as of 31st July 2016

submit to the 178th General Meeting of Shareholders, held on 14th June

will be consolidated at the ratio of 5 shares to 1 share.

2016, an agenda item concerning a change in the number of shares constituting a trading unit and a consolidation of shares, which the said Meeting of

3 Reduction in number of shares as a result of consolidation

Shareholders approved.

Total number of issued shares
before consolidation (as of 31st March 2016)

1,271,406,928 shares(a) Change in Number of Shares Constituting a Trading Unit

1 Reason for change

Reduction in number of sharesas a result of consolidation

1,017,125,543

Japanese stock exchanges have announced the Action Plan for Consolidating

Total number of issued shares after consolidation

254,281,385

Trading Units, which aims to standardise the trading units of domestic companies listed on Japanese stock exchanges at 100 shares of common stock by
1st October 2018. As a company listed on the Tokyo Stock Exchange, theCompany shall respect this aim and change number of shares constituting aNote:	The “Reduction in number of shares as a result of consolidation” and “Total number
of issued shares after consolidation” are theoretical values calculated based on the
total number of issued shares before consolidation of shares and on the consolidation ratio.

trading unit from the current 1,000 shares to 100 shares.

Hankyu Hanshin Holdings • Annual Report 2016

105

Notes to the Consolidated Financial Statements

4 Treatment of fractional shares(Reference)

If any fractional shares arise as a result of the consolidation of shares, pursuant

As stated above, the effective date of change in number of shares constituting

to the provisions of the Companies Act of Japan, the Company will pay share-a trading unit and consolidation of shares will be 1st August 2016. However,holders that have fractional shares in proportion to their respective fractions.

due to procedures after the acquisition of shares, on the Tokyo Stock Exchange
the trading unit of the Company’s shares will change from 1,000 shares to 100(c) Schedule of Change in Number of Shares Constituting a Trading Unit andshares on 27th July 2016.

Consolidation of Shares(d) Effect on per Share Information

Date of resolution by the Board of Directors

13th May 2016

Date of resolution by the General Meeting of
Shareholders

14th June 2016

Effective date of change in number of shares constituting a trading unit and consolidationof shares

1st August 2016 (plan)

Assuming the Company had implemented the said consolidation of shares atthe beginning of the previous fiscal year, per share information for theprevious fiscal year and the current fiscal year is as follows.
Yen

U.S. dollars

2015

2016

2016

Net assets per share¥2,627.80¥2,815.96$24.92

Net income attributable toowners of the parent per share¥  214.89¥  277.88$ 2.46

Net income attributable to owners of the parent
per share—diluted¥  214.76¥  277.67$ 2.4624 Consolidated Supplementary Statements 
1 Corporate Bond Statements
Millions of yen

Thousands of
U.S. dollars

Name

Issue date

Balance as of
1st April2015

Balance as of
31st March2016

Balance as of
31st March
2016

Interest rate

Security

Redemption
dateHankyu Hanshin Holdings, Inc.

Series 38 unsecured
corporate bonds

23rd Oct.
2009¥ 10,000¥ 10,000$  88,496

1.87%

None

23rd Oct.
2019

Hankyu Hanshin Holdings, Inc.

Series 39 unsecured
corporate bonds

28th Jan.
2010

20,00020,000(20,000)

176,991(176,991)

1.25

None

27th Jan.
2017

Hankyu Hanshin Holdings, Inc.

Series 40 unsecured
corporate bonds

22nd Sept.
2010

15,00015,000132,743

1.43

None

18th Sept.
2020

Hankyu Hanshin Holdings, Inc.

Series 41 unsecured
corporate bonds

22nd Sept.
2010

7,000

7,000

61,947

1.72

None

22nd Sept.
2022

Hankyu Hanshin Holdings, Inc.

Series 42 unsecured
corporate bonds

17th Mar.
2011

10,00010,00088,496

1.54

None

17th Mar.
2021

Hankyu Hanshin Holdings, Inc.

Series 43 unsecured
corporate bonds

9th Sept.
2011

10,00010,000(10,000)

88,496(88,496)

0.55

None

9th Sept.
2016

Hankyu Hanshin Holdings, Inc.

Series 44 unsecured
corporate bonds

25th Oct.
2012

10,00010,00088,496

0.406

None

25th Oct.
2017

Hankyu Hanshin Holdings, Inc.

Series 45 unsecured
corporate bonds

14th Mar.
2013

10,00010,00088,496

0.589

None

13th Mar.
2020

Hankyu Hanshin Holdings, Inc.

Series 46 unsecured
corporate bonds

25th Oct.
2013

10,00010,00088,496

0.819

None

25th Oct.
2023

Hankyu Hanshin Holdings, Inc.

Series 47 unsecured
corporate bonds

18th Jul.
2014

10,00010,00088,496

1.202

None

18th Jul.
2029

—

—

112,000

112,000(30,000)

991,150(265,487)———

Company

Total

Notes:
1. The amount in parenthesis in the “Balance as of 31st March 2016” column is the current portion of the total amount and is recorded in current liabilities in the consolidated balance sheets.
2. Redemption schedule of bonds for five years subsequent to 31st March 2016

106

Millions of yen

Thousands of
U.S. dollars

Due within one year

¥30,000$265,487

Due after one year through two years

10,00088,496

Due after two years through three years——

Due after three years through four years

20,000176,991

Due after four years through five years

25,000221,239

Hankyu Hanshin Holdings • Annual Report 2016

Notes to the Consolidated Financial Statements

2 Statements of Loans Payable
Thousands of
U.S. dollars

Millions of yen
Item

Balance as of
1st April 2015

Balance as of
31st March 2016

Balance as of
31st March 2016

Average interest
rate¥156,950¥135,322$1,197,540

0.552%—

82,61570,586624,655

1.393—

Short-term borrowings
Current portion of long-term debt

Repayment deadline

1,831

1,794

15,876——Long-term debt (excluding current portion)

594,047

589,100

5,213,274

1.005

2017 – 2036

Lease obligations (excluding current portion)

8,382

7,765

68,717—2017 – 2026

—

—

—

—

—

843,828804,570

7,120,088——

Current portion of lease obligations

Other interest-bearing debt
Total

Notes:
1.	The balances are expressed after the elimination of transactions with companies in the
consolidation group.
2.	The “Average interest rate” of loans payable is the weighted average interest rate foroutstanding loans payable as of the end of the current fiscal year.
3.	The “Average interest rate” is not shown for lease obligations because the Company
uses mainly the method that includes the amounts equal to interest in total capitallease obligations and that spreads the total amount equal to interest equally over eachfiscal year of the lease period.
4.	Repayment schedule of long-term debt and lease obligations (excluding current
portion) within five years subsequent to 31st March 2016.

Long-term debt

Millions of yen

Thousands of
U.S. dollars$386,903

Due after one year through two years¥43,720

Due after two years through three years

41,235364,912Due after three years through four years

33,667

297,938

Due after four years through five years

33,321

294,876

Millions of yen

Thousands of
U.S. dollars

Due after one year through two years¥1,665$14,735

Due after two years through three years

1,169

10,345Due after three years through four years

1,074

9,504

Due after four years through five years

903

7,991

Lease obligations

3 Schedule of Asset Retirement Obligations
Omitted as the significance is negligible.

25 Others Quarterly financial information in fiscal year ended 31st March 2016
1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Revenues from operations (Millions of yen)

¥163,730¥335,212¥496,238¥707,359

Income before income taxes (Millions of yen)

27,88652,56775,151

96,087

Net income attributable to owners of the parent (Millions of yen)

18,552

34,361

49,20969,971

Net income attributable to owners of the parent per share (yen)

14.72

27.26

39.06

55.58

Cumulative period

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Revenues from operations (Thousands of U.S. dollars)$1,448,938$2,966,478$4,391,487$6,259,814

Income before income taxes (Thousands of U.S. dollars)

246,779

465,195

665,053

850,327

Net income attributable to owners of the parent (Thousands of U.S. dollars)

164,177

304,080

435,478

619,212

0.13

0.24

0.35

0.49

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter¥14.72¥12.54¥11.80¥16.53

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

$0.13

$0.11

$0.10

$0.15

Cumulative period

Net income attributable to owners of the parent per share (U.S. dollars)

Accounting period

Net income attributable to owners of the parent per share (yen)Accounting period

Net income attributable to owners of the parent per share (U.S. dollars)

Hankyu Hanshin Holdings • Annual Report 2016107

Major Rental Properties / Major Sales Properties
Major rental properties
Completed

Leasable area1(1,000 m2)

Use

Property nameLocation

Umeda Hankyu Bldg.

Kita-ku, Osaka

2012

213

Department stores (Hankyu Department Store), Offices

Umeda Hanshin Daiichi Bldg. (HERBIS OSAKA)

Kita-ku, Osaka

1997

82

Hotels (The Ritz-Carlton, Osaka), Offices, Commercial facilities,
Multifunctional convention hall

Umeda Hanshin Daini Bldg. (HERBIS ENT)

Kita-ku, Osaka

2004

55

Offices, Commercial facilities, Theatre (Osaka Shiki Theatre)

Hankyu Chayamachi Bldg. (Applause Tower)

Kita-ku, Osaka

1992

52

Hotel (Hotel Hankyu International), Offices, Commercial facilities

Hankyu Sanban Gai Shopping Centre

Kita-ku, Osaka

1969

41

Commercial facilities

Hankyu Grand Bldg.

Kita-ku, Osaka

1977

36

Offices, Commercial facilities

GRAND FRONT OSAKA

Kita-ku, Osaka

2013

28

Offices, Commercial facilities, Knowledge Capital, Hotel(InterContinental Hotel Osaka)

Hankyu Terminal Bldg.

Kita-ku, Osaka

1972

27

Offices, Commercial facilities

Hankyu Five Bldg. (HEP FIVE)

Kita-ku, Osaka

1998

20

Commercial facilities

Navio Hankyu (HEP NAVIO)

Kita-ku, Osaka

1980

16

Commercial facilities

Kita Hankyu Bldg.

Kita-ku, Osaka

1971

13

Offices, Commercial facilities

NU– chayamachi

Kita-ku, Osaka

2005

12

Commercial facilities

Noda Hanshin Bldg. (WISTE)

Fukushima-ku, Osaka

1992

32

Commercial facilities, Offices

Shin-Osaka Hankyu Bldg.

Yodogawa-ku, Osaka

2012

24

Offices, Hotel (REMM Shin-Osaka), Commercial facilities

Hankyu Nishinomiya Gardens

Nishinomiya, Hyogo

2008

108

Commercial facilities, Department stores(Hankyu Department Store)

Hankyu Kawaramachi Bldg.

Shimogyo-ku, Kyoto

1974

38

Department stores (Takashimaya)

1. Leasable area does not include areas for public use.

Major properties sold in fiscal 20162
Property nameLocation

Major properties planned to be sold in fiscal 20172
Total number of units

Condominium

Location

Total number of units

Condominium

Geo Senri Chuo3

Toyonaka, Osaka

514 4

Geo Takatsuki Muse Resis

Takatsuki, Osaka244

Geo Hankyu Rakusaiguchi North Residence

Muko, Kyoto

231

G-Clef Geo Kobe Motoyama3

Higashinada-ku, Kobe

256

Geo Seishin Chuo

Nishi-ku, Kobe

205

Geo Senri Chuo The Residence

Toyonaka, Osaka218

Geo-Tower Minamihorie

Nishi-ku, Osaka

203 4

Brod Takatsuki

Takatsuki, Osaka

51

Ukyo-ku, Kyoto

32

Muko, Kyoto

161

Geo Kyoto Saga Arashiyama

Geo Minami Kusatsu Front Stage

Kusatsu, Shiga48

Geo Kyoto Arashiyama

Nisikyo-ku, Kyoto

25

Geo Nishinomiya Kitaguchi Hinokuchi-cho

Nishinomiya, Hyogo

36

Geo Sumiyoshi Honmachi

Higashinada-ku, Kobe

22 4

Geo Kobe Yamamotodori

Kobe, Hyogo36

Geo Grande Okamoto 1-chome

Higashinada-ku, Kobe

17 4

Geo Nishinomiya Kitaguchi Crowns

Nishinomiya, Hyogo

20

Geo Tama Center

Tama, Tokyo

300

Shinjuku, Tokyo

1,093 4

Geo Chigasaki 3

Chigasaki, Kanagawa

136

Le Fond Solei Funabashi Utsukushi Gakuen

Funabashi, Chiba

186

Geo Tsudanuma

Narashino, Chiba84

Geo Todoroki

Setagaya, Tokyo

69

Geo Kyodo

Setagaya, Tokyo78

Geo Shin-Koiwa

Edogawa, Tokyo

38

Geo Gyoen Naitomachi

Shinjuku, Tokyo

63

Geo Akasaka Tango-cho

Minato, Tokyo

23

Geo Hankyu Rakusaiguchi South Residence

3

Tomihisa Cross Comfort Tower 3
3

Detached house

Detached house
Nishi-Yodogawa-ku, Osaka254

Hankyu Saito Garden Front Saito Mino-o Residence

Minoh, Osaka48

Hapia Garden Neyagawa-shi

Neyagawa, Osaka

62

Hapia Garden Mino-o Onohara

Minoh, Osaka

20

Hapia Garden Tarumi Kasumigaoka

Tarumi-ku, Kobe

10

Hapia Garden Tsukaguchi Tomatsucho

Amagasaki, Hyogo

10

Hapia Garden Yokohama Yamate

Naka-ku, Yokohama

14Grand Forum Soshigaya-Okura Hapia3

Setagaya, Tokyo

27

Hapia Garden Sakuradai 3-chome

Nerima, Tokyo

12

Hapia Garden Shimo Shakujii

Nerima, Tokyo

13

Hapia Garden Suginami Horinouchi

Suginami, Tokyo

11

Hapia Garden Oizumi Gakuencho

Nerima, Tokyo

8

Osaka Nakajima Koen Toshi Hapia Garden

2. Ordered by highest total number of condominium units first, with Kansai area and Tokyo
metropolitan area categorised separately
3. Joint-venture properties
4. Including unsold condominium units

108

Property nameHankyu Hanshin Holdings • Annual Report 2016

Major Group Companies(As of 31st March 2016)

Consolidated Subsidiaries
Urban Transportation

Entertainment and Communications

Main business

Name of company

Main business

Name of company

Railway operations

Hankyu Corporation
Hanshin Electric Railway Co., Ltd.
Nosé Electric Railway Co., Ltd.
Kita-Osaka Kyuko Railway Co., Ltd.
Hokushin Kyuko Railway Co., Ltd.
Kobe Rapid Transit Railway Co., Ltd.
Hankyu Hanshin Railway Technology Co., Ltd.
Hankyu Hanshin Electric System Co., Ltd.

SportsHanshin Electric Railway Co., Ltd.
Hanshin Tigers Baseball Club, Ltd.
Hanshin Contents Link Corporation
Wellness Hanshin Inc.

Stage

Hankyu Corporation
Takarazuka Creative Arts Co., Ltd.
Takarazuka Stage Co., Ltd.
Umeda Arts Theater Co., Ltd.

Hankyu Bus Co., Ltd.
Hanshin Bus Co., Ltd.
Hankyu Kanko Bus Co., Ltd.
Osaka Airport Transport Co., Ltd.
Hankyu Denen Bus Co., Ltd.
Hankyu Taxi Inc.
Hanshin Taxi Co., Ltd.
Hankyu Hanshin Motor Technology Co., Ltd.
Nippon Rent-A-Car Hankyu Inc.

Communication andmedia

Itec Hankyu Hanshin Co., Ltd.
Bay Communications Inc.
Himeji Cable Television Co., Ltd.

Leisure, etc.

Mt. Rokko Cable Car & Tourism Co.

Automobile

Retailing

Hankyu Corporation
Eki Retail Service Hankyu Hanshin Co., Ltd.
Hankyu Style Labels Co., Ltd.

Advertising

Hankyu Corporation
Hankyu Advertising Agency Inc.

Other

Alna Sharyo Co., Ltd.

TravelMain business

Name of company

Travel agency

Hankyu Travel International Co., Ltd.
Hankyu Hanshin Business Travel Co., Ltd.
Hankyu Travel Support Co., Ltd.

International Transportation

Main business

Name of company

Internationaltransportation

Hankyu Hanshin Express Co., Ltd.
Hankyu Hanshin Logipartners Co., Ltd.
HHE (USA) Inc.
HHE (Deutschland) GMBH
HHE (HK) Limited
HHE Southeast Asia Pte. Ltd.

Real Estate

Main business

Name of company

Real estate leasing

Hankyu Corporation
Hanshin Electric Railway Co., Ltd.
Hankyu Realty Co., Ltd.
Osaka Diamond Chikagai Co., Ltd.
Hanshin Real Estate Co., Ltd.

Real estate sales andother business

Hankyu Corporation
Hanshin Electric Railway Co., Ltd.
Hankyu Realty Co., Ltd.
Hankyu Hanshin Building Management Co., Ltd.
Hankyu Hanshin High Security Service Co., Ltd.
Hankyu Hanshin Clean Service Co., Ltd.
Hankyu REIT Asset Management, Inc.

HHE: Hankyu Hanshin Express

HotelsMain business

Name of company

Hotel management

Hankyu Hanshin Hotels Co., Ltd.
Hanshin Hotel Systems Co., Ltd.
Amanohashidate Hotel Co., Ltd.
Arima View Hotel Co., Ltd.
Hankyu Hanshin Restaurants Co., Ltd.

Other

Main business

Name of company

Construction

Hanshin Kensetsu Co., Ltd.
Chuo Densetsu Co., Ltd.

Credit and point card

Hankyu Hanshin Card Co., Ltd.

Group financeHankyu Hanshin Financial Support Co., Ltd.

Outsourcing services
for personnel andaccounting services

Hankyu Hanshin Business Associate Co., Ltd.

Equity-Method Affiliates
Main business

Name of company

Department store

H2O Retailing Corporation[Securities code: 8242]

Railway operations

Nishi-Osaka Railway Co., Ltd.
Kobe Electric Railway Co., Ltd.
[Securities code: 9046]

Real estate leasing

Tokyo Rakutenchi Co., Ltd.
[Securities code: 8842]

Motion picture business Toho Co., Ltd. [Securities code: 9602]
Commercial broadcasting Kansai Telecasting Corporation

Hankyu Hanshin Holdings • Annual Report 2016109

Group History■ Hankyu Holdings, Inc.

■ Hanshin Electric Railway Co., Ltd.
1899

1907

Founding of Mino-Arima Electric Railway Company(predecessor of Hankyu Corporation) by Ichizo Kobayashi

1910

Opening of Takarazuka Line (Umeda–Takarazuka) and Mino-o Line
(Ishihashi–Mino-o)

1913

Formation of Takarazuka Girls’ Revue(currently Takarazuka Revue Company)

1924

Completion of Takarazuka Grand Theatre

1929

Opening of Hankyu Department Store,
Asia’s first railway terminal department
store

1948

Launch of services as Pan American Airways agent

1964

Opening of Hotel new Hankyu Osaka

1973

Opening of New Hankyu Umeda Station as one of the largest
private railway terminals in JapanFounding of Settsu Electric Railway(renamed Hanshin Electric Railway Co., Ltd., in same year)

1905

Beginning of operations linking Kobe
(Sannomiya) and outer Osaka(Deiribashi)

1924

Opening of Koshien Stadium (currently Hanshin Koshien Stadium)

1933

Opening of Hanshin Mart at Hanshin Umeda Station(currently Hanshin Department Store)

1935

Establishment of Osaka Baseball Club
(Osaka Tigers, currently Hanshin Tigers)

1948

Launch of airline agency business

1985

Hanshin Tigers win Japan Series for first time

Changing of company name from Keihanshin Kyuko Railway
Company to Hankyu Corporation
1995
2005

Considerable damage to transportation and business infrastructure of Hankyu and Hanshin due to Great Hanshin Earthquake
Establishment of Hankyu Holdings, Inc.

2006

Establishment of Hankyu Hanshin Holdings, Inc.
Establishment of Hankyu-Hanshin-Daiichi Hotel Group2007

Announcement of Hankyu Hanshin Holdings Group 2007 Medium-Term Management Plan
Management integration of Hankyu and Hanshin department store businesses

2008

Opening of Hankyu Nishinomiya Gardens

2010

Completion of renovation of Hanshin Koshien Stadium,
opening of Museum of Hanshin Koshien StadiumCompletion of Umeda Hankyu Building Office Tower
2012

Completion of Umeda Hankyu Building,full opening of Umeda Flagship Store of Umeda Department Store

2015

Announcement of the Hankyu Hanshin Holdings Group’s
Medium-Term Management Plan (Fiscal 2016–Fiscal 2019)

2016

110

Hankyu Hanshin Holdings • Annual Report 2016

Opening of the Group’s first logistics centre in the ASEAN region in Indonesia

Investor Information(As of 31st March 2016)

Hankyu Hanshin Holdings, Inc.
Head Office:Paid-in Capital:¥99,474 million

1-16-1, Shibata, Kita-ku, Osaka 530-0012, Japan

Fiscal Year-End:

31st March

Phone: +81-6-6373-5001

Number of Employees:

21,607 (consolidated)

Authorised Shares:

3,200,000,000*

Issued Shares:

1,271,406,928*(Group Planning Div., IR Office)Fax: +81-6-6373-5042
Tokyo Office (Personnel and General Affairs Div.):

Number of Shareholders: 77,664*

Toho Twin Tower Bldg.,

Unit of Trading:

1,000 shares*

Stock Exchange Listing:Tokyo

Transfer Agent:

Mitsubishi UFJ Trust and Banking Corporation

1-5-2, Yurakucho, Chiyoda-ku, Tokyo 100-0006, Japan
Phone: +81-3-3503-1568
Fax: +81-3-3508-0249

Principal Shareholders:Ownership Breakdown:
Number of shares(Thousands)*

Name

Japan Trustee Services Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
Nippon Life Insurance Company
Sumitomo Mitsui Banking Corporation
H2O Retailing Corporation
State Street Bank West Client–Treaty 505234 (Standing Proxy:
Mizuho Bank, Ltd. Settlement & Clearing Services Division)
Japan Trustee Services Bank, Ltd. (Trust account 7)
Japan Trustee Services Bank, Ltd. (Trust account 6)
Japan Trustee Services Bank, Ltd. (Trust account 5)
Japan Trustee Services Bank, Ltd. (Trust account 1)

Percentage(%)

69,19045,341
29,023
21,90921,037

5.44
3.57
2.28
1.72
1.65

17,0381.34

16,906
13,757
13,752
13,730

1.33
1.08
1.08
1.08

National government andlocal public organisations
0.00%

Individuals and others
42.71%

Financial institutions
28.90%

Securities
companies
1.00%
Foreigncorporations
and individuals
18.39%

Other corporations
9.00%* The Company conducted a 1-for-5 reverse stock split and the change of trading unit from 1,000 shares to 100 shareswith an effective date of 1st August 2016. The figures are prior to the reverse stock split and the change of trading unit.

Stock Price Range and Trading Volume (Tokyo Stock Exchange):
Stock price (¥)
900

700

Nikkei average (¥)
25,00020,000Stock Price (left axis)

500
300

15,000

Nikkei Average (right axis)

10,000100

5,000

100,000

50,0000
Trading volume 4(Thousand shares)

5

6

7

8

9 10 11 12 1

2

3 4

5

6

7

8

9 10 11 12 1

2

3

4

5

6

7

8

9 10 11 12 1

FY2014FY2015FY2016

High

648

800

824

Low

492

533

667

At year-end

562

743

718

2

3

Hankyu Hanshin Holdings・Annual Report 2016111

Hankyu Hanshin Holdings, Inc. ANNUAL REPORT 2016

Hankyu Hanshin Holdings, Inc.
1-16-1, Shibata, Kita-ku, Osaka 530-0012, Japan
Phone: +81-6-6373-5001 Fax: +81-6-6373-5042
http://www.hankyu-hanshin.co.jp/en/

Hankyu Hanshin Toho Group

Printed in Japan