To Our Stakeholders

New Medium-Term Management Plan 
Changes in Business Conditions
The business conditions facing the Hankyu Hanshin HoldingsGroup have changed dramatically. The features of current conditions are the growing scale of the market in the Tokyo metropolitan area, the growth of markets in Asia centred on the ASEAN
region, and market expansion accompanying the rapid increase
in tourists from overseas. As our new medium-term management plan shows, we see such changes in business conditions as
new business opportunities and believe we must take further
action to sustain corporate value growth.

Basic Approach of the Medium-Term Management Plan
I believe that one of our strengths is progressiveness. In otherwords, we are ahead of the times and open to new ideas.
However, for a long time we have had to be defensive. We havecurbed growth investment and given priority to reducing interestbearing debt because improving our financial position has been
our most important management task. Having become more
profitable by cementing earnings foundations and improving
our financial position, we can finally realise our inherent progressiveness and provide customers with new value.
In this new management phase, we will lay foundations for
future growth. Accordingly, the two main business strategies of
our new medium-term management plan call on us to enhancevalue of the Umeda area and other line-side areas and develop newmarkets for medium-to-long-term growth.
Under the plan, with a view to growing future earnings, wehave earmarked roughly ¥340 billion for investment during thefour years from fiscal 2016. Of this, we will allocate approximately¥130 billion to investment in such major development projects
as the Umeda 1-1 Project and the development of new markets,
topics I will touch on later. This is more than twice the amountinvested from fiscal 2012 to fiscal 2015 and is approximately thesame investment level that we had between fiscal 2008 andfiscal 2011, when we were advancing several major projects,
such as the rebuilding of Umeda Hankyu Building.
Meanwhile, we will continue strengthening our financial
position because maintaining financial discipline over the
medium-to-long term as we steadily invest for growth is criticalto ensure fund-raising capabilities, and, by extension, investment
capabilities. Specifically, we will reduce interest-bearing debt toless than ¥900 billion by the end of fiscal 2019.
As well as investing for growth and strengthening our financial position, we will endeavour to further enhance returns toshareholders through dividends and acquisition of treasury
stock. Furthermore, to promote flexible allocation of cash flows
to returns to shareholders, we have introduced a total return
ratio as an indicator from fiscal 2016.

The preparation and implementation of growth strategies
premised on maintaining financial discipline (fiscal 2016 – fiscal 2019)

Investment
Approx. ¥340 billion
Grow income
Give priority to investment

Maintain and improve
capital efficiency

Cash flows
Approx. ¥450 billion**	Calculated using simplified method that deducts
interest expenses and income taxes from EBITDA

Acquire treasury stock

Returns to shareholders
Introduce total return ratio

Control debts
Reduce to less than¥900 billion

To Our Stakeholders

Business
Strategy 1

Enhance Value of the Umeda Area andOther Line-Side Areas

With respect to the areas served by its lines, the Group will promote further development by giving priority to allocation ofmanagement resources to the Umeda area, which is its largest
business base. At the same time, we will take measures toheighten the value of areas served by Hankyu and Hanshin lines.
Through these measures, the Group will maintain and enhancethe value of its assets.
Begun in October 2014, the Umeda 1-1 Project is a largescale redevelopment project that entails creating a single integrated building by reconstructing Dai Hanshin Building and theadjacent Shin Hankyu Building, which are situated at the centreof the Umeda area. This project is only possible thanks to the
management integration of Hankyu Holdings and Hanshin
Electric Railway nine years ago. Moreover, in conjunction withthis project, we have begun construction work to upgrade
Hanshin Umeda Station. The completion of these closely interlinked projects will enable the creation of new foot traffic flows
centred on Hanshin Umeda Station and promises to make touring the entire Umeda area more enjoyable for visitors, thereby
helping invigorate it.

Further, to make the Umeda area somewhere people wantto visit frequently, developing such physical infrastructure as
office buildings and commercial facilities is not enough. To
invigorate the area, I believe proactively fostering intangible
infrastructure through area management is indispensable.
Specifically, with local landowners we are developing initiatives
to energise the whole area, such as area events and emergency
drills that help create a sense of community. In addition, in 2014,
we opened a support base for entrepreneurs, GVH#5, which provides start-ups with small comfortable offices at affordable rents.
Being the largest landowner in the Umeda area makes us
uniquely qualified to facilitate this initiative. In this way, throughefforts to improve tangible and intangible infrastructure, we will
create business opportunities from a medium-to-long-term perspective. I am confident that, ultimately, our efforts will raise
Umeda’s prestige as an urban area, and enhance the value of ourassets as a consequence.
In areas other than the Umeda area that are served byHankyu and Hanshin lines, we will redouble efforts to enhancevalue. As part of these efforts, we aim to develop businesses that
address social issues in line-side areas. For example, we are developing private after-school day-care centres, After-School Kippo,
to help working parents with child rearing. Also, we are

Approach to investment (and trends in capital investment)
Major projects• Rebuilding of Umeda Hankyu Building• Extension of Hanshin Namba Line•	Development ofHankyu Nishinomiya Gardens• Refurbishment of
Hanshin Koshien Stadium•	Development of Umekita(GRAND FRONT OSAKA), etc.

Approx. ¥340 billion

Approx. ¥320 billion*

Approx. ¥130 billion

Approx. ¥240 billion*
Approx. ¥60 billion

Approx. ¥190 billion

Approx. ¥180 billion

Investment in major
development projects
and new market
development
Approx. ¥130 billion

Investment inmaintenance andrenewal of existing
infrastructure, etc.
Approx. ¥210 billion

FY2008 – FY2011

FY2012 – FY2015

FY2016 – FY2019

Investment in development for growth

Improvement in financial position throughcurbing of capital investment

Development of foundations for
medium-to-long-term growth* Excluding capital investment related to the repurchase of securitised assets and the exchange of the assets with Hankyu REIT Inc.

To Our Stakeholders

developing a provider of comprehensive support for the elderlythat establishes environments enabling the elderly to lead active
lives. Providing these services helps create urban areas in which
different generations can live with peace of mind. As a result,people will want to live in, remain long-term in, or keep visiting
areas served by Hankyu and Hanshin lines, which will foster
demand and add value to our line-side areas.
Business
Strategy 2

Develop New Markets for
Medium-to-Long-Term GrowthWith a view to extending earnings foundations through thedevelopment of new markets, the Hankyu Hanshin HoldingsGroup is concentrating efforts on expanding businesses in theTokyo metropolitan area and developing overseas markets. At
the moment, the population is rising in areas served by theGroup’s lines. However, given the aging of Japan’s population
overall, decline of the population in line-side areas is inevitable
over the medium-to-long term. Therefore, developing new markets will establish foundations for sustained growth.
In the Tokyo metropolitan area, we have decided to participate in an urban redevelopment project in front of Yotsuya
Station in Tokyo’s Shinjuku-ku. With its sights set on completion

70

Approx.

%Business Strategy 1

Enhance value ofthe Umeda area andother line-side areas●●

Umeda 1-1 Project
Ebie 1-Chome Development Plan, etc.

30

Approx.

%Business Strategy 2

Develop new markets
for medium-tolong-term growth
Redevelopment Project for
Area in Front of Yotsuya Station● REMM Roppongi● Development of logistics
centres overseas●

in 2019, the Real Estate Business is already holding discussions
with project partners and other related parties. Also, in the residential business, which develops condominiums and houses
under the Geo and Hapia brands, we intend to create and acquirebusiness opportunities while carefully analysing market trends.
The Hotels Business plans to open its fifth, and largest, hotel
under the REMM brand in spring 2017. Situated in one of Tokyo’s
most famous quarters, Roppongi in Minato-ku, it will be the chain’s
third hotel in the Tokyo metropolitan area. Mainly for overnightstays, the hotel will have 400 guest rooms, and cater to the growing demand from non-Japanese tourists.
As for the International Transportation Business, in responseto the increasing demand for logistics services in the ASEAN
region, we are creating comprehensive logistics businesses.
Specifically, in August 2014, we established a company inIndonesia that will offer logistics and warehousing services. Also,
construction of a logistics centre is under way. And, we began
developing a new logistics centre in Singapore in July 2015. In
addition, we intend to participate in a business that develops
and sells condominiums in Vietnam. Through this initiative, wewant to acquire business know-how with a view to expanding
our real estate business in the ASEAN region.
Other initiatives included the second visit of the Takarazuka
Revue to Taiwan in August 2015, with its performances again
proving hugely popular. Rather than limiting the success of these
performances to the entertainment area, we want to leverage itin businesses throughout the Group. For example, we willemphasise the appeal of our quality entertainment overseas tocreate demand from non-Japanese visitors.

Overview of the Hankyu Hanshin Holdings Group’s Medium-Term Management Plan (Fiscal 2016–Fiscal 2019)

The Hankyu Hanshin Holdings Group’s Medium-Term Management Plan calls for the development of foundations for
medium-to-long-term growth in the period through to fiscal 2019. In accordance with this new management direction, weare advancing measures with a view to future growth.

Medium-Term Management Plan (fiscal 2016–fiscal 2019)

Period of developing foundations for medium-to-long-term growthBusiness strategies

Businessstrategy

1

Implementing two business strategies with a view to medium-to-long-term growth

Enhance value of the Umeda area
and other line-side areas
Create line-side areas people want to live in permanently
or visit frequently

Developline-side areas

Enhancingline-side area value

Combine businessstrategies

1 and 2Financial strategy

Develop additional
value inline-side areas

Businessstrategy2

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

Overseas

Capture burgeoning demand from non-Japanese tourists
Offset Japan’s sluggish consumer market and step up efforts to capture rapidly growing demand fromvisitors to Japan

Focus on forward-looking investment, while distributing cash flows in a flexible, balanced manner torealise continuous strengthening of financial standing and returns to shareholders

Forward-looking investment
Follow business strategies 1 and 2
and give priority to funding investment
regardless of previous investment levels

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

Continuous strengthening of financial standing
Continue strengthening financial standing
to mitigate risk of future interest rate rises
and secure funding capacity over medium-to-long term

Numerical targets

Profitability

Keep operating income at ¥80 billion level andkeep net income at ¥40 billion level

While focusing efforts on developing foundations for medium-tolong-term growth, we will maintain operating income at a certain
level and achieve stable net income.

Capital efficiency

Keep ROE at 6% level

Given that we expect to achieve stable net income while strengthening our financial standing, we will maintain ROE at a certain level.

Financial soundness

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

We will continue steadily strengthening our financial standing as aprovision for the risk of interest rate rises.

Financial soundness targetedover medium-to-long term

Keep interest-bearing debt/EBITDA ratio between 5 and 6 times and D/E ratio around 1 timeOverview of the Hankyu Hanshin Holdings Group’s Medium-Term Management Plan (Fiscal 2016–Fiscal 2019)
Urban
Transportation

Businessstrategy

1

Real EstateEntertainment andCommunications

International
Transportation

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

Umeda 1-1 Project

Construction Work to Upgrade
Hanshin Umeda Station(Dai Hanshin Building and Shin Hankyu Building
rebuilding project)
Begun in October 2014, this project is rebuilding Dai Hanshin Building,which includes Hanshin Department Store’s Umeda Flagship Store, andShin Hankyu Building. We are making steady progress and plan tocomplete construction in 2022.

To coincide with the implementation of the Umeda 1-1 Project, in March
2015 we began construction work to upgrade Hanshin Umeda Stationand make it a facility befitting Hanshin Electric Railway’s largest terminal
station. Aiming to complete the work in spring 2023, we are widening
station spaces and platforms and installing automatic platform gates.

A conceptual illustration of the Hanshin Umeda Station
upon completion of upgrading work
East and west ticket gates
Relocate offices for station operations andbeautify ticket gate areas
Two incoming and outgoing
platforms on west ticket gate side
Install lifts and escalators

No. 4 line

A conceptual illustration of the Umeda 1-1 Project upon completion

Extend platform
New No. 1 line
Build a structure underground to createan additional space in the railway stationand thereby enable platform widening

Ebie 1-Chome Development Plan
In December 2014, we acquired land for a large-scale
development near Hanshin Noda Station, a stop for
express services. We are examining a development
plan that will invigorate the line-side area and create a
new urban area.

Plan summary
Location

1-9, Ebie 1-chome, Fukushima-ku, Osaka-city

Site area

Approx. 27,900 square metres

Site

Ebie-Higashi
Elementary
SchoolSagisu-Kami
Park

3 platforms
Install automatic
platform gates

Note: We may change the locations of lifts and escalators.

Kita-Osaka Kyuko Railway Line
Extension and Improvement Project
We plan to extend the Kita-Osaka Kyuko Railway Line 2.5 kilometres north from its
terminal station, Senri-Chuo Station. Aiming to obtain approval for railway operations
and a charter for railway track operations in fiscal 2016 and begin operations in fiscal
2021, the Osaka Prefectural Government, Minoh City, Kita-Osaka Kyuko Railway, andHankyu Corporation are advancing the project.

Senri-Chuo
StationApprox. 1.4 km
HighwayNo. 423(main line)

GroundMino-oSemba Station(provisional
name)Approx. 1.1 km

Shin-Mino-oStation(provisional
name)

JR zai e
To LinEbie Station

3

WISTE Shopping Centre
Hanshin Main Line
Noda Station

2

Underground section

Elevated section

Overview of the Hankyu Hanshin Holdings Group’s Medium-Term Management Plan (Fiscal 2016–Fiscal 2019)

Businessstrategy1Businessstrategy

Enhance value of the Umeda area andother line-side areas

2

Business Providing Comprehensive Support to the Elderly
Through a capital tie-up with Royal Communication Club Co., Ltd., we participated in abusiness that provides one-stop everyday support for active elderly people. In areas served
by Hankyu and Hanshin lines, we have established salons that provide an environment
conducive to developing new friendships after retirement. Moreover, the salons giveelderly people peace of mind. As well as providing a lively, fulfilling environment, the salons
include a help centre offering comprehensive support that ranges from addressing day-today problems through to responding in the event of sudden illness.

Develop new markets for

REMM Roppongi Plan
In Roppongi, we will open our fifth hotel under the
REMM brand (our third in the Tokyo metropolitanarea). REMM hotels mainly comprise guest rooms forovernight stays. Scheduled to open in spring 2017,
the new hotel will have 400 guest rooms, making it
the REMM chain’s largest hotel.

Business concept
Culture classes

Recreation

Responding tosudden illness

Providing fulfilment
TravelOne-stop services for
elderly people

ResortSafety confirmation

Providing peace of mind
Support ineveryday life

Nursing-care
supportMembers can solve any type of problem arising in day-to-day life bytelephoning the club at any time.

After-School Kippo
To help parents bringing up children in areas served byour lines, we opened a private after-school day-care
centre on 1st April 2015. By helping with child rearing,
we hope to help working men and women who are
pursuing careers.

Main Initiatives for New Businesses
Watching over Children Going to and Returning from School
In this system, children carry IC tags. When a child passes through the school gates on their way toor from school, the system automatically notifies their guardian by e-mail.

Condominium Projectin Ho Chi Minh City, Vietnam
We will participate in a condominium project in Ho
Chi Minh City, Vietnam, which one of the country’s
major housing developers, Nam Long Investment
Corporation, is advancing.

A conceptual illustration of the condominium upon completion

Geo and Hapia Residential
Businesses
While carefully monitoring market trends, we will
exploit condominium-related business opportunities andheighten recognition of the Geo brand. At the same time,
we intend to strengthen our business that develops
detached houses in towns under the Hapia brand.

Hanshin Ikiiki Day Service
This day-care service specialises in providing half-day
rehabilitation programs. We provide physical andemotional support to help clients have active lives intheir local towns.
Note: A s of July 2015, we operate facilities in Nishinomiya,
Amagasaki Kuise, Osaka Noda, and Minami-ibaraki.
Geo Gyoen Naito-choOverview of the Hankyu Hanshin Holdings Group’s Medium-Term Management Plan (Fiscal 2016–Fiscal 2019)
Urban
Transportation

Entertainment andCommunications

Real Estatemedium-to-long-term growthTokyo
metropolitan
area

Overseas

Redevelopment Projectfor Area in Front of Yotsuya Station
We are participating in an urban redevelopment project in front of
Yotsuya Station. The Urban Renaissance Agency is implementing the
project, which is slated for completion in fiscal 2020.
Sotob
ori-D

Site

ori

Tokyo Metro
Nanboku Line
Yotsuya Station

JR Yotsuya
StationTokyo Metro
Marunouchi Line
Yotsuya Station〒

International
Transportation

Combine business strategies

Hotels1 and 2

Capture burgeoning demand from
non-Japanese tourists
By exploiting existing operational foundations,
we will step up efforts to capture demand fromvisitors from overseas and develop new business
opportunities.

Development of Travel Products for
Non-Japanese Tourists

H
H

TravelProvide travel products that make the facilities of the Group
more convenient to use and encourage non-Japanese tourists
to make excursions to areas served by its lines

20

Main travel products

A conceptual illustration of
the building upon completion

HANKYU TOURIST PASS, HANSHIN TOURIST PASS
ROKKOSAN TOURIST PASSArima Onsen (hot spring) Taiko no Yu coupon for
non-Japanese tourists

Development of Logistics Centres Overseas
The International Transportation Business is creating comprehensive logistics
businesses in the ASEAN region by developing the Group’s logistics centres toenable the provision not only of forwarding services but also warehousing
services. As part of this initiative, the International Transportation Businessand the Real Estate Business are collaborating to develop logistics centresin the ASEAN region.

Strengthening of Promotion
Heighten Group’s profile overseas and unearth demand
from non-Japanese tourists
Main travel productsE stablish base in South Korea and implement sales andpromotion activities
Display at overseas travel expos in Taiwan, South Korea,
Hong Kong, Thailand, etc.
Strengthen overseas sales division of the Hotels Business

A conceptual illustration of the Singapore logistics centre
upon completion

Takarazuka Revue Performance in Taiwan
Following acclaimed performancesin 2013, the Takarazuka Revue held
encore performances in Taiwan inAugust 2015.

©Takarazuka Revue Company

A press conference on 27th January 2015

Develop Capabilities for
Accommodating Needs of
Non-Japanese Tourists
Increase convenience and comfort for non-Japanese
tourists visiting our line-side areas
Main travel productsE stablish Hankyu Tourist Centre andHanshin Train Services CentreProvide free Wi-Fi (HANKYU-HANSHINWELCOME WI-FI) for non-Japanese tourists
Introduce China UnionPay card settlement
terminals to the Group’s facilities
Open reservation web site (Travel to Japan) for domestic
travel products under Trapics brand