Performance Highlights (Consolidated)

Key Financial Indicators(Millions of yen)
FY

2008

2009

2010

2011

2012

2013

2014

¥   679,157

Result of Operations:
Revenues from operations¥   752,300¥   683,715¥   653,287¥   638,770¥   649,703¥   682,439

Operating income

90,724

77,82370,12664,74373,80987,921

91,828

EBITDA1

145,200

135,300

133,200

127,100

133,500

145,100

149,200

Ordinary income

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

81,191

Income before income taxes

26,09834,06433,89932,76043,41962,192

83,542

Net income attributable toowners of the parent

627

20,55010,79318,06839,25239,702

46,352Comprehensive income——

12,541

14,72844,99254,081

55,941

Capital expenditure

134,307

109,688

132,386

68,431

55,26759,51280,722

Depreciation and amortisation

51,57754,79860,41859,66956,96854,54054,474

Cash flows from operating activities¥   74,902¥   108,597¥   146,955¥   103,252¥   124,525¥   127,655¥   146,991

Cash flows from investing activities(100,058)(115,047)(132,737)(62,516)(44,295)(58,923)(45,517)

Free cash flow2(25,155)(6,449)14,21740,73580,23068,732

101,474

Cash flows from financing activities

36,718

7,014(24,200)(39,544)(78,978)(69,195)(105,079)¥2,286,928

Cash Flows:

Financial Position:
Total assets¥2,348,476¥2,307,332¥2,337,331¥2,314,669¥2,274,380¥2,281,007

Total net assets

476,639

473,878

480,633

486,947

524,801

573,154

617,598

Interest-bearing debt

1,271,100

1,275,620

1,282,583

1,251,665

1,183,647

1,126,633

1,032,307¥     0.50¥    16.28¥     8.55

¥    14.32¥    31.13¥    31.48¥    36.76

0.41

16.18

8.51

14.27

31.13

31.47

36.75

Net assets

369.25366.96371.70377.17407.01443.63477.69Dividend

5.00

5.00

5.00

5.00

5.00

5.00

6.00

Operating income margin (%)

12.1

11.4

10.7

10.1

11.4

12.9

13.5

ROA (%)3

3.2

2.5

2.2

2.0

2.8

3.3

3.6

ROE (%)4

0.1

4.4

2.3

3.8

7.9

7.4

8.0

Interest-bearing debt/EBITDA (Times)

8.8

9.4

9.6

9.8

8.9

7.8

6.9

Equity ratio (%)

19.9

20.1

20.1

20.6

22.6

24.5

26.3

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

2.7

2.8

2.7

2.6

2.3

2.0

1.7

Per Share Data (Yen):
Net income attributable toowners of the parent

Basic
DilutedRatios:Stock Price Index:
Stock price at the end of fiscal year (Yen)¥      431¥      447¥      433¥      384¥      361¥      569¥      562

Market capitalisation (¥ billion)

5,480

5,683

5,505

4,882

4,590

7,234

7,145

PER (Times)

862.0

27.5

50.6

26.8

11.6

18.1

15.3

PBR (Times)

1.2

1.2

1.2

1.0

0.9

1.3

1.2

Hankyu Railway (Thousand)6

618,373618,585

605,963

603,233

608,632

615,324

629,125

Hanshin Electric Railway (Thousand)6

180,906

182,997

193,620

205,202

218,560

221,133

226,004

Average vacancy rates of rental officebuildings (Umeda area, Osaka; %)7

3.08

5.88

8.90

11.22

7.29

11.50

9.22

Business Data:

1. EBITDA = operating income + depreciation expenses + amortisation of goodwill
EBITDA figures are rounded to the nearest ¥100 million.
2. Free cash flow = cash flows from operating activities + cash flows from investing activities
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. Annual number of passengers carried
7. 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.”
8. Regarding transactions related to such items as the export of mixed cargo of the International Transportation Business, the Company has changed the recognition of revenues fromoperations from net presentation to gross presentation as of fiscal 2017. As a result of this change, the amount of revenues from operations for fiscal 2016 is the amount after retrospective application (gross presentation).
Further, the Company consolidated shares at the ratio of 5 shares to 1 share with an effective date of 1st August 2016. Net income per share, diluted net income attributable to ownersof the parent per share, net assets per share, and dividend per share have been calculated based on the assumption that the said reverse stock split was executed on 1st April 2015.

Performance Highlights (Consolidated)

Revenues from operations8: ¥736.8 billion(down 1.3%, or ¥10.0 billion, from the previous fiscal year)
Operating income: ¥104.1 billion(down 5.7%, or ¥6.2 billion, from the previous fiscal year)

2017

2015

20168

¥   685,906¥  746,792¥ 736,763

94,026110,293

104,058

150,100

166,500

159,300

85,590104,479

100,60777,62096,087

100,805

54,201

69,971

71,302

71,034

63,842

79,288

68,11566,63986,21253,14353,70152,800

The Group recorded year-on-year declines of 1.3%, or ¥10.0 billion, in revenues fromoperations, to ¥736.8 billion, and 5.7%, or ¥6.2 billion, in operating income, to ¥104.1
billion, due to the sale of land for facilities in the Real Estate Business in the previous fiscal
year and the lower yen-equivalent value of revenues and earnings in the International
Transportation Business.
Operating income: Factor analysis (YoY change)(¥ million)

110,293

FY2016

Urban Transportation¥  131,881¥  124,838¥  115,633(52,529)(78,843)(84,845)

79,35245,99530,788(81,746)(47,278)(30,595)

Entertainment and Communications

+967
+354

Travel –43
International Transportation–200

Hotels–502

Real Estate–7,881

Other

+372

Adjustment+698¥2,279,638¥2,282,180¥2,349,831

679,482

724,237

804,659

955,828

916,570

899,523¥    42.98¥  277.88¥   285.11

42.95

277.67284.86525.562,815.96

3,150.67

6.00

35.00

35.00

13.7

14.8

14.1

3.7

4.6

4.3

8.6

10.3

9.4

6.4

5.5

5.6

29.1

31.0

33.5

1.4

1.3

1.1

¥      743¥        718¥      3,620

9,447

9,129

9,205

Net income attributable to owners of the parent: Factor analysis (YoY change)

17.3

12.9

12.7

Improvement in total extraordinary income net of total extraordinary loss +¥8.6 billion

1.4

1.3

1.1

627,536

644,563

647,369

227,203234,226

236,766

7.84

5.54

3.20

FY2017104,058

Net income attributable to owners of the parent: ¥71.3 billion(up 1.9%, or ¥1.3 billion, from the previous fiscal year)
Net non-operating loss (total non-operating expenses net of total non-operating income)declined ¥2.4 billion, year on year, to ¥3.5 billion, due to an increase in equity in income ofaffiliates. Total extraordinary income net of total extraordinary loss was ¥0.2 billion, an
improvement compared with the previous fiscal year’s loss of ¥8.6 billion. This
improvement reflected decreases in losses on revaluation of investment securities and in
impairment loss.
Due to the above, net income attributable to owners of the parent increased 1.9%, or¥1.3 billion, year on year, to ¥71.3 billion.

Increase in equity in income of affiliates+¥2.9 billion

Increase in total income taxes–¥3.4 billion

Decrease in operating income–¥6.2 billion

Interest-bearing debt: ¥899.5 billion(down 1.9%, or ¥17.0 billion, from the previous fiscal year-end)
The outstanding balance of interest-bearing debt at the end of the fiscal year underreview amounted to ¥899.5 billion, a decrease of 1.9%, or ¥17.0 billion, from the previous
fiscal year-end. This was because free cash flow was used to repay interest-bearing debt.

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

Performance Highlights (Consolidated)

Key Financial Indicators (Graphs)
Revenues from operations

Revenues from operations decreased 1.3%, or ¥10.0
billion, year on year, to ¥736.8 billion, due to the saleof land for facilities in the Real Estate Business in theprevious fiscal year and the lower yen-equivalentvalue of revenues and earnings in the International
Transportation Business.

(¥ billion)
900

752.3

683.7

600

653.3

638.8

649.7

10

11

12

682.4

679.2

685.9

13

14

15

746.8

736.8

16

17(FY)

300

0

08

09

Operating income and operating income margin(¥ billion)

(%)

120

21

110.3
90.7

80

12.1

87.9

77.8
11.4

70.1

64.7

73.8

104.1

14.8

14.1

14

13.7

13.5

12.9

11.4

10.1

10.7

40

94.0

91.8

Operating income was down 5.7%, or ¥6.2 billion,
year on year, to ¥104.1 billion, due to the above­
mentioned decrease in revenues from operations
and lower revenues from the accommodation andbanquet areas in the Hotels Business.

7

0

0

08

09

Operating income

10

11

12

13

14

15

17(FY)

16

Operating income margin (right axis)

EBITDA

Operating income decreased 5.7%, or ¥6.2 billion,
year on year, to ¥104.1 billion; depreciation and amortisation declined 1.7%, or ¥0.9 billion, to ¥52.8 billion; and amortisation of goodwill declined 1.8%, to¥2.4 billion. As a result, EBITDA was ¥159.3 billion.

(¥ billion)
180

145.2

135.3

133.2

09

10

120

127.1

133.5

145.1

149.2

150.1

13

14

15

166.5

159.3

16

17

60

0

08

11

12

(FY)

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

(%)

80

16

70.0
60

39.3
20.6

20

0

12

54.2

40

0.6
08

7.9
4.4

10.3

46.4

39.7

9.4

8.6

8.0

7.4

71.3

18.1
3.8

10.8

4

2.3

0.1
09

10

8

0

11

Net income attributable to owners of the parent

12

13

ROE (right axis)

14

15

16

17

(FY)

Total income taxes were up from the previous fiscal
year, but higher income before income taxes
caused net income attributable to owners of theparent to increase 1.9%, or ¥1.3 billion, year on year,to ¥71.3 billion, breaking the previous record forthe sixth consecutive year. Due to higher equity,
ROE decreased 0.9 percentage point, to 9.4%.

Performance Highlights (Consolidated)

Total assets and ROA(¥ trillion)

(%)
6

3

2.35

2.34

2.31

2.31

2.27

2.29

2.28

2

3.2
2.5

2.28

4.6

2.35
4.3

2.0

2.2

1

3.6

3.3

2.8

2.28
3.7

4

2

0

0

08

09

Total assets

10

11

12

13

14

15

17(FY)

16

ROA (right axis)

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

(Times)
15

1.5

1.27
1.0

1.28

1.28

1.18

9.8

9.6

9.4

8.8

1.25

1.13

8.9

1.03
7.8

0.96
6.9

0.92
6.4

2.8

2.7

2.7

2.6

2.3

2.0

1.7

1.4

5.6

1.3

09

Interest-bearing debt

10

11

D/E ratio (right axis)

12

13

14

15

5

1.1

0

08

10

0.90

5.5

0.5

0

17(FY)

16

Interest-bearing debt/EBITDA (right axis)

Cash flows
147.0

150

108.6

103.3

74.9

80.2

50

14.2

0
–50

–25.2

–150

–100.1

147.0
101.5

68.7

131.9

124.8

115.6

79.4
46.0

30.8

–62.5

–44.3

–58.9

–45.5

13

14

–52.5
–78.8

–84.8

16

17(FY)–132.7

–200

08

40.7

127.7

–6.4
–115.0

–10

124.5

09

10

11

Net cash provided by operating activities
Free cash flow

1215

Net cash used in investing activities

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

1,000

50.00

58.5

40.00

60

35.00

35.00

45

30.00

34.9
30

20.00

30.7

10.00

The outstanding balance of interest-bearing debt at
the end of the fiscal year under review amounted to¥899.5 billion, a decrease of 1.9%, or ¥17.0 billion,
from the previous fiscal year-end. As a result, theGroup reduced interest-bearing debt to less than¥900 billion ahead of the previous medium-term
management plan’s schedule, which envisaged
achieving this by the end of fiscal 2019. Consequently, the D/E ratio decreased to 1.1 times. Further,
the interest-bearing debt/EBITDA ratio was 5.6
times, remaining below 6 times for the second consecutive fiscal year.

Net cash provided by operating activities was ¥115.6
billion, reflecting income before income taxes, depreciation and amortisation, and income taxes paid.
Net cash used in investing activities was ¥84.8 billion
due to purchases of noncurrent assets. Net cashused in financing activities was ¥30.6 billion as aresult of redemption of bonds.

(¥ billion)

100

Total assets rose ¥67.7 billion from the previous fiscal
year-end, to ¥2,349.8 billion, due to an increase inconstruction in progress. ROA edged down 0.3 percentage point, to 4.3%, reflecting lower ordinary
income.

16.1

15.9

5.00

5.00

5.00

5.00

5.00

5.00

08

09

10

11

12

13

16.3

14.0
6.00

0

14

25.0

25.0

15

6.00
15

0

16

17(FY)

Dividend per share
Total payout ratio (right axis)
Notes: The total payout ratio for fiscal 2017 includes purchase of treasury stock (amounting to ¥9.1 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 after the reverse stock split.

The Company’s basic policy is to pay stable annual
dividends and acquire treasury stock with a total
payout ratio (the total of purchases of treasury stockand the total annual dividend as a percentage of net
income attributable to owners of the parent) of 25%
as a target. Regarding dividend payments fromprofits in fiscal 2017, the Company paid a dividendof ¥35 per share, which was the same as the dividend paid in the previous fiscal year. The Company
purchased treasury stock (amounting to ¥9.1 billion)
based on the target of a total payout ratio of 25%.

To Our Stakeholders

Fiscal 2017 Business Results In fiscal 2017, the year ended 31st March 2017, although weachieved our earnings targets, revenues from operations, operating income, and ordinary income declined year on year. These
declines resulted from the sale of land for facilities in the Real
Estate Business in the previous fiscal year as well as the lower
yen-equivalent value of revenues and earnings of overseas subsidiaries in the International Transportation Business, whichaccompanied exchange rate fluctuations. However, reflecting an

improvement in total extraordinary income net of total extra­ordinary
loss, net income attributable to owners of the parent reached arecord high for the sixth consecutive fiscal year. Further, despite
steady investment for growth, we reduced interest-bearing debt
to less than ¥900 billion ahead of the previous medium-term
management plan’s schedule, which envisaged achieving this by
the end of fiscal 2019. As a result, the interest-bearing debt/
EBITDA ratio was below 6 times for the second fiscal year in a row.

Fiscal 2017 business results overview
(Billions of yen)

FY2017 results

FY2016 results

YoY
Increase / Decrease(%)

Revenues from operations

736.8

746.8

–10.0

–1.3

Operating income

104.1

110.3

–6.2

–5.7

Ordinary income

100.6

104.5

–3.9

–3.7

Net income attributable to owners of the parent

71.3

70.0

1.3

1.9

Interest-bearing debt

899.5

916.6

–17.0

–1.9

5.6

5.5

0.1 ptInterest-bearing debt/EBITDA ratio (Times)

Returns to Shareholders In fiscal 2017, in accordance with the Group’s policy, annual dividend payments from profits were ¥35 per share, representing
total annual dividend payments of approximately ¥8.8 billion. In
addition, based on a target of 25% for the total payout ratio, totaltreasury stock purchases amounted to roughly ¥9.1 billion.
In light of stable performance trends recently and steady
improvement in our financial position, we intend to enhance
returns to shareholders even further. In fiscal 2018, the year
ending 31st March 2018, we plan to increase annual dividend
payments from profits from ¥35 per share to ¥40 per share and toraise our target total payout ratio from 25% to 30%.

Returns to shareholders(¥ billion)

(Yen)

21

14

7

45

40

35*

35

8.7

9.1

30

7.6

8.8

8.8

15

2015

2016

2017

30*

30*

7.6

2014

0

0

Total dividend

Acquisition of treasury stock

2018 (Est.)(FY)

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 this shareconsolidation.

Corporate Governance With a view to increasing the transparency of the Board of Directors, we increased the proportion of external directors by reducing
the number of directors from 14 to nine while continuing toappoint two external directors. Meanwhile, we introduced an
executive officer system to enhance the execution of duties.
Further, external Audit & Supervisory Board members continue toaccount for three of our five Audit & Supervisory Board members.
Note: Billions of yen figures are rounded to one decimal place.

As a result, five of the 14 directors and Audit & Supervisory Board
members that attend meetings of the Board of Directors are
external directors or external Audit & Supervisory Board members who are independent of the Company.
Also, given that we currently do not have senior advisors,
we took the opportunity that this presents to abolish the senioradvisor system, which was stipulated in the articles of incorporation.

Consolidated Six-Year Summary

2012

FY

2013

2014

2015

2016 620172017$ 6,578,241

Result of Operations (Millions of yen and thousands of U.S. dollars) :1¥  649,703¥  682,439¥  679,157¥  685,906¥  746,792¥  736,763

Operating income

73,80987,921

91,82894,026110,293

104,058

929,089

EBITDA2

133,500

145,100

149,200

150,100

166,500

159,300

1,422,321

Ordinary income

65,39374,914

81,191

85,590104,479

100,607898,277

Income before income taxes

43,41962,192

83,542

77,62096,087

100,805

900,045

Net income attributable to owners of the parent

39,25239,702

46,352

54,201

69,971

71,302636,625

Comprehensive income

44,99254,081

55,941

71,034

63,842

79,288707,929

Capital expenditure

55,26759,51280,722

68,11566,63986,212769,750

Depreciation and amortisation

56,96854,54054,474

53,14353,70152,800471,429

Revenues from operations

Cash Flows (Millions of yen and thousands of U.S. dollars):
Cash flows from operating activities¥  124,525¥  127,655¥  146,991¥  131,881¥  124,838¥  115,633$ 1,032,438

Cash flows from investing activities(44,295)(58,923)(45,517)(52,529)(78,843)(84,845)(757,545)

Cash flows from financing activities(78,978)(69,195)(105,079)(81,746)(47,278)(30,595)(273,170)

767

817

(1,840)(1,125)(1,978)(480)(4,286)23,57225,581

24,49723,49722,363

22,530201,161¥2,281,007¥2,286,928¥2,279,638¥2,282,180¥2,349,831$20,980,634

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¥2,274,380

Total net assets

524,801

573,154

617,598

679,482

724,237

804,659

7,184,455

Interest-bearing debt

1,183,647

1,126,633

1,032,307

955,828

916,570

899,523

8,031,455¥    31.13¥    31.48¥    36.76¥    42.98¥   277.88¥   285.11$       2.55

31.13

31.47

36.75

42.95

277.67284.86

2.54

Net assets

407.01443.63477.69525.562,815.96

3,150.67

28.13

Dividend

5.00

5.00

6.00

6.00

35.00

35.00

0.31

Operating income margin (%)

11.4

12.9

13.5

13.7

14.8

14.1

—

ROA (%)

2.8

3.3

3.6

3.7

4.6

4.3

—

Per Share Data (Yen and U.S. dollars):
Net income attributable toowners of the parent

Basic
DilutedRatios:3

ROE (%)

7.9

7.4

8.0

8.6

10.3

9.4

—

Interest-bearing debt/EBITDA (Times)

8.9

7.8

6.9

6.4

5.5

5.6

—

Equity ratio (%)

22.6

24.5

26.3

29.1

31.0

33.5

—

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

2.3

2.0

1.7

1.4

1.3

1.1

—

1,271,406

1,271,406

1,271,406

1,271,406

254,281254,281—

20,811

20,751

20,913

21,037

21,607

21,860—4

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

1. The U.S. dollar amounts have been translated, for convenience only, at ¥112 = US$1, the prevailing exchange rate on the Tokyo Foreign Exchange Market as of 31st March 2017.
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. Regarding transactions related to such items as the export of mixed cargo of the International Transportation Business, the Company has changed the recognition of revenues
from operations from net presentation to gross presentation as of fiscal 2017. As a result of this change, the amount of revenues from operations for fiscal 2016 is the amountafter retrospective application (gross presentation).
	Further, the Company consolidated shares at the ratio of 5 shares to 1 share with an effective date of 1st August 2016. Net income per share, diluted net income attributableto owners of the parent per share, net assets per share, dividend per share, and number of outstanding shares have been calculated based on the assumption that the said
reverse stock split was executed on 1st April 2015.

Consolidated Financial Review

Analysis of Operating Results for Fiscal 2017 (Year ended 31st March 2017)
Although the Group was able to achieve its profit targets, revenues
from operations declined 1.3%, or ¥10,029 million, year on year, to¥736,763 million. This decrease was attributable to the sale of land
for facilities in the Real Estate Business in the previous fiscal year andthe lower yen-equivalent value of revenues and earnings in theInternational Transportation Business that accompanied exchange
rate fluctuations. As a result of the abovementioned decrease in revenues from operations, operating income was down 5.7%, or ¥6,234
million, year on year, to ¥104,058 million.
Further, ordinary income declined 3.7%, or ¥3,872 million, year
on year, to ¥100,607 million, because the abovementioned decrease

in revenues from operations counteracted higher equity in incomeof affiliates and a decrease in interest expenses accompanying lower
interest-bearing debt.
Total extraordinary income net of total extraordinary loss was¥197 million, compared with a loss of ¥8,391 million in the previous
fiscal year, due to the recording of losses on revaluation of investment securities in the previous fiscal year. Reflecting the improvement in total extraordinary income net of total extraordinary loss,
net income attributable to owners of the parent increased 1.9%, or¥1,331 million, year on year, to ¥71,302 million.

Analysis of operating income(¥ million)

110,293

FY2016
Decrease in revenues from operations–10,029

Decrease in operating expenses and cost of sales*+2,251

Decrease in personnel expenses+1,031

Decrease in expenses+543

Increase in taxes–116

Decrease in depreciation and amortisation+39

Decrease in amortisation of goodwill

Decrease in selling,
general and administrative
expenses*+1,543+44
104,058

FY2017

YoY difference –6,234* Included in cost of revenues from operations, retirement benefit expenses increased ¥2,088 million.

Segment Information
The following table shows business performance for each core business segment. For reviews of these results, please see the respective reference pages at the bottom of the columns in the table below.
(Millions of yen)
Urban
Transportation

Real EstateEntertainment andCommunications

FY2017

237,136

215,709

115,193

29,938FY2016

239,544

220,923

112,490

30,502

76,092

YoY difference–2,407–5,213+2,703–563–4,422

TravelInternational
Transportation

HotelsOther

Adjustment

Consolidated

65,64042,646(41,172)

68,04238,859(39,660)

746,792–2,401+3,787–1,512–10,029

Revenues fromoperations
71,670736,763

Operating income
FY201742,237

41,97015,655

637

1,587

2,795

1,340

(2,167)104,058

FY2016

41,27049,851

15,301

680

1,788

3,298

967

(2,866)110,293

YoY difference+967–7,881

+354

–43

–200

–502

+372

+698

–6,234

Reference page

P.37

P.39

P.41

P.43

P.45

P.47

—

—

—

Note: Regarding transactions related to such items as the export of consolidated cargo of the International Transportation Business, the Company has changed the recognition of revenues
from operations from net presentation to gross presentation as of the fiscal year under review. As a result of this change, the amount of revenues from operations for the previous fiscal
year is the figure after retrospective application (gross presentation). Further, this change has not affected operating income.

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¥2,349,831 million, a rise of ¥67,650 million from the previous fiscal
year-end. This increase mainly stemmed from investment thatexceeded depreciation and amortisation, the recognition of anincrease in equity in income of affiliates, a rise in the market value oflisted investment securities owned, and an increase in constructionin progress. Further, construction in progress increased in tandemwith the advancement of the Ginza 3-chome Project and the Umeda
1-1 Project.

As for liabilities, the primary causes of higher total long-term liabilities were increases in long-term debt and bonds. Meanwhile, adecrease in total current liabilities mainly resulted from lower shortterm borrowings. Consequently, interest-bearing debt was ¥17,046
million lower than at the previous fiscal year-end. Total liabilities
decreased ¥12,771 million from the previous fiscal year-end, to¥1,545,171 million.
Net assets increased ¥80,422 million from the previous fiscal
year-end, to ¥804,659 million, due mainly to higher retained earnings.
As a result, the equity ratio stood at 33.5%, and ROE was 9.4%.

AssetsLiabilities and net assets(¥ billion)(¥ billion)
Total assets¥2,349.8 billion

Total assets¥2,282.2 billion

289.1
40.5

Noncurrent assets+53.2
Main cause:
Increase inconstructionin progress

1,697.1

255.5

1,734.7

Current assets+14.5
Main cause:
Increase in tradereceivables

FY2016
Current assets
Intangible assets

307.9
37.3

Property and equipment
Investments and other assets

270.0
FY2017

Total liabilities
and net assets¥2,349.8 billion

Total liabilities
and net assets¥2,282.2 billion

724.2

1,101.8

456.1

Net assets+80.4
Main cause:
Increase incapital surplus
Long-term liabilities+24.1
Main cause:
Increase inlong-term debt
Current liabilities–36.8
Main cause:
Decrease in
short-term borrowings

FY2016
Current liabilities

Long-term liabilities

804.7

1,125.9

419.3
FY2017

Net assetsConsolidated Financial Review

2. Cash Flows
Cash and cash equivalents at end of year increased ¥167 million fromthe previous fiscal year-end, to ¥22,530 million.
(1) Cash Flows from Operating Activities
Net cash provided by operating activities was ¥115,633 million(down 7.4% year on year). The main factors were income before
income taxes of ¥100,805 million, depreciation and amortisation of¥52,800 million, and income taxes paid of ¥22,714 million.

(2) Cash Flows from Investing Activities
Net cash used in investing activities amounted to ¥84,845 million (up7.6% year on year). This primarily reflected purchases of noncurrent
assets of ¥92,767 million, purchases of investment securities of¥11,527 million, and receipt of contributions for construction of¥13,973 million.
(3) Cash Flows from Financing Activities
Net cash used in financing activities totalled ¥30,595 million (down
35.3% year on year). This was due partly to a net decrease in borrowings of ¥3,932 million, proceeds from new bonds issued of ¥19,858
million, redemption of bonds of ¥30,000 million, purchase of treasury stock of ¥5,271 million, and dividends paid of ¥8,803 million.

Cash flows(¥ billion)

Cash flows fromoperating activities–9.2

Cash flows frominvesting activities–6.0

Cash flows fromfinancing activities
+16.7

+19.9

+6.9

–20.0
+21.1

22.4
–0.1

+2.7

–1.5

–6.7

+7.8

22.5

Year ended 31st March 2017

–0.9

Other

+4.7

–30.0

–0.6

–2.0

Dividends paid

Purchases of treasury stock

Redemption of bonds

Proceeds from new bonds issued

Net decrease in short-term borrowings

Other

Receipt of contributions for construction

Purchases of investment securities

Purchases of noncurrent assets

Other

Income taxes paid

Depreciation and amortisation

Income before income taxes

Year ended 31st March 2016

3. Fund Procurement
The outstanding balance of interest-bearing debt at the end of the
fiscal year under review amounted to ¥899,523 million, a decrease of¥17,046 million from the previous fiscal year-end. This was because
net cash provided by operating activities more than compensatedfor capital expenditure for the Ginza 3-chome Project and the building of new rolling stock.

The ratio of interest-bearing debt/EBITDA (operating income +depreciation expenses + amortisation of goodwill), which is thebenchmark the Company uses for assessing the soundness of its
financial position, stood at 5.6 times at the end of the fiscal year
under review, compared with 5.5 times at the previous fiscal
year-end.

Consolidated Financial Review

Consolidated Capital Expenditure and Depreciation and Amortisation
Capital expenditure in the fiscal year under review (on a consolidated basis; including intangible assets) increased ¥19,573 million, or 29.4%, year
on year, to ¥86,212 million.

The following is a breakdown for each business segment.
(Millions of yen)(%)

FY2017YoY

Urban Transportation

31,158

11.4

Real Estate

43,144

52.5

Entertainment and Communications

7,388

24.8

Travel528

4.1International Transportation

384

–63.4

Hotels

3,182

42.5

Other

618

–13.7

Total

86,40629.6

Adjustment(193)–272.6

Consolidated

86,212

29.4

Urban 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 moved forward with the Ginza 3-chome
Project and continued implementing 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 IT systems for in-house operations.

International Transportation
In the International Transportation Business, Hankyu Hanshin Express
invested in IT systems for in-house operations.
HotelsIn the Hotels Business, Hankyu Hanshin Hotels refurbished the guest
rooms of its hotels.
Depreciation and amortisation decreased ¥901 million, or 1.7%,
from the previous year (on a consolidated basis), to ¥52,800 million.