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.

Group Management Philosophy

ValuesWhat is important to us

Customers First

Sincerity

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

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.

Corporate Social Responsibility (CSR)

We believe that contributing to local communities and preserving the environment are social responsibilities that are incumbent upon us to fulfill 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.

Basic Policy
Social Contribution Activities

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

Basic Concept
Environmental
Preservation Activities

Mindful that global environmental preservation isa 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.

At a Glance

Major Operating Companies*

Urban Transportation
Hankyu Corporation

阪神電気鉄道Fiscal 2017 Results

Revenues fromOperations¥

Operating Income¥

Segment Assets¥

Revenues fromOperations¥

Operating Income¥

Segment Assets¥

Revenues fromOperations¥

Operating Income¥

Segment Assets¥

Revenues fromOperations¥

Operating Income¥

Segment Assets¥

Revenues fromOperations¥

Operating Income¥

Segment Assets¥

Revenues fromOperations¥

Operating Income¥

Segment Assets¥

237.1 billion (YoY –1.0%)
42.2 billion (YoY +2.3%)
802.2 billion (YoY +1.0%)

Hanshin Electric Railway

Real EstateEntertainment andCommunications

215.7 billion (YoY –2.4%)
42.0 billion (YoY –15.8%)
1,056.7 billion (YoY +3.3%)
115.2 billion (YoY +2.4%)
15.7 billion (YoY +2.3%)
147.3 billion (YoY +3.2%)©Takarazuka Revue Company

TravelHankyu Travel International

International Transportation
Hankyu Hanshin Express

HotelsHankyu Hanshin Hotels* For Major Group Companies, please see page 107.

29.9 billion (YoY –1.8%)
0.6 billion (YoY –6.4%)
73.9 billion (YoY +13.3%)
71.7 billion (YoY –5.8%)
1.6 billion (YoY –11.2%)
38.7 billion (YoY –3.1%)
65.6 billion (YoY –3.5%)
2.8 billion (YoY –15.2%)
82.6 billion (YoY –0.2%)

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

30.5

39.8

35.9

Nature of Business
Railway operations: These operations form a network in the Kansai area that centres on the railway lines of Hankyu
Corporation and Hanshin Electric Railway. Hankyu Corporation’s railway lines link Osaka-Umeda with Kobe, Takarazuka,
and Kyoto. Meanwhile, Hanshin Electric Railway is the only private (non-JR) railway operator with railway lines that directly link Kobe with Osaka’s major northern and southern terminals, which are Osaka-Umeda and Namba, respectively.
The operating kilometres of Hankyu Corporation and Hanshin Electric Railway are 143.6 km* and 48.9 km*, respectively.
* Including tier 2 railway operators

Automobile business (bus, taxi): This business manages and operates bus and taxi services, which coordinate withrailway services to increase convenience in line-side areas.
Retailing business: This business manages and operates convenience stores and other shops mainly inside railway
stations on the Hankyu and Hanshin lines.
Advertising business: This business provides advertising media that are based on digital signage inside railway stations
and space inside trains.
Real estate leasing business: This business owns numerous office buildings and facilities, mainly in Osaka-Umeda andthe line-side areas of the Hankyu and Hanshin lines. In recent years, the business has been actively pursuing development of real estate in the Tokyo metropolitan area. (For a list of principal rental properties, please see page 106.)
Real estate sales and other business: This business markets condominiums, residential land lots, and detachedhouses, mainly in the line-side areas of the Hankyu and Hanshin lines and the Tokyo metropolitan area. In recent years
the business has entered the ASEAN region. The business is engaged in property 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.

27.7

47.3
39.5

Sports business: This business manages the Hanshin Tigers professional baseball team, which has a history of morethan 80 years, as well as the team’s home ground and high-school baseball mecca Hanshin Koshien Stadium and manages related businesses. The business also operates a music business (Billboard Live).
Stage business: This business manages the performances of the Takarazuka Revue—an organisation which has morethan a century of history—sells related products, and manages and operates related businesses engaged in video andmusic distribution. Further, the business operates Umeda Arts Theatre and promotes stage productions.
Communication and media business: This business operates a broadcast and communications business, which provides cable television services (including multichannel broadcasts, Internet, and fixed telephone line services), and an
information services business, which provides a variety of services based on system development and other IT.

Travel business: This business plans, markets, arranges, and supports travel for Japanese people in Japan and overseas
and for non-Japanese visitors in Japan.

14.8International transportation business: This business operates air freight, sea freight, and logistics businesses as well as
a comprehensive portfolio of businesses that are ancillary or related to these operations. The business has 46 bases inJapan and 119 bases overseas as of 1st July 2017.

3.8
9.2
14.7
6.6
Hotels business: This business operates a wide range of hotel formats, from “city hotels” through to business hotels
mainly comprising guest rooms for overnight stays. The business operated 48 hotels, consisting of 19 directly managed
hotels and 29 franchise hotels, with 10,693 guest rooms as of 1st April 2017. In addition to the above hotels, the business
manages The Ritz-Carlton, Osaka, based on an alliance with the Ritz-Carlton chain of international luxury hotels.

8.4
3.3
5.5

0.6
1.5
2.6

1.7
3.7

1.3

1.5

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.

Location of Our Business Base

Survey of prospective condominium
purchasers regarding their preferredKansai residential area, conducted infiscal 2017
Ranking

Station1

Nishinomiya-kitaguchi

2

Shukugawa3

Okamoto

4

Umeda

5

Takarazuka

6

Ashiyagawa

7

Mikage8

Senri-chuo

product of Thailand and Singapore.

9

Toyonaka* Cabinet Office, Report on Prefectural Accounts for the Fiscal Year Ended 31st March 201510

AshiyaThe Hankyu Hanshin Holdings Group’s business base is the Kansaiarea, which has a population of approximately 20 million. This issecond only to the Tokyo metropolitan area. Further, the Kansai area
is one of Asia’s economic powerhouses. According to a Cabinet
Office survey*, in fiscal 2015 the Kansai area’s gross production
reached US$734.5 billion, surpassing the combined gross domestic

Source: A survey of prospective condominium
purchasers regarding their preferred residentialarea, 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.) and included in a press release
dated 29th September 2016
Note:  indicates the locations of the above
railway stations

Tokyo

TanigamikyunK
shi Lineku
Ho ilwayRa

Hankyu Kobe Line

Kyoto
Kyoto
City

Hyogo

Shiga

o

Kobe City
Osaka City
Osaka
Nara
Areas of high population densities

Kobe Rapid Transit
Railway Line
Shin-Kobe
Kobe
Sannomiya
Minatogawa
Shinkaichi
NishidaiMotomachi

Wakayama

Kobe Airport

Osaka Bay

With a railway network linking the Kansai area’s major cities—OsakaUmeda, Kobe, and Kyoto—the Group has established an unshakable
presence in the Kansai area. Since the earliest days of its railway operations, the Group has developed housing, entertainment facilities, andcommercial facilities in the areas served by its lines. Further, thanks toefforts 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 lineside areas some of the most popular places to live in the region. A surveyof prospective condominium purchasers regarding their preferred Kansai
residential area conducted in fiscal 2017 reflects this popularity. The

Kansai International
AirportThe largest airport in western Japan,
this is the Kansai area’s gateway to
the world.

survey revealed that areas centred on the Group’s railway stations
accounted for all of the most popular areas. The above factors have led tohigh population densities in our line-side areas, which enable highly
efficient transportation.

Kansai International
AirportK

N

Arashiyama

N

Arashiyama

KyotoKyoto
Prefecture
Prefecture
Katsura

Kawaramachi Kawaramachi
KatsuraKyoto

Hankyu Hankyu
ArashiyamaArashiyama
Line
Line

Kyoto

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

Myokenguchi Myokenguchi
Nissei-chuo

Nissei-chuo

OsakaOsaka
Prefecture
Prefecture

Nosé Electric
Railway Line

Nosé Electric
Railway Line

HyogoHyogo
Prefecture
Prefecture

HankyuHankyu Mino-o
LineMino-o Line
Mino-oMino-oKawanishi-noseguchi
Kawanishi-noseguchi

KoyoenShukuShukugawa
gawaTsukaguchi
NishinomiyaNishinomiya- Tsukaguchi
kitaguchi
kitaguchi
Imazu

Imazu
Imazu
Imazu
Mukogawa
Mukogawa
Daimotsu

Hanshin Hanshin
Main Line Main Line

Amagasaki

Esaka

Esaka

ShinOsaka

ShinAwaji
Osaka

Daimotsu
Juso

Amagasaki

Umeda

Juso

Sh

ink

an

se
n
an
ink

Kita-Osaka Kyuko

Kita-Osaka Kyuko

KoyoenHankyu
Senri
Line

se
n

Kita-senriSh

Kita-senri

Osaka
Osaka
Senri-chuo
Senri-chuoInternational
International
Ishibashi
Ishibashi
Takarazuka Takarazuka
Airport
AirportHankyu Hankyu
HankyuImazu Line Imazu Line
Senri
Line
Itami
Itami
Hankyu Hankyu
Hankyu Hankyu
Itami Line Itami Line Hankyu Hankyu
Koyo Line Koyo Line
TakarazukaTakarazuka
Line
Line

Awaji

TenjimbashisujiTenjimbashisuji
6-chome6-chome

Umeda

Kintetsu-Nara Kintetsu-Nara

Mukogawadanchi-mae
Mukogawadanchi-mae

SubwaySakaisuji Line

SubwaySakaisuji Line

Hanshin Hanshin
MukogawaMukogawa
Line
Line

Hanshin Namba
LineNamba Line Osaka-Namba Osaka-Namba
HanshinNara Prefecture
Nara Prefecture

Kintetsu Nara Line
Kintetsu Nara LineUmeda
The Group’s most important base, theUmeda area, is the Kansai economic bloc’s
hub and one of Japan’s most popular
shopping and entertainment districts.

Hankyu Railway Network 143.6 km
Kobe Line
46.9 km(Kobe Line, Imazu Line, Itami Line, Koyo Line)
Takarazuka Line
(Takarazuka Line, Mino-o Line)

Average number of passengers per day using stations ofprivate (non-JR) railway operators in fiscal 2017

Kyoto Line
65.4 km
(Kyoto Line, Senri Line, Arashiyama Line)(Thousands of people)
1,149

Tokyu Shibuya Station

Kobe Rapid Transit Railway Line

2.8 km770

Keio Shinjuku Station
Hankyu Umeda Station

505

Odakyu Shinjuku Station

500

Seibu Ikebukuro Station

485

Hanshin Umeda Station

28.5 km164

Source: Prepared by the Group based on documents
released by respective companies

Hanshin Electric Railway Network 48.9 km
Hanshin Line
43.9 km(Hanshin Main Line, Hanshin Namba Line,
Mukogawa Line)
Kobe Rapid Transit Railway Line
5 km

5.0 km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%.

ESG Highlights

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

800,000

658,607648,955

602,586

600,000

642,366
600,000

476,265
400,000

400,000

327,014

320,753

200,000

302,303309,143

317,491

200,000

0

0

2012

2013

Urban Transportation
Entertainment and Communications
International Transportation
Other

2014

2015

2016

(FY)

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

Electricity consumption during summer months (July–September)

The Group has been endeavouring to lower its electricity consumption over the peak usage months
from July to September. As a result, total electricity
consumption from July to September 2016 was
261,738 kWh, down 0.2% year on year (a decrease of
approximately 15% from the equivalent period in
2010, before the Great East Japan Earthquake).

(Thousand kWh)
300,000

285,000

281,759
277,219
268,581270,000

In fiscal 2016, overall emissions were down 1.0% year
on year, to 642,366 t-CO2. While CO2 emissions
jumped in fiscal 2013, this rise was the 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.
Further, energy consumption on a crude oilconversion basis decreased for the fifth consecutive
year as a result of efforts by Group companies toreduce energy consumption. These efforts included
measures by Hankyu Corporation and Hanshin Electric Railway to switch to light-emitting diode (LED)lighting in railway stations and other facilities and to
introduce more new rolling stock with better energy
efficiency than existing rolling stock.

262,261

261,738

2016

2017

255,000

0

2013

2014

2015

(FY)

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.

Social Factors
Capital investment in railway operations

As a railway operator, the Group provides a formof public infrastructure. We therefore make giving
priority to the safety of our customers a fundamental policy of management, and conduct ongoingsafety-related capital investments in our railway
operations accordingly. In fiscal 2017, such investments totalled ¥12.7 billion at Hankyu Corporationand ¥3.7 billion at Hanshin Electric Railway. These
investments were primarily used to conduct station upgrades, including track elevation, seismic reinforcement of elevated tracks, expansion of platforms, andmeasures for making stations barrier-free.

(¥ billion)
25

20

3.3
15

1.8

2.8

2.9

3.3

10

5

0

16.1

13.7

11.4
1.2
3.8
Hankyu Hanshin
2013

1.5

13.0

12.7

1.1

0.6

4.9

0.9

4.0

4.4

3.7

Hankyu Hanshin
2014

Hankyu Hanshin
2015

Hankyu Hanshin
2016

Hankyu Hanshin
2017

(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.

Note: Please see “Safety Initiatives in the Railway
Business” on pages 64–67 of this report.

ESG Highlights

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

3,000

45

43
39

36

45
2,628

2,602

2,501
2,024

27

25

1,500

1,200

17
13
600
404

0

2011

Programmes

445
0

2012

2012

2014

2015

2016

2017

2018

(FY)

Invited participants (right axis)

The Group conducts a variety of activities focusedon its line-side areas in accordance with a basic
policy of creating towns and cities that people will
truly want to live in. Particularly popular among local
residents are programmes that take advantage ofthe unique business expertise of Group companies
to provide primary school students with opportunities to experience a diverse range of workplaces.
Since we began this initiative in 2010, we have invited 12,404 students to participate in programmes
from an aggregate total of roughly 92,000 applications. In fiscal 2017, these activities received a special
commendation from the judges of an award recognising companies that offer experiential activities foryoung people, organised by the Ministry of Education, Culture, Sports, Science and Technology.
Note: Please see “CSR and Corporate Value Enhancement”
on pages 30–33 of this report.

Governance Factors
Membership of the Board of Directors

The General Meeting of Shareholders held in June2017 approved a reduction in the number of directors from 14 to nine, thereby increasing the proportion of external directors. Five directors of theCompany concurrently serve as directors of Group
companies to ensure that business management
reflects viewpoints from the Group’s operations. In
addition, two of the Company’s part-time directors
have been appointed from H2O Retailing Corporation and Toho Co., Ltd., with the aim of strengthening coordination with other companies in the
Hankyu Hanshin Toho Group.

(People)
15

2

2

2

2

6

6

10

7

6

2
3

5

5

5

5

2013

2014

2015

6
4

0

Directors with operational execution responsibilities
Internal directors without operational execution responsibilities
Independent external directors

2016

2017

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

Rate of attendance of external directors and external Audit & Supervisory Board members
at meetings of the Audit & Supervisory Board and the Board of Directors
(%)
100

96.3

97.2

97.2
80

83.3

96.7

96.7

97.2

97.2
90.0

85.0

60

96.7

100.0
97.2
85.0

65.0

40

20

0

2013

2014

2015

2016

External directors, Board of Directors’ meetings
External Audit & Supervisory Board members, Board of Directors’ meetings
External Audit & Supervisory Board members, Audit & Supervisory Board meetings

2017

(FY)

To support external directors and external Audit& Supervisory Board members, the Company has
established secretariats for the Board of Directors
and the Audit & Supervisory Board. In particular, theCompany has appointed to the secretariat of the
Audit & Supervisory Board dedicated personnel who
provide information to Board members and liaise
with relevant in-house departments and divisions.
The Company provides external directors and external Audit & Supervisory Board members with information about the Company’s businesses, financial
position, and organisations mainly at meetings of
the Corporate Governance Committee. Also, thesecretariat of the Board of Directors sends Board
members documents detailing agenda items for
submission to the Board of Directors, in principle,
seven days prior to the dates of meetings.

Major Rental Properties / Major Sales Properties

Major rental properties
Completed

Leasable area1(1,000 m2)

Property name

Location

Umeda Hankyu Bldg.

Kita-ku, Osaka

2012

213

Use

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

40

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_ –chayamachi
NU

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 20172
Property name

Major properties planned to be sold in fiscal 20182
Location

Total numberof units

Condominium

Property name

Location

Total numberof units

Condominium

Geo Takatsuki Muse Resis

Takatsuki, Osaka

244

Geo Tenroku Twin Towers

Kita-ku, Osaka358

G-Clef Geo Kobe Motoyama3

Higashinada-ku, Kobe

256

Cielia Saito (First phase)3

Ibaraki, Osaka208

Geo Senri Chuo The Residence

Toyonaka, Osaka218

Geo Ibaraki Togu-cho

Ibaraki, Osaka

45

Brod Takatsuki

Takatsuki, Osaka

51

Geo Nishinomiya Kitaguchi The Grace

Nishinomiya, Hyogo40

Geo Kyoto Saga Arashiyama

Ukyo-ku, Kyoto

32

Geo Nishinomiya Kitaguchi Kawarabayashi-cho

Nishinomiya, Hyogo35

Geo Kyoto Arashiyama

Nisikyo-ku, Kyoto

25

Geo Nishinomiya Kitaguchi Yakushi-cho

Nishinomiya, Hyogo

29

Geo Sumiyoshi Honmachi

Higashinada-ku, Kobe

224

Geo Fukagawa Sumiyoshi

Koto-ku, Tokyo

190

Geo Grande Okamoto 1-chome

Higashinada-ku, Kobe

174

Geo Yotsuya Araki-cho

Shinjuku-ku, Tokyo1314

Geo Tama Center

Tama, Tokyo300

Primce Style Higashi Nihombashi3

Chuo-ku, Tokyo734

Geo Chigasaki3

Chigasaki, Kanagawa

136

Geo Yotsuya Sanei-cho

Shinjuku-ku, Tokyo

61

Geo Tsudanuma

Narashino, Chiba84

Geo Utsukushigaoka 2-chome Hills

Yokohama, Kanagawa

52

Geo Kyodo

Setagaya-ku, Tokyo78

Geo Minamiaoyama

Minato-ku, Tokyo

25

Geo Gyoen Naitomachi

Shinjuku-ku, Tokyo

63

Geo Grande Motoazabu

Minato-ku, Tokyo

194

Hapia Garden Tarumi Seiryodai

Tarumi-ku, Kobe

17

Hapia Garden Kuzuhanamiki 1-chome

Hirakata, Osaka

7

Hapia Garden Takarazuka Gotenyama

Takarazuka, Hyogo

6

Hapia Garden Shimo Shakujii

Nerima-ku, Tokyo

13

Hapia Garden Komae Izumi Tamagawa

Komae, Tokyo

9

Hapia Garden Yokohama Yamate Nibangai

Yokohama, Kanagawa

7

Detached house

Detached house

Osaka Nakajima Koen Toshi Hapia Garden
Shiki no Machi

Nishi-Yodogawa-ku, Osaka

Hankyu Saito Garden Front Saito Mino-o Residence

Minoh, Osaka48

Hapia Garden Mino-o Onohara

Minoh, Osaka

20

Grand Forum Soshigaya-Okura Hapia3

Setagaya-ku, Tokyo

27

Hapia Garden Yokohama Yamate

Yokohama, Kanagawa

14

Hapia Garden Oizumi Gakuen-cho

Nerima-ku, Tokyo

8254

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

Major Group Companies(As of 31st March 2017)

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.
Nose Electric Railway Co., Ltd.
Kita-Osaka Kyuko Railway Co., Ltd.
Hokushin Kyuko Railway Co., Ltd.
Kobe Rapid Transit Railway Co., Ltd.
Hankyu Bus Co., Ltd.
Hanshin Bus Co., Ltd.
Hankyu Taxi Inc.
Hanshin Taxi Co., Ltd.
Hankyu Corporation
Eki Retail Service Hankyu Hanshin Co., Ltd.
Hankyu Style Labels Co., Ltd.
Hankyu Corporation
Hankyu Advertising Agency Inc.
Alna Sharyo Co., Ltd.
Hankyu Sekkei Consultant
Hanshin Station Net Co., Ltd.

SportsHanshin Electric Railway Co., Ltd.
Hanshin Tigers Baseball Club, Ltd.
Hanshin Contents Link Corporation
Hankyu Corporation
Takarazuka Creative Arts Co., Ltd.
Umeda Arts Theater Co., Ltd.
Itec Hankyu Hanshin Co., Ltd.
Bay Communications Inc.
Mt. Rokko Cable Car & Tourism Co.

Automobile

Advertising

Retailing
Other

Stage

Communicationand media
Leisure, etc.

TravelMain businessName of company

Travel agency

Hankyu Travel International 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.
Hanshin Real Estate Co., Ltd.
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.
Hankyu Housing Support Ltd.

Real estate sales andother business

Equity-Method Affiliates
Main business

Department store

Name of company

H2O Retailing Corporation[Securities code: 8242]
Railway operations
Nishi-Osaka Railway Co., Ltd.
Kobe Electric Railway Co., Ltd.
[Securities code: 9046]
Motion picture business Toho Co., Ltd. [Securities code: 9602]
Real estate leasing
Tokyo Rakutenchi Co., Ltd.
[Securities code: 8842]
Commercial
Kansai Telecasting Corporation
broadcasting

HHE: Hankyu Hanshin Express

HotelsMain businessName of company

Hotel management

Hankyu Hanshin Hotels Co., Ltd.
Hanshin Hotel Systems Co., Ltd.
Hankyu Hanshin Restaurants Co., Ltd.
Arima View Hotel Co., Ltd.

Other
Main business

Construction

Name of company

Hanshin Kensetsu Co., Ltd.
Chuo Densetsu Co., Ltd.
Outsourcing services Hankyu Hanshin Business Associate Co., Ltd.
for personnel andaccounting services
Credit and point card Hankyu Hanshin Card Co., Ltd.
Group financeHankyu Hanshin Financial Support Co., Ltd.

Group History

Hankyu Holdings, Inc.

Hanshin Electric Railway Co., Ltd.

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

1899

Founding of Settsu Electric Railway(renamed Hanshin Electric Railway Co., Ltd., in same year)

1905

Beginning of operations linking Kobe (Sannomiya) andouter Osaka (Deiribashi)

1924

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 Japan

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

Considerable damage to transportation and business infrastructure of Hankyu and Hanshin due to the Great Hanshin Earthquake

2005

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

2017

Opening of the Group’s first logistics centre in the ASEAN region, in Indonesia

Announcement of the Hankyu Hanshin Holdings Group’s
Long-Term Management Vision for 2025 (Fiscal 2017–Fiscal 2026)

Investor Information(As of 31st March 2017)

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

Number of Employees:

21,860 (consolidated)

Authorised Shares:

640,000,000*

Issued Shares:

254,281,385*

Phone: +81-6-6373-5001(Group Planning Div., IR Office)Fax: +81-6-6373-5042
Tokyo Office (Personnel and General Affairs Div.):

Number of Shareholders: 79,271*

Toho Twin Tower Bldg.,
1-5-2, Yurakucho, Chiyoda-ku, Tokyo 100-0006, Japan

Unit of Trading:

Phone: +81-3-3503-1568

Stock Exchange Listing: Tokyo

Fax: +81-3-3508-0249

Transfer Agent:

Principal Shareholders:

100 shares*

Mitsubishi UFJ Trust and Banking Corporation

Ownership Breakdown:
National government and local
public organisations
0.00%

Name

Number of shares(Thousands)*

Percentage(%)

Japan Trustee Services Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
Nippon Life Insurance Company(Standing Proxy: The Master Trust Bank of Japan, Ltd.)
Japan Trustee Services Bank, Ltd. (Trust account 5)
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 1)
Japan Trustee Services Bank, Ltd. (Trust account 2)

12,906
9,163

5.08
3.60

5,804

2.28

Financial institutions
28.03%

4,641
4,381
4,207

1.83
1.72
1.65

Securities
companies
0.86%

3,584

1.41

3,460
3,447
3,409

1.36
1.36
1.34

Individuals and others
42.17%

Other corporations
8.76%

Foreigncorporations
and individuals
20.17%* The Company conducted a 1-for-5 reverse common stock split and the change of trading unit from 1,000 shares to 100
shares with an effective date of 1st August 2016. The figures take into account the reverse stock split and the changeof trading unit.

Stock Price and Annual Trading Volume (Tokyo Stock Exchange):
Stock price (¥)

Nikkei average (¥)

5,000

4,000

25,00020,000Stock Price (left axis)

3,000

15,000

Nikkei Average (right axis)
2,000

10,000

1,000

5,000

0

0

180,000

90,0000

Trading volume(Thousand shares)

2008

2009

2010

2011

2012

2013

2014

2015

Notes:
1. The stock prices are as of 31st March of each year. The trading volumes are for years ended 31st March.
2. The data takes into account the reverse stock split and the change of trading unit conducted with an effective date of 1st August 2016.

20162017