ANNUAL REPORT 2013
Making Steady Progress

HankyuHanshinHoldings
Securities code: 9042

Making Steady Progress
Hankyu Hanshin Holdings Group is one of the primary private-sector railways operators in Japan, coming into beingin October 2006 through the management integration of Hankyu Holdings, Inc. and Hanshin Electric Railway Co., Ltd.
Positioning the six business domains—Urban Transportation, Real Estate, Entertainment and Communications, Travel,
International Transportation, and Hotels—as core businesses,*1 we aim to foster organic growth across the entire Group.
The Kansai area*2—the main base of our operations—has played an important role as a key economic and logistical basenationwide since ancient times and has been developing as an urban industrial area since the 19th century. Accounting
for approximately 16% of Japan’s GDP, the Kansai area currently is the second-largest economic area in the country and ishome to various industries that play a major role in the Japanese economy. The Group operates railway networks linking
Osaka, Kobe and Kyoto that substantially expand people’s lifestyle possibilities. At the same time, the Group engages
in a wide range of secondary businesses in areas served by our stations ranging from housing and shopping centres tothe Hanshin Tigers professional baseball team and Takarazuka Revue. By providing services that did not exist previously,
the Group offers more fulfilling lifestyles and contributes to community-building in areas served by its lines. In pursuing
future growth, the Group will work to increase value along Group railway lines over the medium to long term whileleveraging its know-how in community-building and its brand power.
The theme of the 2013 Annual Report is “Making Steady Progress.” Through it, the Group aims to give stakeholders an
overall understanding of our business operations, including the steady progress we have made in the improvement offinancial standing and the redevelopment of Umeda to position us for the next stage of growth.
*1 Certain core businesses will be restructured in fiscal 2014. For more details, please see pages 22 and 60.
*2 Kansai area: Osaka, Kyoto, Hyogo, Nara, Shiga and Wakayama prefectures

Search Index

Group Overview
2~11,
38~39,
118,
119

Business Performance
12~15,
18,
83~86

Forecasts (Group)
19

Forward-looking Statements
The reader is advised that this report contains forward-looking statements regarding the future plans, strategies, and earnings performance of Hankyu Hanshin
Holdings, Inc., which are not statements of historical fact but constitute estimates or projections based on facts known to the Company’s management as of the timeof writing. Actual results may therefore differ substantially from such statements.

Section

1

Key Facts

Contents
Section1

SectionKey Facts

Social Responsibility andManagement Organisation

2

64 Message from the President
65 Corporate Governance
68 Internal Control System
69 Compliance
70 Measures to Prevent Takeovers
70 Risk Management
71 Safety Management System
78 Corporate Social Responsibility
80 Directors and Audit & Supervisory Board Members

2

Business Policies and Strategies

SectionSection3

Core Businesses:
Overview and Outlook

16 To Our Stakeholders
18 Interview with the President
26 Medium-Term Management Plan
30 Special Feature: Our Investment for Growth
SectionSectionBusiness Policies andStrategies

02 Our Business
04 Our Strength
08 Business Portfolio
12 Performance Highlights (Consolidated)
Section4

5

Financial Section and Corporate Data

3

83 Consolidated Six-Year Summary
84 Consolidated Financial Review
87 Business Risks
90 Consolidated Balance Sheets92	Consolidated Statements of Income/Consolidated Statements of Comprehensive Income
93 Consolidated Statements of Changes in Net Assets
94 Consolidated Statements of Cash Flows
95 Notes to the Consolidated Financial Statements
118 Major Group Companies
119 Investor Information

Core Businesses:
Overview and Outlook

4

Social Responsibility andManagement Organisation

38 Core Business Highlights
40 Urban Transportation
44 Real Estate
50 Entertainment and Communications
53 Travel and International Transportation
56 Hotels
58 Retailing
60	Forecasts for Fiscal 2014 Onward

SectionSection5

Forecasts(Each Core Businesses)
60~63

Medium-Term Management Planand Growth Strategies
20~23,
26~29,
40~59

Progress inLarge-Scale Projects
24~25,
30~37

Safety Measuresin the Railway Business

Financial Section andCorporate Data

(Numerical Targets for Each Core Business in the New Segment
Classification)

Financial Policy andShareholder Returns

71~77,
88

20~21,
25

About the compilation of this Annual Report and the auditing company used

Definition

The financial section of this Annual Report includes a digest of information including consolidated
financial statements in the Company’s Securities Report for the 175th period, audited by KPMG
AZSA LLC presented in somewhat changed format. We have presented this information in sucha way as to ensure that there is no discrepancy with the data presented in the Annual Securities
Report. However, the Annual Report itself has not been audited by KPMG AZSA LLC.

“Fiscal 2013” refers to the fiscal year ended 31st March
2013. Other fiscal years are referred to in a corresponding manner in this Annual Report. Figures are basicallyrounded off. Sums expressed in units of ¥100 million
are rounded to the nearest ¥100 million.

HankyuHankyu Hanshin
Hanshin Holdings
Holdings

AnnualAnnual Report
Report 2013
2013

1

S ec t i o n

1

Key Facts

Our BusinessBusiness
Summary

Operating wide-ranging businesses
centred in the Kansai area

Urban
Transportation

Real Estate

Forming a mega network in the Kansai area

Develop and manage high-quality housing,that provides various urban transportationcommercial facilities and offices in the areas

services linking Group railways, buses and taxis

served by our lines

Entertainment andCommunications
Expand businesses of high brand value suchas Hanshin Tigers professional baseball team,Hanshin Koshien Stadium and Takarazuka Revue

TravelOffer a wide range of travel agency services
through our mainstay Trapics brandInternational
Transportation
Offer high-quality global logistics services
mainly through Hankyu Hanshin Express

HotelsOperate Japan’s major hotel groups underthe Hankyu-Hanshin-Daiichi Hotel Group, andmanage The Ritz-Carlton, Osaka< Revising Core Business Structure >Certain core businesses have changed from fiscal 2014 onward. The business segments listed above are the
new classifications. For more details, please see pages 22 and 60.

2 Hankyu Hanshin Holdings

Annual Report 2013

Section

1

Key Facts

Fiscal 2013
Core Business
Operating Results

The Urban Transportation and Real EstateBusinesses are generating stable cash flows

In the Urban Transportation Business, railways account for most revenues and earnings, and the same is true of leasing
operations in the Real Estate Business. This ensures the generation of stable cash flow in both businesses. The Group’s
railway operations connect the central cities of the Kansai economic zone—Osaka, Kobe, and Kyoto—and they display
high transportation efficiency. The most distinctive feature of our real estate leasing operations is the large number ofproperties we own in prime locations near our railway terminuses, principally in Umeda (Osaka) area.

Revenues from Operations

Operating Income
Approx.
Approx.

Above Above

80%80%

50%50%

682.4

¥

87.9

¥

billionbillion■ Urban Transportation■ Real Estate■ Entertainment and Communications■ T ravel and

26.8%
27.2%
15.0%

38.2%
40.7%
13.8%

9.8%

4.9%

■ Hotels■ Retailing■ Other

8.9%
7.4%
5.0%

0.6%
1.5%
0.3%

International Transportation*Figures for % of revenues from operations are calculated based on the simple aggregate amount (including intersegment transactions) of each segment.

Operating Income by Core Business(¥ billion)
100

80

3.4
10.7

11.1

60

33.7

30.9

32.3

31.0

40

■ Urban Transportation■ Real Estate■ Entertainment andCommunications■ Other

20

0
2009

2010

-1.0

4.2
10.1

3.0
10.0

37.0

29.1

24.0

32.3

29.4
2011

6.4
12.6

2012

Hankyu Hanshin Holdings

34.7
2013

(FY)

Annual Report 20133

Our Strength
The Potentialof the Kansai
KansaiArea

The Group’s railway netwo
communities constituting
served by our stations have

Our Railway
Network

N

Hyogo

Tokyo

Kyoto

Shiga

Kyoto City
Kobe City Osaka
Osaka City
Nara

Kansai

Hyogo
Wakayama

Tokyo

Kyoto

Shiga

Kyoto City

Kobe City Osaka
Osaka City

Hankyu Railway Network
143.6km
Nara
Kobe Line 46.9km (Kobe Line, Imazu Line, Itami Line, Koyo Line)
Takarazuka
Line 28.5km (Takarazuka Line, Mino-o Line)
Wakayama
Kyoto Line 65.4km (Kyoto Line, Senri Line, Arashiyama Line)
Kobe Rapid Transit Railway Line 2.8km

The Kansai area, the main baseof our operations, accounts forapproximately 16% of Japan’sGDP, making it the second-largest
economic area in Japan.

Hanshin Electric Railway Network 48.9km
Hanshin Line 43.9km (Hanshin Main Line, Hanshin Namba Line, Mukogawa Line)
Kobe Rapid Transit Railway Line 5.0km
Tanigami

Area:

About

Hokushin Kyuko
Railway Line

7

Shuk

Hankyu Kobe Line% of Japan
Kobe Rapid Transit Railway Line
Shin-Kobe

Population:

16

About

Hanshin

Sannomiya*
Minatogawa% of Japan

Shinkaichi
NishidaiMotomachi

Improvement works at
Hanshin Sannomiya Station(Completed in March 2013)

GRP*:

ay
Overall, Kansai
par
Railw
ji is onctrice
To HimelEoSany
with the Netherlands* Gross Regional
Product

Sources: IMF/World Economic and Financial
Surveys 2010
Cabinet Office, Government of Japan,“Prefectural Accounts FY2010”

16,00014,499

5,930

5,495

4,000

3,312

2,000
1,034 1,015 877 781
731 7100Indonesia (18th)

Turkey (17th)

Netherlands (16th)

Kansai Area

Annual Report 2013

Korea (15th)

Mexico (14th)

Germany (4th)Japan (3rd)

China (2nd)

United States (1st )4 Hankyu Hanshin Holdings*Sannomiya Station changed its name to
Kobe Sannomiya Station in December 2013.

Osaka(16th in the world)($ billion)

6,000

Line

Strength

Ability to crea

1 in areas served by ou

The Group creates new demand in the areas served by our lines by fo
housing and commercial facilities right from the start. In addition,
cultural institutions by building amusement facilities as well as
these areas. Through these activities, we are working with local peo
The Group has earned an excellent reputation thanks to our longof the communities served by our lines, and the areas along thehigher popularity levels than other parts of the Kansai area. As seen fr
value in areas served by Group stations is one of the Group’s strength

Arashiyama

Kyoto Pref.

Kawaramachi
KatsuraKyoto

Hankyu Arashiyama Lineork, which begins in Umeda (Osaka), links Kobe, Kyoto and otherthe economic hubs of the Kansai area and their suburbs. Areas
relatively high population density in the Kansai area.

Section1

Key Facts“Nishiyama-tennozan Station”
Myokenguchi(Scheduled to open on 21st December 2013)

Nissei-chuo

Hankyu Kyoto Line
Nosé Electric
Railway Line

Osaka Pref.

Hyogo Pref.
Hankyu Mino-o Line

Mino-oKawanishi-noseguchi

Hankyu Senri Line
Kita-senri

Hankyu Koyo
Line

n
se
an

Itami

Hankyu Itami Line
Hankyu Takarazuka Line

KoyoenkugawaKita-Osaka Kyuko
Railway Linenk

Hankyu Imazu Line

Ishibashi Senrichuo

Sh
i

Osaka
International
AirportTakarazuka

Tsukaguchi
Nishinomiya-kitaguchi

Esaka

Awaji

Shin-Osaka Hankyu Building

Shin-Osaka

Imazu

Nara Pref.

(Construction completed in July 2012)

Imazu
Mukogawa

Daimotsu

Amagasaki

Main Line

Juso

Tenjimbashisujirokuchome

Umeda

Rebuilding of Umeda Hankyu Building(Grand opening held in November 2012)

GRAND FRONT OSAKA (Opened in April 2013)
Umeda 1-1 Project

Mukogawadanchi-mae
Subway Sakaisuji Line

Hanshin Mukogawa Line

Hanshin Namba Line

Osaka-Namba

Kintetsu Nara Lineate value

ur stations

ocusing on developing high-class
we establish and develop local
attracting schools and colleges toople to develop local communities.
-term efforts to enhance the value
Group’s railway lines now enjoy
rom the above activities, creatinghs.

Top ranked area in survey ofpreferred residential areas

To Kintetsu-Nara

Bay

Tenga
chaya
Source: Survey by Sumitomo Realty& Development
and six other major real estate firms (27th September 2012)

Survey of Preferred Residential Areas (Kansai Area)
Rank

Place

AshiyaAreas along
Hankyu andHanshin lines
topped the rankings overall(exception:16thranked Tennoji)

Location

Ashiya, Hyogo

Rank

Place

Location

MikageKobe, Hyogo (Higashi-nada-ku)

Nishinomiya Nishinomiya, Hyogo

Downtown Osaka Osaka

Shukugawa Nishinomiya, Hyogo

Downtown Kobe Kobe

Kobe

Kobe, Hyogo (Chuo-ku)

Takatsuki

Takatsuki, OsakaOkamoto

Kobe, Hyogo (Higashi-nada-ku)

Namba

Osaka (Chuo-ku)

Umeda

Osaka (Kita-ku)

Tennoji

Osaka (Tennoji-ku)

Kyoto

Kyoto

Ibaraki

Ibaraki, Osaka

Senri-chuo Toyonaka, Osaka

Takarazuka Takarazuka, Hyogo

Sannomiya Kobe, Hyogo (Chuo-ku)

Toyonaka

Toyonaka, Osaka

Minoh

Minoh, Osaka

Osaka

Osaka (Kita-ku)

Hankyu Hanshin Holdings

Annual Report 2013

5

Strength

Leveraging our strong presence

2 in Umeda, Kansai’s economic centre

The Umeda area of Osaka, the Group’s most important base, is one of the most famous shopping and entertainment districtsof Japan, served by the Umeda stations of the Hankyu and Hanshin lines and the Osaka Municipal Subway as well as JR Osaka
Station. It is Kansai’s economic centre. In the Umeda area, the Group operates railway terminuses serving both the Hankyu andHanshin networks, and also runs key commercial facility, office building, hotel, theatre and other businesses.



P.31 Umeda Area in Detail

P.49 Major Rental Properties



P.30 Special Feature: Our Investment for Growth

Aerial Photo of the Umeda Area
The Group owns and manages commercial facilities, multipurpose buildings and numerous other properties concentrated in the Group’s terminal (consisting of Hankyu Umeda and Hanshin Umeda stations) located in the Umeda area,
western Japan’s largest shopping and entertainment area.

20
14
15
1
18

2

17

5

16

19 Hankyu Umeda Sta.
6

JR OSAKA Sta.
Hanshin Umeda Sta.

12

13

7
8

9

3

11
10

4
Umeda 1-1 Project

1 HERBIS OSAKA

8 HEP NAVIO

15 Hankyu Corporation Head Office

2 HERBIS ENT

9 HEP FIVE

16 Kitano Hankyu Bldg.

3 Dai Hanshin Bldg./Hanshin Umeda Sta.

10 Higashi Hankyu Bldg.

17 Kita Hankyu Bldg.

4 Shin Hankyu Bldg.

11 Umeda Centre Bldg.

18 Nishi Hankyu Bldg.

5 Umeda Hankyu Bldg.

12 NU chayamachi

19 Hotel new Hankyu

6 Hankyu Grand Bldg.

13 NU chayamachi Plus

20 GRAND FRONT OSAKA

7 Hankyu Umeda Sta./Hankyu Sanban Gai Shopping Centre/Hankyu Terminal Bldg.

14 Applause Tower■ Owned solely by the Group ■ Joint ownership ■ Owned by Hankyu REIT Inc.

6 Hankyu Hanshin Holdings

Annual Report 2013*HEP FIVE is jointly owned with Hankyu REIT Inc.

Our Strength

Section1

Key Facts

Strength

Ownership of original content

3 with strong brand value

The Group delivers inspiration and dreams through the Hanshin Tigers professional baseball team/Hanshin Koshien Stadium
and the Takarazuka Revue, both of which are unique assets that are popular and enthusiastically supported not only in
Kansai but throughout Japan. These two powerful attractions are assets that none of our rivals have. They help increase
passenger numbers in the areas served by our stations when there is a show or a game on. They also contribute greatly toincreased brand recognition for the Group.

Hanshin Tigers/
Hanshin Koshien Stadium©Hanshin Tigers

Takarazuka Revue©Takarazuka Revue Company

Hankyu Hanshin Holdings

Annual Report 20137

Business Portfolio

Developing a Balanced Business Portfolio
Capable of Sustainable Growth

Urban Transportation
P.40

Core Companies:
Hankyu Corporation, Hanshin Electric Railway

Total length oflines operated

Hankyu Railway
Hanshin Electric Railway

Annual numberof passengers
carried(FY2013)143.6 km48.9 km

615 million
Hanshin Electric Railway 221 million

Hankyu Railway

8 Hankyu Hanshin Holdings

Annual Report 2013

Focusing on its Railway Business, the Group is working to enhance the value of the areas

Section1

served by its stations by expanding organic links primarily between the Real Estate Business

Key Facts

and the Entertainment and Communications Business. In addition, we will realise a stableand balanced business portfolio by building on the unique strengths of each business.
Looking ahead, the comprehensive strength of the entire Group will be redoubled
in such areas as bolstering competitiveness in each core business, aiming to be a No.1 andonly one company, and generating Groupwide synergies that transcend barriers between
businesses.

Real Estate
P.44

Core Companies:
Hankyu Corporation, Hanshin Electric Railway

Leasablearea*1

Approx.

1.7 million m

2(Of this total, approximately 800,000m areconcentrated in the Umeda area)2

Number of
condominiums
sold *2
for FY2013

1,548*1 As of the end of March 2013
*2 Number of deliveries
Hankyu Hanshin Holdings

Annual Report 20139

Entertainment andCommunications
P.50

Core Companies: Hankyu Corporation, Hanshin Electric Railway

Total
attendances(FY2013*)

Approx.

Hanshin Tigers(Home games)

2.7 million

Takarazuka Revue(Including nationwide
stage productions)

Approx.

2.5 million*Total attendance at Hanshin Tigers home games during the 2012 season

International
Transportation
P.53

Core Company: Hankyu Hanshin Express

Sales*(FY2013)74.2 billion¥

Japan outbound export handling volume:
4th in the industry
Japan inbound import handling volume:
4th in the industry*Includes the equivalent amount of initial export freight charges

10 Hankyu Hanshin Holdings

Annual Report 2013

©Hanshin Tigers

Business Portfolio

TravelSection1

Core Company: Hankyu Travel International

Key Facts

P.53

Total travel
billings(FY2013)387.5 billion¥

Total travel billings: No.2 in the industry
Overseas travel billings: No.3 in the industry

HotelsCore Company: Hankyu Hanshin Hotels

P.56

Group hotels*

Number ofrooms*

50
10,445* As of 1st April 2013
Hankyu Hanshin Holdings

Annual Report 201311

Performance Highlights (Consolidated)
Key Financial Indicators(¥ million)($ thousand)2008

2 0 09

2010

2011

2012

2013

201 3

¥752,300
90,724145,200¥683,715
77,823
135,300¥653,287
70,126133,200¥638,770
64,743
127,100¥649,703
73,809133,500¥682,439
87,921
145,100$7,259,989
935,330
1,543,617

Income before income taxes andminority interests

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

661,617

Net income

627—
134,307
51,577

20,550—109,688
54,798

10,793
12,541
132,386
60,41818,06814,72868,431
59,66939,252
44,99255,26756,96839,70254,081
59,51254,540422,362575,330
633,106
580,213¥ 74,902(100,058)(25,155)
36,718¥108,597(115,047)(6,449)7,014¥146,955(132,737)
14,217(24,200)¥103,252(62,516)
40,735(39,544)¥124,525(44,295)
80,230(78,978)¥127,655(58,923)
68,732(69,195)$1,358,032(626,840)
731,191(736,117)¥2,348,476
476,639
1,271,100¥2,307,332
473,878
1,275,620¥2,337,331
480,633
1,282,583¥2,314,669
486,947
1,251,665¥2,274,380
524,801
1,183,647¥2,281,007
573,154
1,126,633$24,266,032
6,097,383
11,985,457¥  0.500.41
369.255.00¥ 16.2816.18
366.965.00¥  8.55
8.51
371.705.00¥ 14.32
14.27
377.175.00¥ 31.1331.13
407.01
5.00¥ 31.4831.47
443.63
5.00

$0.33
0.33
4.72
0.05

12.1
3.2
0.1
8.8
19.9
2.7

11.4
2.5
4.4
9.4
20.1
2.8

10.7
2.2
2.3
9.6
20.1
2.7

10.1
2.0
3.8
9.8
20.6
2.6

11.4
2.8
7.9
8.9
22.6
2.3

12.9
3.3
7.4
7.8
24.5
2.0

—
—
—
—
—
—

Stock price at the end of fiscal year
(yen and U.S. dollars)¥  431¥  447¥  433¥  384¥  361¥  569$  6.05

Market capitalisation (¥ billion, $ million)
PER (times)

548.0
862.0
1.2

568.3
27.5
1.2

550.5
50.6
1.2

488.2
26.8
1.0

459.0
11.6
0.9

723.4
18.1
1.3

76,957——618,373
180,906

618,585
182,997

605,963
193,620603,233
205,202608,632
218,560

615,324
221,133

—
—

3.08

5.88

8.90

11.22

7.29

11.50

—

FY

Result of Operations:
Revenues from operations
Operating income
EBITDA

Comprehensive income
Capital expenditure
Depreciation and amortisation
Cash Flows:
Cash flows from operating activities
Cash flows from investing activities
Free cash flow
Cash flows from financing activities
Financial Position:
Total assets
Total net assets
Interest-bearing debt
Per Share Data (yen and U.S. dollars):
Basic
Net income
DilutedNet assets
Dividend
Ratios:Operating income margin (%)
ROA (%)ROE (%)
Interest-bearing debt/EBITDA (times)
Equity ratio (%)
Debt/equity (D/E) ratio (times)
Stock Price Index:

PBR (times)
Business Data:
Hankyu Railway (thousand)Hanshin Electric Railway (thousand)Average vacancy rates of rental officebuildings (Umeda area, Osaka; %)Notes:
The U.S. dollar amounts have been translated, for convenience only, at ¥94 = $1, the prevailing exchange rate on the Tokyo Foreign Exchange Market at 31st March 2013.
EBITDA = operating income + depreciation expenses + amortisation of goodwill attendant on the management integration of Hankyu and Hanshin. EBITDA figures are rounded to the nearest ¥100 million.
Free cash flow = cash flows from operating activities + cash flows from investing activities
ROA = ordinary income/total assets (average of period-start and period-end totals)
ROE = net income/equity (average of period-start and period-end totals)
D/E ratio = interest-bearing debt/equity
Average vacancy rate figures are overall rates for the Umeda downtown area at the end of March for major rental office buildings (including properties not owned by the Group) with a total floor area ofat least 3,300m2. Based on Latest trends in the office-building market in Osaka, Miki Shoji.
Annual number of passengers carried

12 Hankyu Hanshin Holdings

Annual Report 2013

Section

1

Key Facts

Revenues from operations:¥682.4 billion(up ¥32.7 billion or 5.0% from the previous fiscal year)

Operating income: Factor analysis (YoY change)(¥ million)
FY201273,809FY2013+7,861
Real Estate+2,442Entertainment and Communications+2,369Urban Transportation
Travel and International Transportation +1,269
Hotels +794
Retailing +54
Other -454
Adjustments -226
87,921

Operating income: ¥87.9 billion(up ¥14.1 billion or 19.1% from the previous fiscal year)
Revenues from operations increased by 5.0%, or ¥32,735
million, to ¥682,439 million, due to a year-on-year increasein condominium unit sales in the Real Estate Business andthe subsiding impact of the Great East Japan Earthquake
primarily on the Travel and Hotels businesses. In line withthis growth, operating income increased 19.1%, or ¥14,111
million, to ¥87,921 million.

Net income: ¥39.7 billion (up ¥0.5 billion or 1.1% from the previous fiscal year)
Net non-operating expenses deteriorated 35.3%, or ¥4,590 million, year on year to ¥13,006 million mainly due to a decline in
non-operating income accompanying a rise in equity in incomeof affiliates from an increase in our stake in the equity affiliate
H2O Retailing Corporation in the previous fiscal year.
Net extraordinary loss improved 72.7%, or ¥9,251 million, year
on year to ¥12,721 million partly due to recognition of impairment
losses on land used for major development projects during theprevious fiscal year. This result occurred despite posting a provision

 et income:N
Factor analysis(YoY change)

for loss on removal of property and equipment related to therebuilding of Dai Hanshin Building and Shin Hankyu Building.
At the same time, income tax payments surged 559.6%,
or ¥18,015 million, year on year to ¥21,234 million due to anincrease in income taxes-deferred accompanying the cessationof reforms to the tax system in Japan that had brought down
corporate tax rates until the previous fiscal year.
The above factors and the increase in operating income pushed
net income up by ¥450 million year on year to ¥39,702 million.

Increase in revenues from operations
Decrease in extraordinary loss (chiefly decrease in loss on impairment of fixed assets)
Decrease in non-operating expenses (primarily a decrease in interest expenses)
Increase in operating expenses and cost of sales of transportation
Increase in selling, general and administrative expenses
Decrease in non-operating income (primarily decrease in equity in income of affiliates)
Decrease in extraordinary income (primarily due to a decrease in gain on contributions for construction)
Increase in income taxes (including income taxes-deferred)
Increase in minority interests in income+¥32.7 billion+¥14.1 billion+¥2.3 billion-¥17.5 billion-¥1.1 billion-¥6.9 billion-¥4.9 billion-¥18.0 billion-¥0.3 billion

Interest-bearing debt: ¥1,126.6 billion (down 4.8% or ¥57.0 billion from the previous fiscal year)
The balance of interest-bearing debt decreased by 4.8%, or¥57,014 million, year on year to ¥1,126,633 million due to net

cash from operating activities surpassing capital investment outlays for rebuilding of Umeda Hankyu Building and other works.

Hankyu Hanshin Holdings

Annual Report 201313

Key Financial Indicators (Graphs)
Revenues from Operations(¥ billion)
800

Operating Income/Operating Income Margin(¥ billion)

(%)
20

100

752.3
683.7

600

653.3 638.8 649.7

90.7

682.4

80

60

87.9
77.8

12.1

11.4

400

70.1
10.7

73.8
64.7
10.1

11.4

15

12.9
10

40
200

5

20

0

0

0
2008

2009

2010

2011

2012

2013 (FY)2008

Net Income

2010

2011

39.3

39.7

2013

(FY)

(¥ billion)(Times)

1,500

4

1,200

30

900

20.6

1,271.1 1,275.6 1,282.6 1,251.7

2.7

2.8

1,183.6

18.1

2.6
2.3
2.0

10.8

10

1,126.6
3

2.7

600

0

2012

Interest-Bearing Debt and D/E Ratio(¥ billion)
40

20

2009

2

300

0.6
2008

1

0
2009

2010

2011

2012

2013 (FY)

2008

2009

2010

2011

2012

2013

(FY)

* D/E ratio = interest-bearing debt/equity

Total Assets/ROA(¥ billion)
2,500

Equity/ROE(%)

2,348.5 2,307.3 2,337.3 2,314.7 2,274.4 2,281.0

2,000

1,500

5

4

3.3

3.2
2.5

1,000

2.0

2

0

0
2010

2011

2012

2013

(FY)

* ROA = ordinary income/total assets (average of period-start and period-end totals)

14 Hankyu Hanshin Holdings

Annual Report 2013

524.8
7.9

7.4

8

6
300

1

2009

476.6 473.9 480.6 486.9

10

400

500

2008

500

(%)

573.2

3

2.8
2.2

(¥ billion)
600

4.4

200
100

4

2.3

3.8
2

0.1

0

0
2008

2009

2010

2011

2012

2013

(FY)

* ROE = net income/equity (average of period-start and period-end totals)

Performance Highlights (Consolidated)

Section1

Annual Number of Passengers Carried/Hankyu Railway

Key Facts

Operating and Business Environmental Data
Annual Number of Passengers Carried/Hanshin Electric Railway(Thousand)(Thousand)

800,000

300,000

700,000

Total

Opening of Hanshin Namba Line
(20th March 2009)

600,000
200,000

500,000
400,000

Changes in method of recognition for Kobe Rapid
Transit Railway Line (1st October 2010)

Commuter pass

300,000
200,000

Total

100,000

Other tickets

Commuter pass
Other tickets

100,000
0

0
03

04

05

06

07

08

09

10

11

12

13

Average Vacancy Rates of Rental Office Buildings (Tokyo/Osaka Business Area)
(%)
14

03

(FY)

04

05

Source: Miki Shoji, Latest trends in theoffice-building market

Significant increase in vacancy rates in the Umeda area andOsaka’s business areas overall following the opening of
GRAND FRONT OSAKA

06

07

08

09

10

11

12

13

(FY)

* S um of tier 1 and tier 2 operators for bothHankyu and Hanshin* A mong tier 2 operators, we have modified
our method of recognising Kobe Rapid Transit
Railway Line’s passenger volumes followingchanges to its management organisation,effective October 2010 (for both Hankyu andHanshin-operated stretches of the line)

12
10
8
6
4
2

Osaka businessareas (all)Source: Compiled by the Group based on data from Toyo Keizai, Inc.’s Local Economy Directory
and the Ministry of Internal Affairs and Communications Basic Resident Register

Umeda area
Tokyo business areas (all)

0
2007

2008

2009

2010

(As of 31st March of each year)

2011

2012

2013

* Areas served by Hankyu and Hanshin lines:
Below are lists of areas with Hankyu Corporation and Hanshin Electric Railway stations (includingtier 2 operators).
Osaka Prefecture: Osaka City (Fukushima, Konohana, Nishi, Naniwa, Nishi-Yodogawa, HigashiYodogawa, Yodogawa, Kita and Chuo, out of a total of 24 wards); and Toyonaka, Ikeda, Suita,
Takatsuki, Ibaraki, Minoh, Settsu cities and Shimamoto town
Hyogo Prefecture: Kobe City (Higashi-Nada, Nada, Hyogo, Nagata and Chuo, out of a total of 9
wards); and Amagasaki, Nishinomiya, Ashiya, Itami, Takarazuka and Kawanishi cities
Kyoto Prefecture: Kyoto City (Nakagyo, Shimogyo, Ukyo, Nishikyo, out of a total of 11 wards); andMuko and Nagaokakyo cities and Oyamazaki town

Population Trends in Areas Served by Hankyu and Hanshin Lines (1991=100)
105
104
103
102

The Great Hanshin (Kobe) Earthquake

Kansai area

101
100
99
98

Areas served by Hankyu and Hanshin lines

97
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (CY)

Hankyu Hanshin Holdings

Annual Report 201315

S ec t i o n2Business Policies and Strategies

To Our Stakeholders

Kazuo Sumi
President and Representative Director

16 Hankyu Hanshin Holdings

Annual Report 2013

Section

2

Business Policies andStrategies

Completing a series of major
projects, we aim to reach ourmanagement goals ahead ofschedule and are poised toembark on a new growth stage.
Under the Hankyu Hanshin Holdings Group’s Medium-Term Management Plan, we
have been focusing on strengthening the operating fundamentals of the Group for
future growth by building enterprise value through major projects and using the
cash flow generated as a result to reduce interest-bearing debt.
Among these achievements, we completed the rebuilding of the Umeda Hankyu
Building in November 2012 after seven and half years of work and celebrated theopening of GRAND FRONT OSAKA in April 2013. These projects have significantly
transformed the Umeda area.
At the same time, these steady investments in growth are paying off in terms of
performance. In fiscal 2013, ordinary income and net income hit record highs, andwe made solid progress concerning the outstanding issue of improving our financial
standing.
From the standpoint of achieving the management goal of bringing down theinterest-bearing debt/EBITDA ratio to around seven times, the time is rapidly approaching to formulate strategies for the next growth stage. Looking ahead, the Group will
come together in a concerted effort to leap forward to this new growth stage.
August 2013

Kazuo Sumi
President and Representative Director

Hankyu Hanshin Holdings

Annual Report 201317

Interview with the President

Fiscal 2013 Performance
The steady performance of each Group business has led to a substantial increase in operating
income, while ordinary income and net income reached record highs. In addition, we are steadilybuilding a base to reach the next growth stage underpinned by the progress being made towards
improving our financial standing, which has been one of our outstanding issues.
An extraordinary loss of ¥12.7 billion was recorded in the fiscal 2013 account settlement. Nevertheless, this amount provides
for future losses due mainly to the posting of estimated demobilization costs on fixed assets (provision for loss on removal ofproperty and equipment: approximately ¥4.4 billion) generated
by the Umeda 1-1 Project (Dai Hanshin Building and Shin Hankyu
Building rebuilding projects) as well as the recording of a loss
from the transfer of the Hotel New Hankyu Kochi (restructuringcosts: approximately ¥2.2 billion), the final stage of our restructuring of the Hotels Business.
Turning to the improvement our financial standing,the investment in growth undertaken during the current
Medium-Term Management Plan has paid off, with EBITDA
steadily increasing ¥11.6 billion year on year to ¥145.1 billion,
and interest-bearing debt shrinking significantly from ¥1,183.6
billion in fiscal 2012 to ¥1,126.6 billion in fiscal 2013 mainly
due to a detailed review of capital investment. As a result, theinterest-bearing debt/EBITDA ratio, the Group’s most important
performance indicator, improved greatly from 8.9 times in fiscal
2012 to 7.8 times in fiscal 2013, enabling the Group to steadilybuild a base to reach the next growth stage.

In fiscal 2013, conditions were uncertain mainly due to power
supply problems following the Great East Japan Earthquake andconcerns over a global economic recession amid prolonged
European debt issues. Nevertheless, signs of an economic recovery were seen in some sectors primarily on the back of an ongoingweakening of yen rates until the end of the fiscal year and higher
stock prices. Under these circumstances, the Real Estate Businessrecorded a significant year-on-year jump in condominium unit
sales and a steady rise in occupancy rates for the Umeda Hankyu
Building Office Tower. In the railway business, the Hankyu andHanshin rail lines both performed steadily*1 thanks to the grandopening of the Umeda Flagship Store of the Hankyu Department
Store. In addition, we saw a recovery primarily in the Travel andHotels businesses from the negative impact of the Great East
Japan Earthquake during the previous fiscal year. Strong sales
in the Travel Business were recorded for overseas travel mainly
to Europe. In the Entertainment and Communications business,the stage business experienced a year-on-year increase in ticket
sales. As a result of the overall firm performance of each business,revenues from operations increased 5%, or ¥32.7 billion, year
on year to ¥682.4 billion, operating income rose 19.1%, or ¥14.1
billion, to ¥87.9 billion, ordinary income grew 14.6%, or ¥9.5
billion, to ¥74.9 billion, and net income improved 1.1%, or ¥0.45
billion, to ¥39.7 billion. Among these increases, ordinary income
and net income reached record highs, while operating income
and operating income margin (12.9%) were at the highest levelsof any major listed private railway operator group.*2*1 Railway operation revenue   Hankyu +1.1%   Hanshin +1.2%*2 Private railway operators excluding the Japan Railway Group

Major Private Railway Groups Operating Income and Operating Income Margin (Fiscal 2013)(¥ billion)
140
120
100
80
60
40
20

Operating income

12.9

(%)
14

Operating income margin

11.9
9.1

87.9
5.2

52.5

55.7

8.6
5.1
47.5

44.1

7.1

8.3

9.4

12

6.2

5.3
32.3

28.0

10

8.5

8

5.2

6
4

23.3

23.0

22.0

20.8

19.1

17.6

Sotetsu
Holdings

KeikyuCorporation

Nishi-Nippon
Railroad020Hankyu Hanshin
Tokyu
Holdings
Corporation

Tobu
Railway

Kintetsu Odakyu Electric
Corporation
Railway

Source: Account settlements of each company

18 Hankyu Hanshin Holdings

Annual Report 2013

NagoyaRailroad

Keio
Keihan Electric Keisei Electric Nankai Electric
Corporation
Railway
Railway
RailwayPerformance Outlook for Fiscal 2014

In contrast, net income is anticipated to increase 5.8%, or ¥2.3
billion, year on year to ¥42.0 billion. This is primarily attributable
to a decline in extraordinary loss accounted for by demobilization
costs on fixed assets posted by the Umeda 1-1 Project during theprevious fiscal year.
Undertaking measures to mitigate overall financial risk, wewill establish a base for stable net income of over ¥40.0 billion
since almost all unprofitable projects have been eliminated—such as one that posted a significant extraordinary loss during
previous fiscal years.

Regarding performance in fiscal 2014, revenues from operations
is expected to decline 1.8%, or ¥12.4 billion, year on year to¥670.0 billion primarily due to the sale of the bookstore businessto an outside company. This forecast has been made despite
the projected full-year occupancy of Umeda Hankyu Building
Phase II and anticipated increases in tenant occupancy rates for
the Office Tower. Operating income is projected to fall 4.5%, or¥3.9 billion, year on year to ¥84.0 billion chiefly because of theaforementioned drop in revenues and higher electricity rates.*
Ordinary income is forecast to decrease 3.9%, or ¥2.9 billion, to¥72.0 billion in line with an improvement in the Group’s financial
account balance.

()Operating Income

Net Income(¥ billion)
800(¥ billion)
100(¥ billion)
45

700

682.4
649.7

670.0

2

* T he impact of lower income from hikes in electricity rates is forecast to beapproximately ¥1.9 billion (consolidated) primarily in the railway business.
Railway Business: Approx. -¥1.4 billion
Others: Approx. -¥0.5 billion

Revenues from Operations

90

SectionBusiness Policies andStrategies

Although operating income is expected to decrease slightly due largely to hikes in electricity
rates, net income is forecast to rise year on year mainly because of improvements in extraordinary
income.

87.9

42.0

84.0

80
40

73.8
70

39.3

39.7

600
60

500

50
2012

2013

2014 (FY)(Est.)

35
2012

2013

2014 (FY)(Est.)

2012

Hankyu Hanshin Holdings

2013

2014 (FY)(Est.)

Annual Report 201319

Progress of the Medium-Term Management Plan
Making steady progress to reach our management goals ahead of schedule
The concept behind the Medium-Term
Management Plan

Why has the Group set the goal of improving
the interest-bearing debt/EBITDA ratio toaround seven times?

On the occasion of the management integration of Hankyu
and Hanshin, the Group formulated and announced the sixyear Hankyu Hanshin Holdings Group 2007 Medium-Term
Management Plan (fiscal 2008–fiscal 2013), for which we established yearly adjusted estimates and implemented initiatives toachieve the plan’s targets. This plan was intended to clarify theGroup’s vision for improving its enterprise value across the board
in fiscal 2013, during which the Group completed such major
projects as the rebuilding of the Umeda Hankyu Building.
Following the plan’s implementation, however, the operating environment deteriorated in the wake of Lehman Brothers’
collapse. This delayed improvements in the Group’s financial
standing and has unfortunately made it impossible to reach theinitial goal of bringing down the interest-bearing debt/EBITDA
ratio to around seven times during the period of the plan.
Nevertheless, in order to increase value along Group railway
lines and shore up its financial standing—which is indispensable
for maintaining sustainable growth—we decided in May 2012
to extend the Medium-Term Management Plan to fiscal 2016.
This decision was made with the idea that despite initial targets
being behind schedule, we must remain firm to the direction
initially established by the plan. Based on this, we announced ourrenewed commitment to achieving the initial goal of improving
the interest-bearing debt/EBITDA ratio to around seven times
and, in turn, are diligently working to carry forward this plan.

To answer this question, I will once again explain the management indicators that the Group is aiming for.
The Group’s mainstay railway and real estate leasing
businesses generate stable cash flows. Yet, these businesses
are characterized by the need to own large amounts of fixed
assets, which saddles the Group with a commensurate amountof interest-bearing debt. It is extremely difficult to pinpoint in a
general way the ideal interest-bearing debt/ EBITDA ratio within
the private railway sector in Japan.
However, in light of the current outstanding balance of interest-bearing debt exceeding ¥1 trillion, our business must havefirm financial foundations that make it resistant to interest-ratefluctuation and other risks. One very basic benchmark in setting
this ratio is to improve the interest-bearing debt/EBITDA ratio toa minimum level among other major private railway operatingcompanies. As you can see from the figures below, this is how wearrived at a target of around seven times.

Interest-Bearing Debt/EBITDA Ratios for Major Listed Private Railway Operators (Fiscal 2013)(Times)
15

13.7

12
9

7.6
6

4.5

7.7

7.8

8.1

8.1

8.5

8.7

8.9

9.9

11.1

5.7

3
0
Nishi-Nippon
Railroad

Keio
Corporation

Tobu
Railway

Tokyu
Hankyu Hanshin
Corporation
Holdings

NagoyaRailroad

Keihan Electric Odakyu Electric Keisei Electric
Railway
Railway
Railway* Interest-bearing debt/EBITDA for each company has been calculated by Hankyu Hanshin Holdings Group.

20 Hankyu Hanshin Holdings

Annual Report 2013

Sotetsu
Holdings

KeikyuCorporation

Nankai Electric
Railway

Kintetsu
Corporation

Interview with the President

Section2

Current estimates indicate that we will achieve our goals slightly
ahead of schedule and forecasts have been adjusted accordingly.
Operating income for the fiscal 2016 target year is forecast to
surpass the previous plan (¥83.0 billion) by ¥2.0 billion to ¥85.0
billion, reflecting currently robust railway operation revenue andhigher rental income mainly from the Umeda Hankyu Building. In
addition, interest-bearing debt is projected to shrink ¥20.0 billion
compared with the previous plan (¥1 trillion) to ¥980.0 billion
primarily thanks to a detailed review of investment amounts
and periods intended to further upgrade our financial standing,extend operating cash flows and improve the financial accountbalance. As a result, the interest-bearing debt/EBITDA ratio inF or further details of the Medium-Term Management Plan,please see page 26.

Over six years have passed since the management integrationof Hankyu Holdings, Inc. and Hanshin Electric Railway Co., Ltd. in
2006. In light of changes in the environment in which each corebusiness operates, certain core businesses have been restructured from fiscal 2014 onward.
F or further details of the revising of certain core businesses,
please see page 22.

Consolidated Performance and Key Performance Indicators during the Medium-Term Management Plan Period(¥ billion)

2008
Results*1

2009
Results

2010
Results

2011
Results

2012
Results

2013
Results*4

2014
Estimate

2016
Plan*4

90.7

77.8

70.1

64.7

73.8

87.9
[78.0]

84.0

85.0[83.0]

145.2<143.2>*2

135.3

133.2

127.1

133.5

145.1
[137.0]

142.0

143.0
[142.0]Effects ofintegration*3

2.2

4.6

7.1

7.9

8.8

9.7
[9.7]

—

—

Interest-bearing
debt/EBITDA

8.8 times

9.4 times

9.6 times

9.8 times

8.9 times

7.8 times[8.5 times]

7.7 times

6.8 times[7.0 times]

Interest-bearing
debt

1,271.1

1,275.6

1,282.6

1,251.7

1,183.6

1,126.6[1,160.0]

1,100.0

980.0[1,000.0]

Debt/equity ratio

2.7 times

2.8 times

2.7 times

2.6 times

2.3 times

2.0 times[2.2 times]

1.9 times

1.5 times[1.6 times]

0.1%

4.4%

2.3%

3.8%

7.9%

7.4%
[6.0%]

7.5%

7.2%[6.5%](FY)

Operating income
EBITDA

ROE

Business Policies andStrategies

Estimates adjusted from the Medium-Term
Management Plan: fiscal 2016 forecast

fiscal 2016 is expected to exceed the previous plan’s target of
7.0 times to 6.8 times. We are steadily taking steps to reach thesemanagement goals as early as possible.

*1 The department store business (The Hanshin Department Store, Ltd. (currently Hankyu Hanshin Department Stores, Inc.) and its four subsidiaries (“Hanshin Department Store
Group”)) was treated as a consolidated subsidiary up to the first half of fiscal 2008.
*2 Figures in < > exclude those of the department store business (the former Hanshin Department Store Group)*3 Calculations based on EBITDA. As some time has passed since the management integration between the former Hankyu Holdings Group and Hanshin Electric Railway Group,
the integration boost effect is factored in only up to fiscal 2013.
*4 Figures in [ ] are those announced in May 2012 for the previous plan.

Hankyu Hanshin Holdings

Annual Report 2013

21

Revising of Certain Core Businesses
Until fiscal 2013, the Group was comprised six core businesses: “Urban Transportation,” “Real Estate,” “Entertainment
and Communications,” “Travel and International Transportation,” “Hotels” and “Retailing.” The businesses are operated
by four core companies: Hankyu Corporation, Hanshin Electric Railway Co., Ltd., Hankyu Hanshin Express Holdings
Corporation and Hankyu Hanshin Hotels Co., Ltd., under the leadership of the Company, which manages the Group.
Over six years have passed since the management integration of Hankyu Holdings, Inc. and Hanshin Electric
Railway Co., Ltd. in 2006. In light of changes in the environment in which each core business operates, certain
core businesses have been restructured from fiscal 2014 onward. This restructuring is intended to further improve
growth in all six core businesses and enhance enterprise value throughout the Group. Details are as follows.
 egarding Travel and International Transportation, we established the intermediate holding company, Hankyu Hanshin Express
R
Holdings Corporation, to smoothly integrate the travel and international transportation businesses of both the Hankyu andHanshin groups. Having achieved this goal, however, we abolished this system and positioned Hankyu Travel International
Co., Ltd. and Hankyu Hanshin Express Co., Ltd. as new core companies to formulate further growth strategies. In addition, we
have separated the Travel Business and International Transportation Business into independent core businesses to strengthen
competitiveness and increase earnings.
T he core Retailing Business segment* has been eliminated, and its operations have been transferred to the Urban Transportation
Business. Through this integration, we will continue building on current achievements (which include revitalising and improving
the attractiveness of railways by retaining consumption along rail lines within the Group and operating a variety of stores). In
addition, this restructuring will enhance the competitiveness and attractiveness of station interiors and surrounding areas in linewith the progressive development of the Umeda area.
 egarding Hankyu Corporation’s advertising operations* (which forms part of the Entertainment and Communications
R
Business), we will promote the more effective use and management of transportation advertising based on the integrated
operations of the Urban Transportation Business.
* A portion of the Retailing Business segment and Hankyu Corporation’s advertising operations have been transferred to the Real Estate Business.

[Until 31st March 2013]

Six core businesses managed by four core companies

Hankyu Hanshin HoldingsU rbanTransportation

Real EstateE ntertainment
andCommunications

Retailing

Hankyu CorporationT ravel andInternational
Transportation
Hankyu Hanshin
Express Holdings

Hanshin Electric Railway

Hotels

Hankyu Hanshin
HotelsHankyu Travel International
Hankyu Hanshin Express[From 1st April 2013 onward]

Six core businesses managed by five core companies

Hankyu Hanshin Holdings
UrbanTransportation

Real EstateE ntertainment
andCommunications

Hankyu Corporation
Hanshin Electric Railway

TravelHankyu Travel
InternationalI nternational
Transportation
Hankyu Hanshin
Express

Hotels

Hankyu Hanshin
HotelsFor further details of business transfers and forecasts under the new classifications, please see page 60.

22 Hankyu Hanshin Holdings

Annual Report 2013

Interview with the President

The Group’s direction and medium- tolong-term management strategies

As mentioned previously, the current Medium-Term Management
Plan (until fiscal 2016) has established a vision for the Group
that we are steadily progressing toward in an effort to achieve
the management goal of improving interesting-bearing debt/
EBITDA ratio at around seven times by fiscal 2016. Fiscal 2014
has therefore been positioned as a year for making a vigorous
push to realise this management goal and marks the beginningof an investigation into the formulation of a new medium-term
management plan set to be implemented in fiscal 2017.
To date, a pillar of the Group’s management strategy has
been: “build good rail lines, build good communities.” Since ourfoundation, we have been operating real estate and leisureoriented businesses along our railway lines. Having received highratings for increases in value along our railway lines as a result of
these synergies, the population living along these lines is steadily
growing (for more details see page 41). Accordingly, the Group is

working to maintain continuous growth by first improving value
along its railway line—the Group’s most important operating
fundamental—and then by enhancing the attractiveness of the
Umeda area, a vital initiative for this growth-driving area that I will
discuss later.
In light of Japan’s lower birth-rate and aging population,
however, we are fully aware that the number of people living
along our rail lines is likely to decrease and the Kansai economy
is expected to contract over the medium- to long-term. Given
these severe operating forecasts, we will work to maintain steady
growth well into the future by increasing value along our railways as well as expanding businesses in areas beyond thoseserved by our lines. For example, one of the options available
to us is expanding businesses in the Tokyo metropolitan area, alarge market, as well as Asia and other overseas regions that are
growing at a significant rate. Based on this perspective, we will
fully examine new management directions for the next 10 to 20
years. A summary of this investigation will form the basis of thenext medium-term management plan and, in turn, our policy forcontinuous growth in the years ahead.

Hankyu Hanshin Holdings

Annual Report 2013

2

Business Policies andStrategies

In light of forecasts that Japan will enter a period of population decline, we are working to maintainfuture growth by formulating management strategies for the next stage that factor in the following
10 to 20 years.

Section23

Osaka’s Umeda area,
driving the Group’s growth
The Umeda Hankyu Building and GRAND FRONT OSAKA have been completed at last.
The Umeda 1-1 Project has made significant progress, which is intended to further enhance theattractiveness of the Umeda area.
Among the major projects undertaken under the Medium-Term
Management Plan, we finally completed the rebuilding of
the Umeda Hankyu Building, which is anticipated to generatesignificant earnings in the future. Despite spanning seven andhalf years, this project was completed without incident, which
I personally find deeply satisfying. The new Umeda Hankyu
Building benefits from the extra capacity made possible by the
Act on Special Measures concerning Urban Reconstruction, withthe specified floor-area ratio significantly eased from 1,000% to
1,800%. This extra capacity has transformed it into a multipurpose
building that features an approximately 150,000m2 department
store along with an approximately 100,000m 2 office complex.
I am proud to say that the Umeda Hankyu Building is not only
the No. 1 building in Umeda, but in the entire Kansai area. With
the building’s occupancy rate rising to nearly 90% (including

informal tenancy commitments), the subsequent rental income
has begun to contribute to overall earnings. Since the grandopening of the refurbished Hankyu Department Store’s Umeda
Flagship Store, it has been attracting numerous people daily andthereby contributing to increases* in the number of passengers
using our railway lines.
Another major development project, GRAND FRONT OSAKA,
commenced operations in April 2013. In conjunction with the
opening of the Umeda Flagship Store, GRAND FRONT OSAKA
is making a substantial contribution to the revitalisation of the
Umeda area. In particular, GRAND FRONT OSAKA attracted over
300,000 customers on each day of the Golden Week spring
holiday.
There are those who believe that the addition of these newcommercial facilities will create an oversaturated retail market in

Umeda is undergoinga significant
transformation.

24 Hankyu Hanshin Holdings

Annual Report 2013

Interview with the President

Hanshin Building and Shin Hankyu Building. This is the first timethat an “area specified for urgent urban regeneration work” inaccordance with the Act on Special Measures concerning Urban
Regeneration is being used to ease regulations on abovegroundconstruction. In addition, we will promote the development of
a comfortable, superior-quality community by undertaking thisproject in conjunction with upgrades to surrounding public
facilities.
The Umeda area is the Group’s most important business base.
Accordingly, we are keenly aware of the role we play in this area.
Looking ahead, we will work in tandem with the governmentand business partners as we further revitalise and improve theattractiveness of the Umeda area in all areas to create a community that meets today’s needs.

Section2

Business Policies andStrategies

the Umeda area. On the contrary, we believe that building retailspaces that enhance the attractiveness of Umeda on the wholewill expand this market and draw more customers than everbefore.
Through these efforts, Umeda is undergoing a significant
transformation. Looking ahead, however, we must further evolve
Umeda into a highly competitive area on the international stage
that gathers together and fosters exchanges among people,
commodities and currencies not only from Kansai and Japan,
but Asia and numerous other overseas regions. One initiative toachieve this is the Umeda 1-1 Project, which involves rebuilding
the Dai Hanshin Building (in which the Umeda Flagship Store islocated) and the adjacent office building, Shin Hankyu Building,into an integrated complex. Thanks to a city plan proposal
decided upon on 19th April 2013 that establishes a special urban
renaissance district, the Umeda 1-1 Project has made significant
headway towards commencing commercial operations. This city
plan proposal eases the specified floor-area ratio under the Act
on Special Measures concerning Urban Reconstruction from
1000% to 2000% (the largest in Japan at the time the proposal
was decided upon). We will also undertake this rebuilding
project using the space above the road separating the Dai* Compared with the number of passengers in the previous fiscal year following the
grand opening of the Umeda Hankyu Building (until 31st March 2013)(Hankyu Umeda Station passengers: +2.5%; Hanshin Umeda Station passengers:+1.3%)

For further details of progress and achievement in growth investment
as well as the competitive advantages of the Umeda area, please see
page 30.

Returns to shareholders
We will recommence interim dividends to return profits to shareholders in a timelier manner.
In addition, when we are certain that our goal of improving the interest-bearing debt/EBITDA ratio
to around seven times is in reach, we will once again consider ways to ensure adequate shareholder
returns.
Because the improvement of financial standing is our priority
issue, we have decided to use free cash flow to meet funding
demand to strengthen our competitiveness in all segments,
and to enhance our financial standing. For this reason, our basic
policy will be to maintain a stable annual dividend of at least ¥5
per share for the time being.
As stated above, we will recommence interim dividends (¥2.5
per share) from fiscal 2014 onward in order to return profits toshareholders in a timelier manner by maintaining a level of operational soundness that generates profits with greater stability
than before.
Provided that there is no dramatic deterioration in theeconomy, we forecast net income to reach ¥45.0 billion during
the final fiscal year of the current Medium-Term Management

Plan. Since net income per share is also expected to rise above
current levels, we recognise that increasing shareholder returns issomething we need to be thinking about.
Although we will focus on the Group’s financial standing as
a top priority issue for the foreseeable future, we will once again
consider ways to ensure adequate shareholder returns when
we are certain that our target of improving the interest-bearing
debt/EBITDA ratio to around seven times is in reach. At the sametime, we will further build up enterprise value to underpin ourshare price and will work unstintingly to meet the expectationsof all our shareholders.

Hankyu Hanshin Holdings

Annual Report 201325

Medium-Term Management Plan

The Group’s Medium-Term Vision

Improving our financial position, we aim to reduce
interest-bearing debt to below ¥1 trillion and bring
down the interest-bearing debt/EBITDA ratio to aroundseven times as soon as possible(¥ billion)(¥ billion)
1,900
1,900

The Group is building enterprise value through major projects
such as the rebuilding of Umeda Hankyu Building and theHanshin Namba Line, as well as following a basic policy of
improving Group financial standing through effective use of
returns from these major projects. As part of this endeavour,
we initially set a target of improving the interest-bearing debt/
EBITDA ratio to around seven times by fiscal 2013 in the MediumTerm Management Plan announced in 2007.
However, amid deteriorating operating conditions accompanying the economic recession that occurred during the period of
this plan, forecasts indicated that this target could not be reachedby fiscal 2013. Consequently, we announced in May 2012 that wewould extend the previous plan to fiscal 2016. Accordingly, we
positioned the three years between fiscal 2014 and fiscal 2016as a period to steadily improve our financial position and once
again take steps to achieve our initial target.
Based on current estimates, we have set the policy of achieving the previous plan’s initial target (improve interest-bearing
debt/EBITDA ratio to around seven times) as soon as possible
between fiscal 2014 and fiscal 2016.

1,800
1,800

Interest-bearing
Interest-bearing
debt/EBITDA
debt/EBITDA
ratio
ratio

9.49.4
times
times

1,700
1,700

1,600
1,600

1,500
1,500

1,400
1,400

1,300
1,300

8.38.3times
times

8.88.8times
times

EBITDAEBITDA(¥ billion)(¥ billion)(right(rightscale)
scale)

146.5
146.5

145.2
145.2

135.3
135.3

Interest-bearing
Interest-bearing
debt
debt
(¥ billion)(¥ billion)(left(leftscale)
scale)

1,271.1
1,271.1

1,200
1,200

1,275.6
1,275.6

1,209.4
1,209.4
1,100
1,100

1,000
1,000

900 900

Investment
Investment
in indevelopments
developments
forfor
growth
growth800 800
FY2007
FY2007

FY2008FY2008FY
FY 2
0 0290 0 9

2007/3
2007/3

2008/3
2008/32 0 0290/039 / 3

Hankyu Nishino
Hanshin

September 2009: Opening of
Department Store Building (Phase I)* Project start times are as of works commencement. Also, finish times
are project completion dates (completion of A and B blocks for Osaka
Station North District (Umekita) Phase I Development Area).

26 Hankyu Hanshin Holdings

Annual Report 2013

9.6 times

Leveraging cash flow generation through largescale projects, reduce total interest-bearing debt
and steadily improve our financial position so that
total capital investment is roughly equivalent todepreciation and amortisation costs, excluding
special factors*1(see page 29), even while maintaining acertain level of strategic capital outlays

The interest-bearing debt/EBITDA ratio was
7.8 times in fiscal 2013, is expected to be 7.7
times in fiscal 2014 and is forecast to improve
to 6.8 times in fiscal 2016 compared with theprevious plan’s target of 7.0 times.

9.8 times
8.9 times

7.8 times(8.5 times)
145.1(137.0)133.2
1,282.6

127.1

7.7 times

143.0(142.0)6.8 times(7.0 times)

1,251.7

2(¥ billion)
180

170

160

150

140

142.0

133.5

SectionBusiness Policies andStrategies

Improve cash flow generation
through earnings from major projects such as Hankyu Nishinomiya
Gardens, Hanshin Namba Line,the Hanshin Koshien Stadium
refurbishment and Umeda Hankyu
Building (Office Tower)

130

120

1,183.6

1,126.6(1,160.0)

1,100.0

980.0(1,000.0)

110

100

Payback from major projects

Reconciling growth and financial soundness90

FY 2 0 1 0

F Y 2 0 11

F Y2012

F Y2013 *1

FY2014(Estimate)

FY2016 *1(Plan)

2010/3

2011/3

2012/3

2013/3

2014/3

2016/3omiya Gardens Development (September 2004 – November 2008)*1 The figures shown in ( ) are for the previous plan announced in May 2012.

Namba Line (opening of new extension) (October 2003 – March 2009)
Renovation of Hanshin Koshien Stadium*2 (October 2007 – March 2010)
April 2010: Completion of Office Tower*2 Renovation work conducted during three off-seasons.

Rebuilding of Umeda Hankyu Building (May 2005 – November 2012)

November 2012: Grand opening of the Umeda Flagship Store of Hankyu Department Store

Shin-Osaka Hankyu Building Development (May 2010 – July 2012)
Osaka Station North District (Umekita) Phase I Development Area Project(March 2010 – March 2013)
Hankyu Hanshin Holdings

Annual Report 201327

Key Points of the Current Plan’s Estmates

Operating income
Hikes in electricity rates are projected to drive down operating
income by approximately ¥1.9 billion in fiscal 2014 and ¥2.5 billion in fiscal 2016. In addition, there are concerns over worsening
consumer attitudes in light of an increase in the consumption
tax. Nevertheless, overall operating income in fiscal 2014 is forecast to be ¥84.0 billion, only a slight decrease compared with
¥87.9 billion in fiscal 2013, and then increase to ¥85.0 billion in
fiscal 2016, up ¥2.0 billion over the previous plan’s target of ¥83.0
billion. This mainly reflects revisions to transportation revenue
based on current conditions and an increase in rental income
from the Umeda Hankyu Building.

Fiscal 20132014

2016 Operating Income

Fiscal 2013 (Result)Fiscal 2014 (Estimate)[Major factors for changes in operating income](¥ billion)-¥3.9 billion

Increase in costs in each business due to higher electricity rates
Increase in maintenance costs in the railway business

87.9
-3.9

Impact of intensifying competition on existing rental facilities

84.0
+1.0

85.0

Decrease in the number of performances in the theatre business other than the

Takarazuka Grand and Tokyo Takarazuka theatres and increase in costs associatedwith the Takarazuka Revue’s centennial (performance and advertising costs)
I ncrease in office occupancy rates in Umeda Hankyu Building and department
store full-year occupancy

Fiscal 2014 (Estimate)

Fiscal 2016 (Plan)[Major factors for changes in operating income]+¥1.0 billionC onsolidate and improve earnings capability by strengthening real estate leasing
management models and promoting cost efficiency
Boost the occupancy rate of office buildings including Umeda Hankyu Building
Expand the cable television business and information technology services
Increase in depreciation and amortisation costs in the railway business

2 013
2014
(Result) (Estimate)

28 Hankyu Hanshin Holdings

2016 (FY)(Plan)

Annual Report 2013D
 ecrease in earnings in the condominium subdivision business (although highincome levels are forecast for fiscal 2014, profitability is expected to decline infiscal 2016 due largely to a rise in the consumption tax rate)F all in rental income (reduced leasable area) accompanying the commencementof the Umeda 1-1 ProjectMedium-Term Management Plan

Improve our financial position

2

Capital Investment and Depreciation and Amortisation(¥ billion)

Capital investment

FY2008-2010
Results

FY2011-2013
Results

FY2014-2016
Plan

Annual average

380.0
127.0

183.0
61.0

196.0
65.0

Depreciation andamortisation

FY2008-2010
Results

FY2011-2013
Results

FY2014-2016
Plan

167.0
55.7

171.0
57.0

166.0
55.3

Three-year total

Three-year total
Annual average

Business Policies andStrategies

In order to improve our financial position, we will, as mentioned
previously, maintain operating cash flows at certain levels; curb
capital investment to be roughly equivalent to depreciation andamortisation costs, excluding special factors*1; factor in improvements in the financial account balance; and appropriately reduce
interest-bearing debt by using surplus funds. Through thesemeasures, we forecast interest-bearing debt of ¥1,100.0 billion in
fiscal 2014, which is then expected to decrease to ¥980.0 billion
in fiscal 2016, ¥20.0 billion below the previous plan’s target of ¥1
trillion.
As a result, interest-bearing debt/EBITDA ratio is projected
to be 7.7 times in fiscal 2014 and steadily improve to 6.8 times infiscal 2016 compared with the previous plan’s target of 7.0 times.

Section*1 Capital investment between fiscal 2014 and fiscal 2016 (three-year total) includes
property swaps with Hankyu REIT Inc. Excluding the impact of this, total investment is expected to be approximately ¥165.0 billion, roughly equivalent todepreciation and amortisation costs.
In addition, capital investment in fiscal 2014 is expected to total ¥30.8 billion(acquisition of assets held by Hankyu REIT) due to asset swaps undertaken with
Hankyu REIT. However, the Group’s real debt burden from asset swaps is forecast
to be held to approximately ¥8.0 billion primarily because of asset sales accompanying asset swaps of ¥18.3 billion and the transfer of deposits for acquired assets.

Outstanding Balance of Interest-Bearing Debt (Until Fiscal 2016)(¥ billion)
1,400[FY2007 takeover bid enacted — compared with FY2007 results] -¥146.6 billion
Asset sales, contractions in cash and deposits, conversion of convertible bonds,
increase in EBITDA, etc.

1,356.0
1,300

1,200

1,271.1 1,275.6 1,282.6
Takeoverbid financing+250.01,209.4•••

Steady contraction ofoperating cash flows

1,251.7

Repurchase of liquidated properties
Hankyu Grand Bldg.

1,183.6

Dai-ichi Hotel Tokyo

1,126.6

New consolidated subsidiary

1,100

1,000

Hanshin Electric
Railway Co., Ltd.
becomes a
consolidated
subsidiary+171.6

900

889.6

•

Excluding special factors,*1 we willkeep capital investment is roughly
equivalent to depreciation andamortisation costs and appropriately reduce interest-bearing debt
by using surplus funds to steadilydecrease interest-bearing debt tounder ¥1 trillion in fiscal 2016.

Kobe Rapid Transit Railway

1,100.0

Repurchase of liquidated properties•••

Kita Hankyu Bldg.

¥20.0 billion below
the previous plan’starget of ¥1 trillion

980.0

Repurchase of liquidated properties

Hotel new Hankyu
Shin Hankyu Bldg.

New consolidated subsidiary

800(During the enactment of the takeover bid)

2006
(Results)

2007(Est.)

Hokushin Kyuko Railway

2007(Results)

2008(Results)

2009(Results)

2010(Results)

Increase mainly due to investment in developments for growth,
newly consolidated subsidiaries and repurchases of liquidated properties

2011(Results)

2012(Results)

2013(Results)

2014(Est.)

2016 (FY)(Plan)

Steady reductions chiefly due to operating cash flows,
recovery of investments in land and buildings for sale, and sales of properties

Hankyu Hanshin Holdings

Annual Report 201329

Special Feature: Our Investment for Growth
Progress and achievement in growth investment
to create value along Group railway lines
The Group’s Medium-Term Management Plan views the railway and real estate leasing businesses as stable cash flow generatorsand focuses on strengthening the Group’s operating fundamentals to ensure future growth. This includes prioritising real estatedevelopment investment in our most important base of operations, the central Umeda area.
The Umeda Hankyu Building and GRAND FRONT OSAKA development projects were completed between 2012 and 2013 withthe goal of creating interest in the Umeda area. These projects are beginning to realise an early increase in value along Grouprailway lines, particularly a rise in train passengers. We are also undertaking the new large-scale Umeda 1-1 Project to improve thecompetitiveness of Umeda in the years ahead. We will report on the progress and achievements of our growth investment for eachproject as well as explain the potential of the Umeda area and our development policy.
Project

Project

Project

Rebuilding of Umeda
Hankyu Building Project

GRAND FRONT OSAKA

Umeda 1-1 Project Total investment: Approx. ¥60 billion Major uses:
Department stores, offices
Height: Approx. 187m
2
 Total floor area: Approx. 254,000m
Foor-area ratio: 1800% Total investment: Approx. ¥51 billion

1

2of Umeda
ebuilding
1 RHankyu
Building Project

Project

2 (Project

3 (2006

30 Hankyu Hanshin Holdings

2007

2008

2009

2010

2011

2012

Dai Hanshin Building and Shin
Hankyu Building Rebuilding Projects

2013

2014

2024

(FY)

Grand opening in November 2012
▶ Department Store Building (Phase I) opened in September 2009
▶ Office Tower opened in May 2010
▶ Department Store Building (Phase II)
opened in October 2012))

Annual Report 2013)

 Total investment:
Yet to be determined Major uses:
Department stores, offices,convention halls
Height: Approx. 190m (planned) Total floor area: 2
Approx. 257,000m (planned)
Floor-area ratio: 2000% (planned) Major uses:
Offices, commercial facilities, hotels,
Knowledge Capital, condominiums
for sale
Height: Approx. 154m–180m Total floor area: Approx. 556,700m2 Floor-area ratio:
South Building 1600%
North Building, Owner’s Tower 1150%

Osaka Station North District (Umekita)
Phase I Development Area Project ai Hanshin Building and ShinD
Hankyu Building Rebuilding Projects(*Our Group’s share only
(Facility investment only. Excludes investments in landand buildings for sale)

GRAND FRONT OSAKA

Umeda 1-1 Project)(Osaka Station North District (Umekita)
Phase I Development Area Project

Development Schedule
Project

3

Opened in April 2013
Completed in
2023 (planned)

Hankyu Arashiyama Line

Kyoto

N

“Nishiyama-tennozan Station”
Myokenguchi(Scheduled to open on 21st December 2013)

Nissei-chuo

Hankyu Kyoto Line
Nosé Electric
Railway Line

Osaka Pref.

Hyogo Pref.

Umeda

Areas Served by Group Lines (Expanded)

)

To

obe
a (K
miy

Shukugawa

n

aw
ara
To
K

Hankyu Takarazuka Line
Tsukaguchi
Nishinomiya-kitaguchi

no
San

ns
e

ch
i

Itami

KoyoenHankyu Kobe Line

Senrichuo

Kita-Osaka Kyuko
Railway Line

Esaka

Awaji
Shin-Osaka

Imazu
Imazu

Mukogawa

Daimotsu

JusoeHanshin Main Linea*

Mukogawadanchi-mae

Osaka Bay

Hanshin Namba Line

Subway Sakaisuji Line

Hanshin Mukogawa Line

machi

2

Tenjimbashisujirokuchome

Umeda

Amagasaki

SectionBusiness Policies andStrategies

gami

Hokushin Kyuko
Railway Line

IshibashiHankyu Itami Line

Hankyu Koyo Line

Umeda lies at the centre of the
Kansai area, which is one of theworld’s biggest conurbations,with approximately 2.5 million
people passing through it daily.
To make the most of the
Umeda area’s outstanding
feature—the largest railway terminus in western Japan—we havecompleted a series of large-scale
development projects and are
cur- Pref.
Nara
rently undertaking new projects.

Kita-senrimaHankyu Imazu Line

Hankyu Senri Line

Sh
in
ka

Osaka
International
AirportTakarazuka

Mino-oHankyuMino-o Line

(Ky
ot
o)

Kawanishi-noseguchi

OsakaNamba

Kintetsu Nara Line
To Kintetsu-Nara

Umeda Area in Detail
Tenga chaya

N

GRAND FRONT OSAKA
Owner’s Tower

Hankyu Corporation
Head Office

GRAND FRONT OSAKA(Osaka Station North District (Umekita)
Phase I Development Area Project)

Applause Tower
Hotel Hankyu
International

North Building

KitanoHankyuBldg.

UnderpassSouth Building

UmekitaUmekita
Plaza

NU_ chayamachi

HankyuHotel
Umeda Sta.
new
Hankyu Hankyu Sanban Gai
Shopping Centre
Hankyu Terminal Bldg.

meda Staji Line U

MidosuJR Osaka Sta.

NU
_ chayamachi Plus

Kita Hankyu
Nishi Bldg.
HankyuBldg.

HankyuGrand Bldg.

HEP FIVE.

Nis

HERBIS ENT

Umeda Hankyu Bldg. HEP NAVIO
Hanshin Umeda Sta. (Hankyu Department Store
Umeda Flagship Store)
Dai Hanshin Bldg.
(Hanshin Department Store)(Dai Hanshin Building and Shin Hankyu Building Rebuilding Project)

Higashi Hankyu
Bldg.

Rebuilding of
Umeda Hankyu Building Project

ta.

hi Um
eda S

.

Sta

Umeda 1-1 Project

Shin
Hankyu
Bldg.

Higas

ed
a

iU
m

The Ritz-Carlton, Osakah

HERBIS OSAKA

Umeda
Centre Bldg.

Hankyu Hanshin Holdings

Annual Report 201331

Project

1 Rebuilding of Umeda Hankyu Building Project

Umeda Hankyu Building concourse

Overview of the Umeda Hankyu Building
Office Tower
Floors:15 to 41
Leasable area: Approx. 70,000m2

This office building features Kansai’s
largest standard per-floor leasable areaof approximately 2,800m 2 and a highlevel of competitiveness that combines
environmental performance with comfort. These features are based on Umeda
Hankyu Building’s convenient location,
which provides easy access to Hankyu,
Hanshin and other rail lines servicing
Umeda Station.

Introduced Japan’s largest elevator, capable of holding 80 people

Umeda Flagship Store of Hankyu Department Store
Floors:13 floors above groundand 2 below
Leasable area: Approx. 80,000m2

The Umeda Flagship Store is westernJapan’s largest department store. The
store’s highly innovative design createsa “theatrical atmosphere” that is comprised largely of the large open area,
Shukusai Plaza, and a total of 24 event
spaces at which Coto Coto Stage can beheld on each floor to allow customers
to experience first-hand the value ofvarious products in daily life.

The Shukusai Plaza is bustlingwith events

The Building
HeightApprox. 187m

Floors

41 floors above ground and 2 below

Total floor area

Approx. 254,000m2

32 Hankyu Hanshin Holdings

Annual Report 2013

Total investment

Approx. ¥60 billion▶ September 2009
▶ May 2010
▶ October 2012
▶ November 2012

Department Store Building (Phase I) opens
Office tower opens
Department Store Building (Phase II) opens
Grand opening

The Group’s key project is finally complete!
The Umeda Hankyu Building was completely transformed into a large multipurpose building in theautumn of 2012, following seven and half years of construction work. Making a fitting landmark for
the Umeda area, this building consists of an approximately 150,000m2 department store that coexists
with an approximately 100,000m2 office building. Maximising its advantageous position in Umeda, theUmeda Hankyu Building will significantly contribute to the Group’s real estate leasing business income.

Occupying a prime location at the north end of Midosuji, Osaka’s
main street, the Umeda Hankyu Building is less than a five-minute
walk from each of the Hankyu, Hanshin, JR and subway stations aswell as contains the Umeda Flagship Store. Rebuilding work on the
Umeda Hankyu Building was undertaken without closing its tenant
department store, even temporarily. Because of this, the work was
divided into two phases. The Umeda Flagship Store held its grandopening on 21st November 2012 following the completion of the
Department Store Building (Phase II) project last autumn.
As result of this construction work, the Umeda Flagship Storeboasts a sales area of approximately 80,000m2, the largest in westernJapan. Rather than displaying products in a conventional manner, theUmeda Flagship Store promotes unique attractions to stay abreast of
new lifestyle trends under the concept of being an exciting “theatricaldepartment store.” This includes Shukusai Plaza—a large open areathat conveys lifestyle and cultural information—and Coto Coto Stages.

The newly designed concourses improves
convenience and freedom of movement to achievea barrier-free facility
Umeda Flagship Store’s east-west and north-south concourses connect to Hankyu and Hanshin Umeda stations, the Osaka Municipal
Subway (Umeda and Higashi-Umeda stations) and JR Osaka Station.
Umeda is a major hub through which around 20,000 commuterspass every hour during the morning rush. The reconstruction of thisbuilding resulted in the removal of the pillars in the central section of
the old north-south concourse and the installation of a nine meterhigh ceiling to create an open space. In addition, we enhanced
convenience and freedom of movement for pedestrians by installing
elevators and escalators that connect to the first basement floor
with the above ground floors as well as open spaces. Through theseactions, we are working to create more bustling areas.
In particular, the southern-end of the north-south concourse,which connects to Hankyu and Hanshin Umeda stations as well as
Umeda and Higashi-Umeda Osaka Municipal Subway stations, hasbeen installed with six parallel escalators, a first in Japan. This enables
around 30,000 commuters to pass through each hour, 1.5 times
that of the previous structure, and creates an environment that canaccommodate larger numbers of visitors to Umeda.

2

Business Policies andStrategies

Umeda Flagship Store of the Hankyu Department
Store transformed into a “Lifestyle Theatre”

Section

Office tower built in Umeda’s prime businesslocation
The rebuilding construction of the Umeda Hankyu Building not only
renovated the department store, but also added new office floorsthat take full advantage of the extra capacity made possible by the
Act on Special Measures concerning Urban Reconstruction (significantly easing the specified floor-area ratio from 1000% to 1800%).
The substantial leasable area of the new office floors is approximately
70,000m2, and its rental income will contribute to Group earnings.

Concourse Map

Hotel
new
HankyuHankyu
Umeda
Sta.

HEP
FIVE
North-southconcourse
East-west
concourse

Hankyu
Grand
Bldg.

HEP
NAVIO

JR
Osaka Sta.

Midosuji Line

Umeda Sta.

Umeda Hankyu Bldg.
(Hankyu Department Store
Umeda Flagship Store)

Dai
HanshinBldg.*Hanshin
Umeda
Sta.

Tanimachi Line

HigashiUmeda Sta.

*Hanshin Department Store
Umeda Main Store

Japan’s first six parallel escalators

Hankyu Hanshin Holdings

Annual Report 201333

Project2

Station North District (Umekita)
GRAND FRONT OSAKA (Osaka
Phase I Development Area Project)

GRAND FRONT OSAKA (April 2013)

Overview of GRAND FRONT OSAKAGRAND FRONT OSAKA Owner’s Tower

InterContinental Hotel Osaka

OfficesThis 48-floor condominium complex realises
the atmosphere of a real first-class hotel
based on a concept known as “The Hotel.”
The tower features a uniquely attractive
atmosphere thanks to a seven-meter highopen reception area referred to as “TheReception,” and a relaxing lounge area
installed with fireplaces known as “The Living.”

Fully equipped with 272 guest rooms, fiverestaurants and bars, reception halls, pooland other amenities,
the InterContinental
is a new-style luxury
hotel that offers
guests an unforgettable experience foundonly in Osaka.

Our top-flight Flagship Office facilities are Kansai’s largest,
boasting approximately 150,000m2 of leasable spacewithin three buildings. In addition
to its elegant lobby space, thesefacilities realise a comfortable andsafe office environment thanks to
the installation of a natural ventilation system and other advanced
technologies.

48 floors above ground,
1 below

Tower C

Tower B

Tower A

33 floors above ground,
3 below

38 floors above ground,
3 below

38 floors above ground,
3 belowN

Knowledge CapitalSouth Building Terrace GardenThis concept involves constructing a clusterof urban facilities that create and transmit
new value. These facilities feature the FutureLife Showroom and The Lab., which allow
visitors to experience advanced technologies for themselves, as well as the multipurpose Knowledge Theatre, a convention
centre and other facilities. These facilities
also include the members-only interactive
Knowledge Salon and small rentable officespaces called COLLABO OFFICE, all of which
provide various places and opportunities topursue knowledge insuch areas as industrial
development, cultural
promotion, international exchange
and human resource
cultivation.

34 Hankyu Hanshin Holdings

Keyaki (elm tree-lined) Street
North Building
Terrace Garden

GRAND FRONT OSAKA
Owner’s Tower

Annual Report 2013

Seseragi (brook) Road

Umekita Plaza
Umekita SHIP
Connection to
JR Osaka
StationNorth Building

Condominiums

InterContinental Hotel Osaka

Offices

Knowledge Capital

Water fountains,reflecting pools, etc.

South Building

Icho (ginkgo) Street

Shop & Restaurant

Shops & Restaurants
Located in the Osaka’s central terminal, this commercial facility is one
of Japan’s largest, bringing together 266 retail outlets in a store area
measuring approximately 44,000m2. Under the key phrase, “Umedaoriginated, Umeda-produced, Umeda-perfected,” this facility consistsof a comprehensive array of stores that encompass all lifestyle areas,
including clothing, food, living and knowledge.

51 billion (Our Group’s share)

Total investment Approx. ¥*Facility investment only. Excludes investments in land and buildings for sale

▶ March 2010
▶ April 2013
▶ June 2013
▶ July 2013

Construction commences
GRAND FRONT OSAKA opens
Hotel opens
Condominiums delivery starts

Birth of a new community at the gateway to Osaka

Emergence of an attractive community at the
gateway of Osaka
Osaka Station North District (Umekita) Development Area Project(approximately 24ha) is the last favourable location in central Osaka.
Within this project, a consortium of 12 companies, including Hankyu
Corporation, developed the Phase I Development Area (approximately 7ha), in which the GRAND FRONT OSAKA multipurpose complex (combining mainly commercial facilities, condominiums andoffices) was completed in April 2013 and is currently in operation.
Under the development vision of “creating a community wherea diverse array of people can gather for new encounters and inspiration that generate a fresh new energy,” this 154m to 180m high,four high-rise complex brings together a cluster of important urban
functions, including salons, showrooms, a convention centre andother facilities focused on providing a “Knowledge Capital” hub,as well as shops and restaurants, Flagship Offices, hotels, serviced
residences, the InterContinental Hotel Osaka and GRAND FRONTOSAKA Owner’s Tower condominiums.

Section2

Business Policies andStrategies

In the redevelopment area immediately adjacent to Osaka Station to the north—Osaka’s last prime location—
GRAND FRONT OSAKA was a large-scale project undertaken by a consortium of 12 companies, including Hankyu
Corporation. Completed in April 2013 after three years of construction work, the time to open GRAND FRONTOSAKA finally arrived. Attracting over 10 million visitors in the first three months since its opening, GRANDFRONT OSAKA has garnered high expectations and interest in various areas as a driver of the Kansai economy.

Creating a community enjoyable for pedestrians
The consortium of 12 companies, including Hankyu Corporation,
not only developed this project, but is also heavily involved in its
operation.
In May 2012, Town Management Organisation (TMO) was
formed, which is undertaking various forward-looking initiatives tocreate a vibrant community.
One such initiative is the establishment of open-air cafes thatmake full use of widened public sidewalks. Although cafes are normally not permitted along public sidewalks, TMO used the special
permission clause under the Act on Special Measures concerning
Urban Reconstruction to obtain a permit from the City of Osaka.
In addition, TMO commenced UMEGLE, a new transportation
service that combines an area loop-line bus, rental bicycles andexisting parking lots. These efforts will reduce vehicle traffic in the
Umekita district, leading to greater revitalisation of and freedom of
movement in the entire area.

Visitor numbers and sales on track since theopeningWithin this aforementioned complex, the Group is deeply involvedin the development and operation of commercial facilities that havebeen attracting impressive numbers of customers since opening.
In the month immediately following its opening, GRAND FRONTOSAKA on the whole attracted 7.61 million visitors, and sales at its
commercial facilities reached ¥5 billion. Accordingly, we are well on
our way to reaching initial fiscal year targets of 25 million visitors andnet sales of ¥40 billion for these commercial facilities. In condominiums, all 525 units were sold prior to opening, despite mainly being
high-priced properties.
In addition to being very conveniently located, our superior-grade offices have been rated highly and are gradually being
rented thanks to boasting the largest floor area in Kansai as well
as being equipped with the latest natural ventilation systems andseismic resistance capabilities.

Along this Japanese Keyaki (elm tree-lined) street, fashionable open-air cafes add adegree of sophistication to the area.

Hankyu Hanshin Holdings

Annual Report 201335

Project3

Umeda 1-1 Project(Dai Hanshin Building andShin Hankyu Building Rebuilding Projects)

Commence projects symbolic of the integration ofHankyu and HanshinThis project involves rebuilding the Dai Hanshin Building (in which the Hanshin Department Store’s Umeda
Flagship Store is located) and the adjacent Shin Hankyu Building into an integrated complex. A new highrise building approximately 190m high will be built on a prime location facing Umeda (Osaka) Station. A city
plan proposal was decided upon on 19th April 2013 that establishes a special urban renaissance district. As
such, the Umeda 1-1 Project has made significant headway towards commencing commercial operations.

Overview of Umeda 1-1 Project
We will undertake this rebuilding project using the space above the road separating the Dai Hanshin Building and Shin Hankyu Building. Thisis the first time that an “area specified for urgent urban regeneration work” in accordance with the Act on Special Measures concerning Urban
Regeneration is being used to ease regulations on aboveground construction. In addition, we will promote the development of a comfortable,superior-quality community by undertaking this project in conjunction with upgrades to surrounding public facilities. Looking ahead, we aim tocomplete this project by 2023 through the ongoing cooperation of the government and business partners.

Overview of Umeda 1-1 Project Building (provisional name)
Office Zone
Featuring advanced equipment, a high-rise section(11th–38th floors) is planned to have western Japan’s largest* floor space per office of approximately 4,500m2.
*Covering office buildings built after 2000

Conference Zone
Taking advantage of the large space made possible bybuilding above roads, we plan to construct an approximately 3,000m2 conference zone on the 11th floor that willcontribute to revitalised business activities in the Umeda
area. During disasters, these facilities function as temporary
shelters for those unable to return home.

Department Store Zone
The total floor space of the newly refurbished Hanshin
Department Store Umeda Main Store at present is approximately 100,000m2 and is planned to encompass 11 floors(9 floors above ground and 2 below). In addition, the store isscheduled to remain open during rebuilding work.
Image of the completed building

The Planned Building
Location

1-1 Umeda, Kita-ku, Osaka

Site area

Approx. 12,100m (includes the space used
above the road separating the two sites)
2

Specified floor-area ratio 2000%
Total floor area

Approx. 257,000m2

Floors38 above ground and 4 below

HeightApprox. 190m

36 Hankyu Hanshin Holdings

Annual Report 2013

Facility
composition• Department store zone (9 floors above ground and 2 below)
Total floor space approx. 100,000m2• Office zone (11th to 38th floors above ground)
Total floor space approx. 133,000m2• Conference zone (11th floor above ground)
Total floor space approx. 3,000m2• Other (parking lot, passageways, etc.)
Total floor space approx. 21,000m2

Construction completion 2023 (planned)▶ April 2013
▶ 2023

Overview of Main Upgraded Public Facilities Located Nearby

Urban development project decided
Completion of construction (planned)

Diagram of Upgraded Area
JR Osaka Sta.

The vicinity of the Dai Hanshin Building and Shin Hankyu Building features an upgraded three-level (underground, ground level, deck level)pedestrian network that improves the comfort and conveniences ofpedestrian spaces and, in turn, contributes to the revitalisation of theimmediate area and the rest of Osaka city.

Deck level(aboveground)	Improve decorations and seismic resistance of the
new Umeda elevated walkway
	Upgrade on-site passageways(2nd floor of the planned building)

Sta
.

i Um
eda
ish
eN
Lin

Yot
s

ub
ash
i

Osaka
Marubiru

Osaka Ekimae
1st Bldg.
[Underground]

Underpass upgrading
Barrier free[Ground level]

Widen and improve
attractiveness of passageways
Upgrade plaza[Aboveground]Elevated walkway
Sections above road

Shin Hankyu Bldg.
Umeda DT
Tower

Osaka Ekimae
4th Bldg.
Osaka Ekimae
2nd Bldg.

2

Business Policies andStrategies

	Upgrade the on-site plazas on the planned west side

Section.

	Widen, perform regular maintenance and improve
attractiveness of Midosuji passageway

Osaka
Dai Hanshin Bldg.
Dai-ichiSeimei Bldg.
Hilton HoteligashiUmeda
Sta

	Make surrounding sites barrier free	Upgrade underpasses at surrounding sites

Ground level

Hanshin Umeda Sta.

HERBIS
ENT	Widen and perform regular maintenance of eastwest underpass (the urban development project’s
passageway No.1 in front of Osaka Station)

Umeda
Hankyu Bldg.

Tanimachi LineH

Underground

South Gate Bldg.

Osaka Ekimae
3rd Bldg.

COLUMN:

Competitive advantages of the Umeda area

Umeda (Kita) Area

In recent years, the urban functions of the Umeda area and other key areas of Osaka
have been progressively updated and built up thanks to large redevelopment projects.
The Umeda area (which has seen the opening of a series of large office buildings andcommercial facilities, particularly Umeda Hankyu Building and GRAND FRONT OSAKA)
and the Abeno/Tenoji district (in which the department store section of ABENO HARUKAS
opened in advance in June 2013) were both redeveloped to enhance their attractivenessand dynamism, helping to significantly raise their value. While these major redevelopments
were taking place, intensifying competition among key areas has given rise to issues
regarding how to attract large numbers of people and capital.
Comparison of Concentration of Commercial Facilities by Region (Store Area)
Commercial district (official designation)

Umeda (Kita-ku, Osaka)
Namba, Shinsaibashi (Chuo-ku, Osaka)*
Tennoji (Abeno-ku, Osaka)
Shibuya, Omotesando (Shibuya-ku, Tokyo)
Shinjuku (Shinjuku-ku, Tokyo)
Ikebukuro (Toshima-ku, Tokyo)
Ginza, Nihonbashi (Chuo-ku, Tokyo)
Marunouchi, Yutakucho (Chiyoda-ku, Tokyo)

June 2008
480,148438,856
127,577
419,226
424,994
389,093
347,969
364,588[Commercial facility area] 682,362m2[Roadside land price (per m2)] ¥7.12 million[Main commercial facilities]
Umeda Flagship Store of Hankyu Department Stores

GRAND FRONT OSAKA

Source: Toyo Keizai, Inc. “List of Large-Scale Retail Outlets 2014”
Store area calculated on basis of official designation in the above table.
Stores surveyed are those with areas in excess of 1,000m2, as of June 2013, based on data on large-scale
stores registered with prefectural governments under the Large-Scale Retail Stores Location Law.
*Including 54,042m2 for Namba Parks (Naniwa-ku, Osaka)

Umeda

Hanshin NambaLine

To Kyoto

JR Osaka
Loop Line

Subway Midosuji Line

Shinsaibashi(m2)

June 2013
682,362
470,437
220,277
427,513438,979
381,588
320,277
342,709

Osaka JR Tokaido Main Line

To KobeNamba
Tennoji

Kintetsu
Minami-Osaka Line

Namba (Minami) Area
[Commercial facility area]

470,437m2[Roadside land price (per m2)]

¥4.56 million[Main commercial facilities]

Takashimaya Osaka
Daimaru Shinsaibashi

Abeno/Tenoji Area
[Commercial facility area]

220,277m2[Roadside land price (per m2)]

¥1.54 million[Main commercial facility]

ABENO HARUKAS

Under these circumstances, the Umeda area, the Group’s most important business base, is western Japan’s biggest railway terminal and currently
contains Japan’s highest concentration of large-scale commercial facilities, attracting people from both inside and outside the Kansai area.
Thanks to redevelopment in recent years, Umeda has also garnered high ratings as an office district. Umeda was not only the first among all of
Osaka’s business districts to benefit early from office expansion and relocation as well as new demand, but maintains the highest leasing rates in
Osaka, making it a highly competitive area.
Moreover, one section of the area surrounding Osaka Station has been designated as a Kansai Innovation International StrategicComprehensive Special Zone, raising expectations of future business expansion in environmental, medical and other fields centred on GRANDFRONT OSAKA’s “Knowledge Capital.” Along with this, the Umeda area is developing into an attractive destination for businesses and humanresources not only from Japan, but also Asia and the rest of the world, due to the upgrading of functions that is organically transforming Umeda
into a central hub. Accordingly, we expect the Umeda area to become even more competitive on the international stage, which will drive growthnationwide as the central urban core of Osaka.

Hankyu Hanshin Holdings

Annual Report 201337

S ec t i o n3Core Businesses: Overview and Outlook

Core Business Highlights
Revenues from Operations 

Urban Transportation% of Revenues from Operations

Revenues fromOperations¥193.6 billion(¥ billion)

191.5 191.9 192.9 192.7 193.6(YoY +0.5%)

26.8%

P. 40
Real Estate% of Revenues from Operations

Operating
Income Margin

17.9%

Segment
Assets¥741.2 billion

Revenues fromOperations(YoY +0.3%)

2009¥196.7 billion

170.2 168.5(YoY +11.7%)

27.2%

P. 44
Entertainment and Communications% of Revenues from Operations

Operating
Income Margin

18.8%

Segment
Assets¥1,016.2 billion

Revenues fromOperations©Takarazuka Revue Company

Travel and International Transportation

15.0%% of Revenues from Operations¥143.9 billion(YoY +2.3%)

2009

2010

¥70.8 billion

65.8

62.9

(YoY +11.5%)

2009

2010

64.7

66.4

(YoY +4.8%)

Operating
Income Margin

P. 53

9.8%

Hotels% of Revenues from Operations

P. 56
Retailing

8.9%% of Revenues from Operations

Segment
Assets¥112.1 billion¥
billion(YoY +0.9%)

Operating
Income Margin

0.8%

Revenues fromOperations¥87.2 billion(YoY -1.0%)

2009¥53.3 billion

67.5(YoY -1.1%)

P. 58

7.4%

2012

2011

2012

2013 (FY)

67.7

67.6

70.8

2011

2012

2013 (FY)Operating
Income Margin

2.6%

Segment
Assets¥17.5 billion(YoY -2.2%)

2009

61.0

65.2

64.1

64.7

2010

2011

2012

2013 (FY)

62.9

54.0

53.9

53.3

2010

2011

2012

2013 (FY)

Notes: 1. Figures for % of revenues from operations are calculated based on the simple aggregate amount (including intersegment transactions) of each segment (fiscal 2013 results).
2. Revenues from operations in other businesses accounted for 5.0%.

38 Hankyu Hanshin Holdings

Annual Report 20132013 (FY)

6.3%

Revenues fromOperations

Segment
Assets196.7

105.8 107.9 103.4 102.3 108.6

Segment
Assets

2011

176.1

2013 (FY)¥108.6 billion

11.6%

Revenues fromOperations

152.7

2012

2009

Operating
Income Margin

2010

2011

(YoY +0.7%)(YoY +6.2%)

P. 50

2010

Operating Income

32.3

2009

33.7

31.0

2010

(¥ billion)

29.4

2011

24.0

10.7

11.1

2009

2010

2013 (FY)

2011

29.1

2012

10.0

10.1

2011

2012

3.2

12.6

2011

2012

0.3
2010

-0.6

-0.3

-1.7
2009

2010

2011

1.4

2012

1.3

1.4

0.4
2010

2011

2012

3

Our Travel and International Transportation Business originally started as an International Air Transport
Association (IATA) agency business in 1948, when we signed Japan’s first agency contract. In the travelbusiness, centred on Hankyu Travel International, we offer an original product range featuring thecomprehensive and varied Trapics core brand of travel packages as well as business travel services.
In the international transportation business, Hankyu Hanshin Express International uses a range ofadvanced information and communication technologies and global networks to provide high-quality
logistics services efficiently combining a wide variety of transportation modes.

The Hankyu-Hanshin-Daiichi Hotel Group operates 50 hotels, consisting of 17 that are directly managed and 33 belonging to chains operated by franchises. It is one of Japan’s leading hotel chains with
10,445 guest rooms (as of 1st April 2013). As a hotel operator with many directly managed hotels in
the Tokyo and Kansai areas, Japan’s two largest markets, it offers a wide range of hotel formats, fromgeneral-purpose “city hotels” to new style hotels (with very limited function facilities). In addition to
chain operations, it also manages The Ritz-Carlton, Osaka, a venerable international luxury brand withwhich it has formed an alliance.

2013 (FY)

0.7

2009

This segment offers a wide variety of live entertainment, centred on the sports business — thenationally popular and famous Hanshin Tigers professional baseball team and their home ground andhigh-school baseball mecca, Hanshin Koshien Stadium — and the stage revue business, based on thehugely popular Takarazuka Revue, which will celebrate its 100th anniversary in 2014. In addition, thissegment runs wide range business such as cable television business and the information technology
services.

Section2013 (FY)

0.5

0.5

The Real Estate segment derives its core revenue from leasing and management of commercial facilities and office buildings and its condominium business. Its attractive business portfolio includes rental
properties located mainly in the Umeda area and along the Group’s rail lines, such as Umeda Hankyu
Building, Hankyu Sanban Gai shopping centre, HERBIS OSAKA, HERBIS ENT, GRAND FRONT OSAKA,
Hankyu Nishinomiya Gardens and the highly regarded Geo condominium brand in the Kyoto-OsakaKobe area and Tokyo metropolitan area.

2013 (FY)

1.5
2009

Total length of lines operated:
Hankyu Corporation: 143.6km Hanshin Electric Railway: 48.9km(Including tier 2 railway operator)

2013 (FY)

4.4
3.0This segment comprises railway operations (with Hankyu Corporation operating the Kobe, Takarazuka
and Kyoto lines out of Umeda (Osaka) and Hanshin Electric Railway lines directly linking Kobe with
Osaka’s major northern and southern terminals, Umeda and Namba). Together, the Hankyu andHanshin network, combined with other lines, and bus, taxi and other urban transportation services,form a single large-scale network in the Kansai area, centred on the cities of Kyoto, Osaka and Kobe.

Core Businesses:
Overview and Outlook

2010

2012

34.7

37.0

30.9

2009

32.3

Nature of Business2013 (FY)This segment group comprises “Ekinaka” retail outlets operated mainly within the premises of stations along
our lines, the Lagare shop station kiosk chain, the Book 1st. bookstore chain*, the asnas convenience store
chain, the COLOR FiELD cosmetics and accessories chain, the DOUBLEDAY furniture and daily accessories
chain and other sale-of-goods outlets. In addition to our retail outlets in areas served by the Hankyu andHanshin lines, we have also opened Book 1st. stores in the Tokyo area, and DOUBLEDAY outlets in the Tokyo
area and Fukuoka Prefecture. Drawing on our long experience in developing businesses in our home area,
we are building our competitive strength in markets beyond the Hankyu and Hanshin networks.
* Bookstore chain business was sold to an outside company on 1st April 2013.

Hankyu Hanshin Holdings

Annual Report 201339

Urban Transportation
Major
Businesses◻ Railway operations:Hankyu Corporation, Hanshin Electric Railway, Nosé Electric Railway, Kita-Osaka Kyuko Railway, Hokushin Kyuko Railway,
Kobe Rapid Transit Railway◻ Automobile business (bus, taxi):

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

Snapshot
Performancein FY2013

Revenues from Operations¥193.6 billion (+0.5%)

Operating Income¥34.7 billion (+7.3%)

Priority Issues
1 	Provide high-value customer services (increase value along Group railway lines)	  Improve the appeal of our transportation services and products
  Expand our networks and catchment areas	  Offer convenience and comfort through services at stations and stores as well as improve customer communication	2 	Ensure low-cost operations (pool and improve technology and know-how)3 	Provide safe, high-quality transportation services that fully justify public trust	 With ongoing major projects and grade separation (track elevation) works underway, as well as barrier removal at stations,this segment is committed to providing safe transportation services

40 Hankyu Hanshin Holdings

Annual Report 2013

Key Facts and Business Environment

Population growth continues in areas served by our lines
Despite this severe external environment surrounding the
Urban Transportation Business, areas served by our lines are
popular and populations here have maintained gradual growth
momentum since the trough of 1996, the year after the Great
Hanshin (Kobe) Earthquake (please see Figure 2).

In recent years, the population of the Kansai area has been in
decline, with a falling birth-rate and a rising proportion of elderly
people. The official Population Census of Japan shows that the
population between the ages of 15 and 64—the working-age
generations—has already begun to decline (please see Figure 1).

Section

3(Million)

655,315,694

5,406,883

5,426,516

486,155
3,802,239

423,032
3,652,948

5,229,907

564,789
3,924,390

4

5,371,402

654,455
3,805,897

5,498,123■ Old■ Working age■ Young

5,557,782

829,343

1,014,126

1,200,690

3,807,524

3,715,180

3,636,224

32
1

1,230,823

1,113,080

910,891

758,909

0
1980

1985

1990

1995

718,503

720,424
2000

2005

720,868
2010 (CY)

Source: Compiled by the Group, basedon data from 2010 Population
Census of Japan, issued by the
Ministry of Internal Affairs andCommunications.

Core Businesses:
Overview and Outlook

Figure 1: Population by Age Group, along Hankyu and Hanshin Lines (Population Census of Japan)* Tallies do not add up to the total
at the top for each year as age
group is not known in manycases. Unknowns account for thedifference.
* A reas served by Hankyu andHanshin lines are as defined in
Figure 2.

Figure 2: Population Trends in Areas Served by Hankyu and Hanshin Lines (1991=100)
105
104
103
102

Areas served by Hankyu
and Hanshin lines
Kansai area
Osaka
Hyogo
Kyoto

Great Hanshin (Kobe) Earthquake

101
100
99
98
97
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (CY)
Source: Compiled by the Group based on data from Toyo Keizai, Inc.’s Local Economy Directory and the Ministry of Internal Affairs and Communications Basic Resident Register

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

Hankyu Hanshin Holdings

Annual Report 201341

Measures to increase the appeal of areas along our lines
In order to achieve continual growth under these severe
operating conditions, the Group is encouraging greater public
transport use by upgrading station facilities and expanding
networks. Looking ahead, we will continue to improve standardsof convenience for customers and make our railway lines more
appealing by expanding and improving all our general transportation services.

▶ Improvement of Hankyu Umeda Station facilities: Ongoing modernising works at Hankyu Umeda
Station, one of Japan’s largest private railway terminals
About 40 years have passed since completion in November 1973of the relocation of the Hankyu Umeda Station away from its sitenear the current Umeda Hankyu Building. Hankyu Corporation
has been undertaking modernising works at Hankyu Umeda
Station since fiscal 2013, with completion scheduled for the endof fiscal 2015. The aim is to give the station a completely new,integrated, more upmarket look and make it the “face” of the
Umeda area of Osaka, where developments are underway suchas the rebuilding of the Umeda Hankyu Building and the Phase I
Development at Osaka Station North District (Umekita).
The modernising works will involve the creation of five spaces
at Hankyu Umeda Station, titled “Approach,” “Gate,” “Lobby,” “Stage,”and “Galleria,” with the use of theatre lighting to achieve a sense ofdrama. The aim is to create a distinctive theatre-like atmosphere.

Upper right: Artist’s impression of “Gate”
Lower left: Artist’s impression of “Stage”▶ Renovations complete at Hanshin Sannomiya Station, with new “Ekinaka” in-station stores open
Major renovations at Hanshin Sannomiya Station that began in2007 were completed five and half years later in March 2013.
The station was opened as an underground station in 1933.
But because there was only one wicket on the western side, it
tended to get crowded during rush-hour. The station also lacked
fire-prevention and barrier-free facilities and had long sufferedfrom clumsy connections between lines within the station.
Major improvement works at Hanshin Sannomiya Station
were launched in October 2007, using subsidies for projects thatenhance urban railway convenience. The aim was to improveuser convenience and enhance its hub function ahead of
the March 2009 launch of direct Hanshin Electric Railway andKintetsu Corporation shared-line services from Sannomiya toNara, using the Hanshin Namba Line.
In the improvement works, we built new eastern wickets thatenable access to Port Liner, JR lines, and the peripheral commercial facility M-INT Kobe. In addition, we remodeled the existing
western wicket, redid the wiring throughout the structure, widened the platforms, and built new elevators and escalators, which
improved connection convenience and realised a barrier-free

42 Hankyu Hanshin Holdings

Annual Report 2013

facility. We also enhanced station information conveyance capabilities by installing the Hanshin Train Service Centre as well ascompletely remodeled the Kobe’s Sannomia Station gateway
with the opening of the new SCRA Sannomia commercial facility
at the western wicket inside the station.

The western wickets of Hanshin Sannomiya Station

Urban Transportation

Performance for the Fiscal 2013

Achieved rises in revenue and earnings thanks mainly to a recovery from theGreat East Japan Earthquake; the grand opening of the Hankyu Department
Store’s Umeda Flagship Store; and steady transportation revenue supported byincreases in the population living along Hankyu and Hanshin lines
following the Great East Japan Earthquake; the grand openingof the Hankyu Department Store’s Umeda Flagship Store; andsteady transportation revenue supported by increases in the
population living along Hankyu and Hanshin lines.
Furthermore, measures were taken to improve customer
convenience in the bus and taxi business, including commencing the hanica IC card, which can be used for all regular routes
operated by Hankyu Bus, Hanshin Bus and Hankyu Denen Bus.
However, revenues from operations decreased 1.1%, or ¥503
million, year on year to ¥46,979 million.
As a result of the above, revenues from operations in the
Urban Transportation Business overall improved 0.5%, or ¥913 million, year on year to ¥193,631 million. Moreover, operating income
increased 7.3%, or ¥2,369 million, to ¥34,711 million primarily due
to decreases in depreciation and amortisation expenses.

Section3

Core Businesses:
Overview and Outlook

In the railway business, the Hankyu Corporation is continuallyworking to upgrade and improve the attractiveness of its railway
facilities. These include the aforementioned renovations at the
Hankyu Umeda and Hanshin Sannomiya stations, the upgradedcentral wicket of the Hankyu Kawaramachi Station in March2013 and the opening of the Hankyu Tourist Information Center,
KYOTO. In addition, Hankyu Corporation began selling to overseas customers the HANKYU TOURIST PASS for all Hankyu raillines and Hanshin Electric Railway started marketing the HanshinKintetsu IC Commuter Pass jointly with Kintetsu Corporation. At
the same time, the Group undertook various initiatives to attract
customers along its rail lines. Revenues from operations in therailway business overall increased 0.7%, or ¥969 million, year on
year to ¥145,927 million despite a decrease in the number ofbusiness days caused by 2012 being a leap year. This result was
mainly attributable to a recovery from a business downturn inthe previous fiscal year as customers refrained from going out

Please refer to page 61 for details on forecasts for fiscal 2014 onward.

Hankyu Corporation and Hanshin Electric Railway: Performance Results
Fare revenues (¥ million)*

HankyuHanshin

Passenger volumes (thousands)*

FY2013

FY2012

Change%FY2013

FY2012

Change%Other tickets

60,74960,268481

0.8%

308,716

306,349

2,366

0.8%

Commuter pass

30,391

29,922469

1.6%

306,607302,282

4,324

1.4%

Total

91,141

90,191950

1.1%

615,324

608,632

6,691

1.1%

Other tickets

19,66919,422247

1.3%

110,385

109,284

1,100

1.0%

Commuter pass

10,74010,623

117

1.1%

110,748

109,275

1,472

1.3%

Total

30,41030,045364

1.2%

221,133

218,560

2,573

1.2%

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

Hankyu Hanshin Holdings

Annual Report 201343

Real Estate
Major
Businesses◻ Real estate leasing and development*:
Extensive property-holdings, mainly along Hankyu and Hanshin lines (for details of major properties, please see page 49)
Major companies: Hankyu Corporation, Hanshin Electric Railway, Hankyu Realty◻ Real estate sales:
Subdivision and sale of residential land lots and sale of condominiums and single-family housing, mainly along Hankyu andHanshin lines. In recent years, also focused on the sale of condominiums in the Tokyo area.
Major companies: Hankyu Corporation, Hanshin Electric Railway, Hankyu Realty◻ Other real estate businesses:
Promote property management, building maintenance and other building operation and management services as well as realestate fund and REIT businesses
Major company: Hankyu Corporation, Hanshin Electric Railway, Hankyu Hanshin Building Management, Hankyu REIT AssetManagement
 lassification changes in major businesses*C
Included in other real estate businesses until fiscal 2013, the real estate development business was combined with the real estateleasing business to form the real estate leasing and development business from fiscal 2014 onward.

Snapshot
Performancein FY2013

Revenues from Operations

Operating Income¥196.7 billion (+11.7%) ¥37.0 billion (+27.0%)

Priority Issues
1 	Enhance the appeal of and revitalise Umeda and other areas served by our lines S teadily promote the Umeda 1-1 Project (Dai Hanshin Building and Shin Hankyu Building
rebuilding projects) F ormulate and advance new development projects and systematically implement facility
reconstruction along rail lines to enhance the value of Hankyu and Hanshin lines
2 Undertake measures to strengthen organisations andexpand operations in the real estate leasing business Improve the profitability of the Umeda Hankyu Building
and GRAND FRONT OSAKA Consolidate and improve profitability by strengthening
management models while optimising costs

3 	Agile responses attuned to changes in the subdi-

vision business environment Planning and development of condominiums tailored tocustomer needs Business promotion and sales focusing on the impact ofraising consumption tax rates D evelop communities of detached single-family
town houses and steadily market residential land-lots(Yamatedai, Nakajima and Saito) Maintain supply network and aggressively obtain business opportunities in the Tokyo area while increasing
recognition of Geo brand condominiums and Hapia
single family housing
4 	Further expand the Group’s Real Estate Businessthrough the stable operation of real estate funding and REIT businesses Pursue external growth of the Real Estate Businessthrough linkage with Hankyu REIT
 Expand fee-based revenues that include asset and property management

44 Hankyu Hanshin Holdings

Annual Report 2013

Key Facts and Business Environment

Recovery in the leasing market will take time
Looking at the current market for rentable office space inthe Umeda area, average vacancy rates for office buildings bottomed out in October 2007 but are still trending at a high level.
This reflects the release onto the market of large numbers of newbuildings in the Umeda area between 2010 and 2013. Nevertheless,vacancy rates have showed signs of improvement from October2010 onward as tenants relocated from other districts, as well aslarge-scale business relocations accompanying mergers and corporate consolidations. Looking at the current situation, however, a
return to full-fledged improvement is expected to take time as thevacancy rate has risen once again. This reflects ongoing vacancies
in the GRAND FRONT OSAKA following its construction (see Figures
1 and 2 for average vacancy rates and average rent levels).

Section3

Core Businesses:
Overview and Outlook

Most revenues and operating income in the Group’s Real EstateBusiness are generated by the real estate leasing business, which
contributes to stable cash flow. The Group has one of the largest
rental real estate portfolios of any private rail company, with many
properties located near Hankyu and Hanshin lines (for details, pleasesee page 49). Overall rentable area operated by the Group was
approximately 1.7 million m2 (as of 31st March 2013). Of this total,
approximately one half, or 800,000m2 (70% being commercial
facilities and the rest office facilities) are concentrated in the Umeda
area, the heart of the Kansai economy, where the Group has a large
number of very competitively located rental properties (near the
Umeda stations of both Hankyu and Hanshin lines as well as JR
Osaka Station (please see page 31 for detailed map of the Umeda area)).

Figure 1: Average Vacancy Rates at Office Buildings (Osaka and Tokyo business areas)(%)

14

2010.10 11.94%

Osaka business areas (all)UmedaTokyo business areas (all)12102013.03 11.50%

2007.10 2.55%

8
6
4

2012.09 6.07%

2
0
2006.
04

2007.
04

2008.
04

2009.
04

2010.
04

2011.
04

2012.
04

2013.
04

Source: Miki Shoji, Latest trends in the Office-building market* The main factor for the significant increases in vacancy rates in the Umeda area and Osaka’s business districts overall from December 2012 to April 2013 is the opening of GRANDFRONT OSAKA.

Figure 2: Average Rents at Office Buildings (Osaka and Tokyo business areas)(¥/3.3m2)

25,000

Osaka business areas (all)UmedaTokyo business areas (all)23,0002013.02 ¥14,276

21,00019,0002008.04 ¥15,965

17,00015,00013,00011,000
9,000
2006.
04

2007.
04

2008.
04

2009.
04

2010.
04

2011.
04

2012.
04

2013.
04

Source: Miki Shoji, Latest trends in the Office-building market

Hankyu Hanshin Holdings

Annual Report 201345

Accordingly, the environment surrounding the office leasing
business remains severe and the future is uncertain. As explained
earlier, the business environment surrounding the real estateleasing market remains challenging. However, thanks to the very
competitive locations of our major rental office buildings close
to the Hankyu and Hanshin Umeda stations in central Umeda,
we can expect relatively stable earnings on the back of steadydemand and rent levels even under such difficult conditions.
Regarding commercial facilities, we forecast competition to
become increasingly severe as major commercial facilities continue opening in the Umeda area. However, Group commercial
facility-related sales currently remain on par with the previous
fiscal year. This is attributable to renovation and major store

reshuffling in fiscal 2013 at key Group facilities (Hankyu Sanban
Gai Shopping Centre, HEP FIVE, Hankyu 32Ban Gai (restaurant
floor of Hankyu Grand Building) and HERBIS PLAZA) as well as arise in the number of visitors to the Umeda area on the whole.
Looking ahead, in the Umeda area, the Group’s most importantbusiness base, competition in the fields of office buildings andcommercial facilities is likely to intensify as major new properties
come on the market. However, we will enhance profitability andoptimise costs by strengthening management systems in the realestate leasing business and improve tenant relations. As the market
leader of the Umeda area, we will also increase the competitiveness of the properties we own and take measures to improve theappeal and customer-drawing power of the entire district.

Promote new large-scale development projects
The completion of the Umeda Hankyu Building and GRANDFRONT OSAKA undertaken during the Group’s Medium-Term
Management Plan has drastically transformed the Umeda area.
Planning to further expand the real estate leasing businessas well as enhance the attractiveness of and revitalise the Umeda
area, we will commence the new large-scale development
project, Umeda 1-1 Project. This project involves the rebuildingof the Dai Hanshin Building (in which the Hanshin Department
Store Umeda Flagship Store is located) and the adjacent officebuilding, Shin Hankyu Building, as an integrated complex. We will
undertake this project with the aim of completing it by 2023.

For details of the following major projects, please see theSpecial Feature section from page 30 onward).
▶ Rebuilding of Umeda Hankyu Building Project▶	GRAND FRONT OSAKA(Osaka Station North District (Umekita) Phase I Development
Area Project)▶	Umeda 1-1 Project(Dai Hanshin Building and Shin Hankyu Building Rebuilding
Project)

GRAND FRONT OSAKA

Umeda Hankyu Building

46 Hankyu Hanshin Holdings

Annual Report 2013

Real Estate

Subdivision business continues to enjoy robust sales

Note: The above figures are based on research by Real Estate Economic InstituteCo., Ltd. Reference was made to National Condominium Market Trends 2012,
Condominium Supply Forecasts in the Tokyo Metropolitan and Kansai Areas 2013,
and Condominium Market Forecasts in the Tokyo Metropolitan and Kansai Areasin the First Half of 2013.

New Supply of Condominiums (Tokyo and Kansai areas)(Unit/year)
100,000

80,00020,00074,463

83,18361,02143,733 44,535 45,602
39,08744,49931,857 33,064 30,219
36,376
21,716 23,266
31,25830,146
22,744 19,784 20,219(Est.)

Source: Real Estate Economic Institute Co., Ltd.’s National Condominium Market Trends 2012, andCondominium Market Forecasts in the Tokyo Metropolitan and Kansai Areas in the First Halfof 2013(¥ thousand/m2)■ Kansai area (average)■ Tokyo area (average)

Kansai area (thousand/m2)
Tokyo area (thousand/m2)

614

50

30

25,018

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (CY)(¥ million)

40

50,0000

Condominium Prices (Tokyo and Kansai areas)
60

3Kansai area
Tokyo area

88,516 85,429
84,14860,00040,000SectionCore Businesses:
Overview and Outlook

sales contract in the first month after a condominium comes on
the market was 78.8% in the Tokyo area and 80.4% in the Kansaiarea, both above the generally employed benchmark level of
70% for condominium sales. This indicates that the condominium market is continuing to experience firm sales.
Looking ahead, we expect new home-purchase incentives
and other measures to continue generating firm demand despite
concerns over lower consumer confidence arising from higher
consumption taxes. Against this backdrop, the Group is expected
to enjoy robust sales for the foreseeable future, with customers
appreciating its supply of high-quality properties situated inexcellent locations.

In the subdivision business, we market condominiums, residential
land lots, and single family houses. The core business is Geobranded condominiums, supplied as high value-added properties
situated in excellent locations, mainly in areas along Hankyu andHanshin lines and in the Kansai and Tokyo areas. With Geo-branded
condominiums, the focus is on quality and functionality, andquality management is strict. We use an integrated framework
spanning development, sales, and management. The Geo marquerates highly in market research into condominium brand image.
The number of individual condominium units supplied in2012 stood at 45,602 in the Tokyo area (up 2.5% year on year). This
minimal increase is attributable to a loss of momentum in market
recovery at the beginning of autumn in spite of an expected
rebound following the Great East Japan Earthquake. In the Kansaiarea, however, the number of individual condominium units
supplied in 2012 was 23,266 (up 15.1% year on year), a significant
jump over the previous fiscal year, because of the ongoing supplyof large-scale condominiums. Under these circumstances, thecombined number of units supplied by the Group in the Tokyoand Kansai areas was 1,590, ranking 12th (3rd in the Kansai area) in
nationwide condominium supply rankings.
The number of condominium units forecast to be supplied
to the market in 2013 is 50,000 in the Tokyo area (up 9.6% year
on year) and 25,000 in the Kansai area (up 7.5% year on year).
Factors behind these significant year-on-year upward projections
include the government’s continued measures to encourage
home buying, including reduced tax rates on mortgage loans,
and a growing supply of units to meet anticipated rush demandahead of the hike in the consumption tax.
In the first half of 2013, the average rate of conclusion of a

545

550

545

555

513
42.00
41.08
41.04
40.69
40.03
449
426
420
417
414
33.80
32.37
31.77
31.64
31.65

46.44

650
47.75

642

700

664

650

645
600

470

476

45.35
471

34.78

35.13

34.11

47.16
488

45.78
499

34.52

34.90

45.40
491

500

34.38 400
300

20

200

10

100

0

0

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

(CY)

Source: Real Estate Economic Institute Co., Ltd.’s National Condominium Market Trends 2012

Hankyu Hanshin Holdings

Annual Report 201347

Performance for the Fiscal 2013

Revenues and earnings rose mainly due to higher condominium sales andoccupancy at Umeda Hankyu Building Office Tower and the opening of
Department Store Building (Phase II )In the real estate leasing business, revenues from operations
decreased 0.5%, or ¥441 million, year on year to ¥81,389 million, reflecting severe operating conditions. This result occurred
despite efforts to boost the competitiveness and maintain occupancy rates of commercial facilities and office buildings held by
each Group company in the Umeda area, including re-launchingof certain sections of Hankyu Sanban Gai Shopping Centre and
HERBIS PLAZA.
Condominium sales in the subdivision business in the Kansai
area included units of the Geo Tower Takatsuki Muse Front(Takatsuki City, Osaka), Geo Branz Saito Hidamarinooka (Minoh
City, Osaka) and Geo Grande Teramachi Oike (Nakagyou-ku,
Kyoto); and in the Tokyo area, Geo Nishi Shinjuku Twin Residence(Shinjuku-ku, Tokyo) and Geo Suginami Takaido (Suginami-ku,
Tokyo).
In residential land-lot subdivisions, we marketed units including Hankyu Takarazuka Yamatedai (Takarazuka, Hyogo Prefecture),
Saito/Minoh Garden Terrace (Minoh City, Osaka), HAPIA Garden
Itayado/Kobe Yamanote (Nagata-ku, Kobe) and HAPIA Garden
Denenchofu (Ota-ku, Tokyo). As a result, condominium unit sales

increased* significantly and, in turn, revenues from operations in
the condominium subdivision business rose by 23.8%, or ¥15,661
million, year on year to ¥81,574 million.
In the other real estate businesses including development
projects, revenues from operations increased 13.8%, or ¥5,857
million, year on year to ¥48,154 million. This was mainly due tothe completion of the Rebuilding of Umeda Hankyu Building
Project, the grand opening of the Hankyu Department Store
Umeda Flagship Store in November 2012 and the opening inAugust 2012 of the Shin-Osaka Hankyu Building (Yodogawa-ku,
Osaka), which is directly connected to Shin-Osaka Station.
As a result, revenues from operations in the real estate business overall increased 11.7%, or ¥20,597 million, year on year to¥196,711 million, and operating income rose 27.0%, or ¥7,861
million, to ¥36,994 million.
*Condominium unit sales in previous year (fiscal 2012): 1,210
Condominium unit sales in year under review (fiscal 2013): 1,548
Note: Number of condominiums sold (number of deliveries) includes units inshared buildings in which only a portion of the units are subdivisions for sale.
Please refer to page 61 for details on forecasts for fiscal 2014 onward.

HAPIA Garden Itayado/Kobe Yamanote

Shin-Osaka Hankyu Building

48 Hankyu Hanshin Holdings

Geo Tower Takatsuki Muse Front

Annual Report 2013

Real Estate

Major Rental Properties
Property Name

Location

Completed

Leasable Area*
(m2)

Use

Department stores(Hankyu Department Store), Offices
Department stores(Hanshin Department Store)
Commercial facilities, Multifunctional
convention hall, Offices, Hotels(The Ritz-Carlton, Osaka)
Commercial facilities, Offices, Theatre(Osaka Shiki Theatre)
Offices, Commercial facilities, Hotel(Hotel Hankyu International)

Kita-ku, Osaka2012

213,147

Dai Hanshin Bldg.

Kita-ku, Osaka

1963

98,578

Umeda Hanshin Daiichi Bldg. (HERBIS OSAKA)

Kita-ku, Osaka

1997

81,634

Umeda Hanshin Daini Bldg. (HERBIS ENT)

Kita-ku, Osaka2004

54,787

Hankyu Chayamachi Bldg. (Applause Tower)

Kita-ku, Osaka

1992

52,074

Hankyu Sanban Gai Shopping Centre

Kita-ku, Osaka

1969

40,982

Commercial facilities

Hankyu Grand Bldg.

Kita-ku, Osaka

1977

36,023

Offices, Commercial facilities

Shin Hankyu Bldg.

Kita-ku, Osaka

1962

32,962

Offices, Commercial facilities

Hankyu Terminal Bldg.

Kita-ku, Osaka1972

26,615

Offices, Commercial facilities

Navio Hankyu (HEP NAVIO)

Kita-ku, Osaka1980

15,711

Commercial facilities

Kita Hankyu Bldg.

Kita-ku, Osaka1971

13,356

Offices, Commercial facilities

Hankyu Five Bldg. (HEP FIVE)

Kita-ku, Osaka1998

12,613

Commercial facilities

Umeda Centre Bldg.

Kita-ku, Osaka1987

10,191

Offices, Commercial facilities

NU chayamachi PLUS

Kita-ku, Osaka

2011

3,021

Commercial facilities

1992

31,630Commercial facilities, Offices

1987

21,764

Offices

2012

24,240Hotel (REMM Shin-Osaka), Offices,
Commercial facilities

Noda Hanshin Bldg. (WISTE)
Fukushima Hanshin Bldg.
Shin-Osaka Hankyu Bldg.

Fukushima-ku,
Osaka
Fukushima-ku,
Osaka
Yodogawa-ku,
OsakaSannomiya Hanshin Bldg.

Chuo-ku, Kobe

1933

13,672

Department stores (SOGO)

Motomachi Hanshin Bldg.

Chuo-ku, Kobe

1987

7,865

Outside horse-racing ticket booth

Kobe Hankyu Bldg.

Chuo-ku, Kobe

1936

7,658

Commercial facilities

Hankyu Nishinomiya Gardens

Nishino miya,
Hyogo

2008

108,215

Department stores (Hankyu Department
Store), Commercial facilities

EBISTA Nishinomiya(Commercial facility under elevated railway tracks)

Nishinomiya,
Hyogo

2003

10,359Commercial facilities

Itami Hankyu Station Bldg. (Itami Reita)

Itami, Hyogo

1998

11,800Commercial facilities

1974

38,237

Department stores (Takashimaya)

2007

2,979

Commercial facilities

Hankyu Kawaramachi Bldg.
Kotocross Hankyu Kawaramachi

Shimogyo-ku,
Kyoto
Shimogyo-ku,
Kyoto

Katsura Higashi Hankyu Bldg.
(MEW Hankyu Katsura)

Nishigyo-ku,
Kyoto

1993

2,915

Commercial facilities

TX Akihabara Hankyu Bldg. (AKIBA TOLIM)

Chiyoda-ku,
Tokyo

2008

10,297

Hotel (REMM Akihabara), Commercial
facilities

Section3

Core Businesses:
Overview and Outlook

Umeda Hankyu Bldg.

* Leasable area does not include areas for public use.

Hankyu Hanshin Holdings

Annual Report 201349

Entertainment and Communications
Major
Businesses◻ Sports business:

Professional baseball business (the Hanshin Tigers) and Hanshin Koshien Stadium, and related businesses◻ Stage businesses:

Takarazuka Revue and related businesses, operation of Umeda Arts Theatre and promotion of stage productions◻ Communication and media businesses:

Cable television business, information technology services, etc.

◻ Leisure businesses:

Facilities on top of Mt. Rokko, and other leisure businesses

Snapshot
Performancein FY2013

Revenues from Operations¥108.6 billion (+6.2%)

Operating Income¥12.6 billion (+24.1%)

Priority Issues
1 	Maximise the value of the Hanshin Tigers, Koshien and Takarazuka brands	 Improve the appeal of live events(create superior attractions, train and acquire star talent, and increase the appeal of our live-event venues) Broaden the fan base and improve customer retention	(leverage Customer Relationship Management, strengthen promotion through external media, undertake
initiatives based on the Takarazuka Revue’s centennial in 2014)
 Create value chain of live events, media, and secondary contents	(enhance the appeal of established media, broaden the range of media channels)
2 	Stable growth of the communication and media business	  In the cable television business, enhance community-based services and gain customers by boosting productcompetitiveness In information technology businesses, focus on promising long-term growth areas and expand businesses in the	Tokyo metropolitan market
3 	Leverage our leisure facilities (facilities on top of Mt. Rokko)	  Enhance the attractiveness of Mt. Rokko and its customer-drawing power by taking advantage of facilities thatbring together its natural, scenic and various other attractive features

50 Hankyu Hanshin Holdings

Annual Report 2013

Key Facts and Business Environment

Two attractions enhancing Group brand value
Hanshin Koshien Stadium, and Takarazuka Revue brands retain
their popularity and passionate fan bases all over Japan, and thegames and shows continue to draw crowds. These two powerfulbrands are assets that none of our rivals can match and form a
proprietary core strength of the Group, contributing significantly
to Group brand value.
We will work to maximise the Group’s brand value by pursuing high-quality performances that deliver inspiration anddreams to our customers.

Section3

Core Businesses:
Overview and Outlook

According to the Ministry of Internal Affairs and Communications
Statistics Bureau’s Family Income and Expenditure Survey, recreational service expenditure of total household in 2012 (real terms)
rose 2.7% year on year, the first increase in three years.
Despite being seen as recession proof given its relatively
weak correlation with economic trends, it is more apparent thanever that the live entertainment industry has become polarised
due to a greater interest in only a few attractions and fierce competition in other areas.
Despite these headwinds, our unique Hanshin Tigers and theHanshin Tigers and the Hanshin Koshien Stadium
Total Attendances at Hanshin Tigers Home GamesOf the professional baseball leagues in Japan, the Hanshin Tigers
has both one of the longest histories and a bedrock of fans not(Thousand)
4,000
only in their home area, Kansai, but also across Japan. Attendances
at home games in the Pennant Race have been the largest in
3,007
3,006
2,977
3,000
2,898
2,728
Japan for seven consecutive years until 2011. The Hanshin Tigers
were the only one of the 12 professional baseball teams in Japan
2,000
to register total attendances of over 3 million people in the 20052007, 2009 and 2010 seasons.
1,000
Opened in 1924, the Hanshin Koshien Stadium is a sports(Central League rankings)
venue of considerable historical value. Known as the home
2nd
4th
2nd
4th
5th
0
ground of the Hanshin Tigers and also the home of the spring and
2008
2009
2010
2011
2012 (CY)summer high school baseball championships, it now also hosts
major events such as the Koshien Bowl (annual American college football final) and open-air concerts.
In the spring of 2010 we completed a renovation of the Stadium, which had been undertaken in three phases starting
in autumn 2007. The works included seismic reinforcement, replacement of the “silver umbrella” roof cover and floodlighting,installation of new seating and refurbishment of food and drink outlets, resulting in a more safe and comfortable spectator spacethat generates improved earnings.

Takarazuka Revue
Performances are given all over Japan by the Takarazuka Revue, which is based at two main venues, the Takarazuka Grand Theatre(Hyogo Prefecture, 2,550 seats) and the Tokyo Takarazuka Theatre (2,069 seats). Repertoires span a wide range of Japanese andwestern material, including overseas musicals. Takarazuka Revue has made a name for itself for major individual musical and show
productions that are performed throughout the year. In 2012, the troupes gave over 450 performances at both its main theatres, infront of a total of approximately 2.5 million people during the year, including troupe tours of venues nationwide.

Hankyu Hanshin Holdings

Annual Report 201351

Entertainment and Communications

Takarazuka Revue performs in Taiwan for the first timeIn April 2013, the Takarazuka Revue performed in Taiwan.
Although it boasts an overseas track record of 17 countries
spanning back before World War II, this marks the first timeever that the Takarazuka Revue has performed in Taiwan. To
date, overseas performances were by government invitation topromote friendly relations. Expanding beyond this, the Taiwan
performance enabled the Takarazuka Revue to accumulate theknowhow required to perform in new regions, taking it uponthemselves to secure a venue, sell tickets and engage in marketing activities that include television commercials. Accordingly,
the Taiwan performance was positioned as a preliminary step tofurther expand the Takarazuka Revue’s activities throughout Asia.
With approximately 18,000 people in attendance, the Taiwan
performance was sold out throughout its nine-day, 12-show run,coming to a close as an overwhelming success.

©Takarazuka Revue Company

Musical entitled Chu Liuxiang, based on a popular Taiwanese mystery novel

Performance for the Fiscal 2013

Revenues and earnings increased mainly due to steady performance in the
sports and stage businesses as well as the contribution from consolidation of
Himeji Cable Television Co., Ltd.
In the sports business, decreases in Hanshin Tigers regular season
home games (from 74 in fiscal 2012 to 70 in fiscal 2013), lower
attendance figures and other factors caused revenues fromoperations to fall 4.6%, or ¥1,076 million, year on year to ¥22,374
million. This result occurred, despite the Tigers’ fan base and ourmeasures to make the most of the Hanshin Koshien Stadiumby leveraging food, drink and merchandising outlets and fanoriented services through special event programmes as well as
the favourable ratings we have received for our newly developed
food and drink menu.
In the stage business, the stage revue business had notablesuccesses with productions at the Takarazuka Grand Theatre
and Tokyo Takarazuka Theatre of Versailles no Bara — Oscar to
Andre (La Rose de Versailles — Oscar and Andre), performed by
the Tsuki (Moon) troupe, and the Yuki (Snow) troupe’s farewell
performance of JIN and GOLD SPARK!. These productions commemorate the Takarazuka Revue’s centennial year, which extends
throughout 2013 and 2014. In the theatre business, we put ona variety of highly topical productions that received favourable reviews, including Elizabeth Special Gala Concert at Osaka’s
Umeda Arts Theatre and Tokyo’s Tokyu Theatre Orb, and features
the previous cast of the Takarazuka Revue’s Elizabeth. As a result,

52 Hankyu Hanshin Holdings

Annual Report 2013

revenues from operations in the stage business increased 9.5%,
or ¥2,442 million, year on year to ¥28,235 million.
The communication and media and other businesses in thissegment began offering as part of their information technology services high-speed public wireless LAN services at retailfacilities located along rail lines, including Hankyu Sanban Gai
and HEP FIVE, as well as all stations at Hanshin Electric Railway,
Nosé Electric Railway and Kita-Osaka Kyuko Railway. This service has also been gradually expanded to stations operated
by the Hankyu Corporation. In the cable television business,
subscriber numbers steadily grew mainly thanks to expanding
mobile phone set menus and introducing discount plans forlong-term contracts. In addition, Himeji Cable Television Co., Ltd.
and YMIRLINK Inc. were added to the scope of consolidation.
Consequently, revenues from operations in these businesses
increased 8.7%, or ¥5,068 million, year on year to ¥63,407 million.
As a result, revenues from operations in the Entertainment
and Communications Business overall improved 6.2%, or ¥6,294
million, year on year to ¥108,608 million, and operating income
increased 24.1%, or ¥2,442 million, to ¥12,584 million.
Please refer to page 62 for details on forecasts for fiscal 2014 onward.

Travel and International Transportation
Major
Businesses◻ Travel Business:

Hankyu Travel International Group (7 companies) Total billings: ¥387.5 billion (No.2 in the industry)* Total billings are Hankyu Travel International (non-consolidated) figures for fiscal 2013.

◻ International Transportation Business:

Hankyu Hanshin Express Group (24 companies)
Sales: ¥74.2 billion* Sales are total of Hankyu Hanshin Express Group figures for fiscal 2013.

Snapshot
Performancein FY2013

Revenues from Operations

Operating Income¥70.8 billion (+4.8%) ¥4.4 billion (+40.0%)

Section3

TravelBusiness

1 Improve sales capabilities
S trengthen product lineup, step up operations in Tokyo area, expand sales channels and promote
cross-media strategies
2 Raise customer satisfaction levels
Rigorous quality and risk management

Core Businesses:
Overview and Outlook

Priority Issues

3 Create fundamentals for stable earnings and enhance management resources
Improve process efficiencies in back office/administrative departments
Develop diverse human resources

International
Transportation
Business

1 Strengthen our marketing capabilities
Further promote global sales, deepen involvement in the marine cargo/logistics business, effectively utilise
marketing and investigate expanding services into new areas
2 Expand networks in promising markets
Expand networks in emerging markets
3 	Promote global management Develop diverse human resources and strengthen governance andrisk management systems

Hankyu Hanshin Holdings

Annual Report 2013

53

Key Facts and Business Environment

Travel

Aim to achieve the highest customer approval ratings in the industry
Since the 1990s, the Group’s travel businesses have focusedon using newspapers and other media (mail-order and online
sales) to market packages, which are organised under a stableof brands spearheaded by the mainstay Trapics marque. Billingsfor overseas travel, a particular strength, were the third-highest
in Japan in fiscal 2013, and our position in the domestic travel
sector is sixth. This business is growing steadily. We now placesecond overall in total billings in the travel sector in Japan.
The business environment is characterised by external factors such as economic and social trends, earthquakes and othernatural disasters, risks to which the travel industry is particularly

Total Travel Billings (FY2013)
Rank

Company namesusceptible. Despite this, our travel business is working to maintain steady growth in both international and domestic operations
by developing and quickly bringing to market products thatleverage advertising-driven sales, a particular strength of Hankyu
Travel International.
Looking ahead, we plan to broaden our lineup to satisfy
increasingly diverse demands, aiming ultimately to achieve thehighest customer approval ratings in the sector through a constantfocus on safety, comfort and providing inspiration and dreams. We
aim to attract still more customers by working together to provide
high-quality travel services that truly meet customer wishes.

Overseas Travel Billings (FY2013)¥ billion

Rank

1

JTB

1,446.7

1

2

Hankyu Travel International

387.5

3

Nippon Travel Agency

387.0

4

HIS

5

Company nameDomestic Travel Billings (FY2013)¥ billion

Rank

Company name¥ billion

JTB

507.4

1

JTB

907.4

2

HIS

348.6

2

Rakuten Travel

309.3

3

Hankyu Travel International

257.6

3

Nippon Travel Agency

237.2

378.4

4

JTB World Vacations

247.8

4

Kinki Nippon Tourist

201.1

Kinki Nippon Tourist

327.8

5

Nippon Travel Agency

138.6

5

ANA Sales

179.4

6

Rakuten Travel

327.5

6

Kinki Nippon Tourist

117.3

6

Hankyu Travel International

129.5

7

JTB World Vacations

247.8

7

JALPAK68.7

7Club Tourism International

100.5

8

ANA Sales

203.5

8

Club Tourism International

52.4

8

JALPAK

100.4

9

JALPAK

169.0

9

NIPPON EXPRESS TRAVEL

49.1

9

JR TOKAI TOURS

81.5

10

Club Tourism International

153.0

10

Travel Plaza International

45.3

10

Top Tour78.3

Source: Japan Tourism Agency Bulletin : Business Volume for Major Travel Agents (April 2012 to March 2013)* Billings are rounded down to the nearest ¥100 million.

International Transportation

Aim to be an innovative logistics provider by consistently offering original value
worldwide
Even compared with other Japanese freight forwarding companies,
which are strong players in the global distribution sector, the Hankyu
Hanshin Group’s international transportation business has led rivals
in marine transportation and logistics to create a framework that
optimises our customers’ supply chain management. We are a total
provider of logistics management systems, capable of handling

54 Hankyu Hanshin Holdings

Annual Report 2013

multiple transportation modes from bases all over the world. By
using advanced information technologies, we have built up an
infrastructure capable of meeting the increasingly sophisticatedlogistics needs of our customers.
We are currently confronted by strong demands to rapidly adapt
to changing and diversifying business conditions, including the riseTravel and International Transportationof globalisation and emerging markets. At the same time, we areentering a new phase in which we must answer the key questions:
how do we prevail over global competition and what can be done
to maintain continuous growth while contributing to society?
Under these circumstances, we will build a system forconsistently providing total solutions. To this end, we are positioning
fiscal 2014 as the first year of our innovation initiatives, promoting
global management, optimising our business portfolios, strengthening our business foundation and meeting the diverse needs ofcustomers.

Number of offices: 34 domestic/96 overseas; Number of employees: 1,953 (as of 1st April 2013)NORTH
AMERICAEUROPE &MIDDLE EASTFRANKFURTDUSSELDORF

EAST ASIA
BEIJINGSHANGHAIGUANGZHOUCHENGDU
CHONGQINGDALIANDONGGUANFUZHOUHANGZHOU
NANJINGNINGBOQINGDAOSHENYANGSHENZHENSUZHOUTANGSHANTIANJINWUHANWUXIXIAMENYANTAIZHENGZHOUHONG KONG
TSING YITAIPEI
KAOHSIUNGTAICHUNGJOHOR BAHRUPASIR GUDANGPENANGPORT KLANGSINGAPORE
MANILACEBU
JAKARTA
HANOI
BINH DUONG
HAI PHONG
HO CHI MINH
DELHI
BANGALORECHENNAIMUMBAI

ASEAN

JAPAN &KOREA

BANGKOKCHIANG MAILAEM CHABANGKUALA LUMPUR
BUTTERWORTH

TOKYO
OSAKA
AICHI
CHIBA
FUKUOKAGUNMA
HYOGOISHIKAWA
KAGAWA
KANAGAWAKUMAMOTOKYOTO
MIYAGINIGATAOKAYAMASAITAMASHIGASHIMANESHIZUOKA

Section3

Core Businesses:
Overview and Outlook

CHICAGOATLANTACINCINNATIDALLASDETROIT
HOUSTONLOS ANGELES
McALLEN
MEXICO CITY
NASHVILLENEW YORKSAN DIEGOSAN FRANCISCO
SAO PAULOSEATTLETORONTOPRAGUELONDONAMSTERDAMROTTERDAM
BRUSSELS
PARIS
MILAN
VIENNADUBAIMOSCOWSEOUL
BUCHEON
INCHEON
PUSAN

Performance for the Fiscal 2013

Although international transportation experienced sluggish logistics demand,
the travel business recorded higher revenues and earnings thanks mainly torobust performance from Europe-bound tourists
Regarding our travel business, despite decreases in the numbers of
tourists visiting China and South Korea beginning in early autumn,
overseas travel operations experienced robust performance centred on Europe-bound tourists thanks to the creation of attractive
vacation packages and aggressive marketing drives. In addition,
domestic travel operations have been steadily recovering from the
major impact of the Great East Japan Earthquake, which continued
throughout the previous fiscal year. This was primarily attributable tothe opening of the new tower, TOKYO SKYTREE, the impact of which
drove up the number of tourists visiting the Kanto region. As a resultof the above, revenues from operations in the travel business wereup 14.3%, or ¥4,265 million, year on year to ¥34,086 million.
The international transportation business worked to strengthen
systems able to provide high quality services to customers,

including establishing new offices in Vietnam, Central and SouthAmerica and other regions as well as enhancing its global network. Nevertheless, operating conditions remained severe due
to weakness seen in worldwide logistics demand in light of theEuropean economic recession, stagnant growth in China and otherfactors. Consequently, revenues from operations in our internationaltransportation business decreased by 2.7%, or ¥1,013 million, year
on year to ¥36,745 million.
As a result of the above, revenues from operations in the Traveland International Transportation Business increased by 4.8%, or¥3,269 million, year on year to ¥70,840 million, and operating
income rose 40.0%, or ¥1,269 million, to ¥4,441 million.
Please refer to pages 62-63 for details on forecasts for fiscal 2014 onward.

Hankyu Hanshin Holdings

Annual Report 201355

Hotels
Major
Businesses◻ Principal directly operated hotels:
Hotel Hankyu International [Number of rooms: 168; total capacity: 316]
Hotel new Hankyu Osaka [Number of rooms: 922; total capacity: 1,304]
Dai-ichi Hotel Tokyo [Number of rooms: 277; total capacity: 554]
The Ritz-Carlton, Osaka* [Number of rooms: 292; total capacity: 584]

* T he Ritz-Carlton, Osaka is operated by the
Ritz-Carlton hotel chain under the managementof Hanshin Hotel Systems.

Snapshot
Performancein FY2013

Revenues from Operations¥64.7 billion (+0.9%)

Operating Income¥0.5 billion (previous fiscal year:-¥0.3 billion

Priority Issues
1 	Improve profitability of established hotels
	  Improve appropriateness of management resource allotment and established growth strategies	  Invest appropriately in product value improvement   Improve sales and productivity
2 	Expand chain by opening new directly managed hotels	  Further develop the REMM brand	  Increase profit margins by focusing more on hotels specialising in lodging services
3 	Expand businesses operated under franchise/management contracts	 Grow earnings at established hotels run under franchise, with chain headquarters providing operational services  Run more hotels through franchises, leveraging chain operational know-how and brand image	

56 Hankyu Hanshin Holdings

Annual Report 2013)

Key Facts and Business Environment

One of the leading hotel groups in Japan
Since the opening of the Takarazuka Hotel in 1926, the HankyuHanshin-Daiichi Hotel Group has been engaging in the management of various types of hotels as one of the leading hotel

groups in Japan, with a total of 50 hotels and 10,445 guest rooms(as of 1st April 2013).

Conditions in the hotel market and our response
are implementing various measures to boost competitiveness,
including selecting locations and eliminating unprofitable hotels.
* White Paper on Leisure, fiscal 2013 edition, published by Japan Productivity Center

Size of the Hotel Market in Japan(¥billion)

1,200
1,000

1,093 1,038
1,041 1,072

976

976

949

2009

2010

2011 (CY)

Section3

Core Businesses:
Overview and Outlook

According to estimates by Japan Productivity Center*, Japan’s
hotel market continued to expand from 2003 through 2007
(based on sales). However, in 2009 and 2010, room demand
slumped and the scale of the hotel market fell back to ¥976
billion, 10% below its peak in 2007. This was due to a decline
in numbers of business-people visiting Japan after the global
economic crisis following the collapse of Lehman Brothers in
the autumn of 2008 and to weak leisure spending owing to the
H1N1 flu scare in 2009. In 2011, the size of the market contracted
further to ¥949 billion due to sluggish demand in the aftermathof the Great East Japan Earthquake and subsequent nuclear
accident.
To respond to this challenging environment, we undertook renovation focusing on Hotel Hankyu International andKichijoji Dai-Ichi Hotel to meet customer needs. In addition, we

800
600
400
200
0
2005

2006

2007

2008

Performance for the Fiscal 2013

Revenues increased and returned to profitability mainly due to a recovery
in demand, which had been impacted in fiscal 2012 following the Great East
Japan Earthquake
In the Hotels Business, demand steadily recovered despite being
sluggish during fiscal 2012 in the aftermath of the Great East
Japan Earthquake. Under these circumstances, we opened thefourth REMM hotel, REMM Shin-Osaka, in September 2012—
which prioritises a good night’s sleep over other services—asa new business base. In addition, we undertook measures tomaintain and increase earnings. These include the Takarazuka
Hotel opening a restaurant in Bimi Shunsai Dining and Bar on the
12th floor of the Umeda Flagship Store of Hankyu Department
Store, newly opened in November 2012, as well as undertaking
renovations concentrating on the Kichijoji Dai-Ichi Hotel’s lobby

and guest rooms. We have also embarked on an aggressive marketing drive that included selling various commemorative plans
to mark the 15th anniversary of the opening of The Ritz-Carlton,
Osaka in May 2012 and the 20th anniversary of the Hotel Hankyu
International in November 2012.
As a result, revenues from operations in the Hotels Businessincreased 0.9%, or ¥607 million, year on year to ¥64,697 million,
while operating income improved by ¥794 million from an operating loss recorded in the previous fiscal year to ¥525 million.
Please refer to page 63 for details on forecasts for fiscal 2014 onward.

Hankyu Hanshin Holdings

Annual Report 201357

Retailing
Major
Businesses◻ Retail: Hankyu Retails Corporation, Book 1st. Corporation
Convenience store chain asnas, station kiosk chain Lagare shop,
high-end supermarket chain Seijo Ishii*, cosmetics chain COLOR FiELD,
the furniture and daily accessories chain DOUBLEDAY,
the Cleduple cosmetics and accessories store with powder rooms,
the general accessory store a.d.r.e.s., bookstore chain Book 1st., etc.

* S eijo Ishii is operated under a franchise
agreement with Seijo Ishii Co., Ltd.

Snapshot
Performancein FY2013

Revenues from Operations¥53.3 billion (-1.1%)

Operating Income¥1.4 billion (+4.1%)

Priority Issues
1 	Strengthen the competitiveness of each retail format	  Deepen the specialisation and build up the brand of each retail format
 Consolidate and improve current earnings levels at established stores and expand the business through store openings and	refurbishments2 	Develop formats to drive future business growth3 	Create a more efficient operating model for back-office administration

58 Hankyu Hanshin Holdings

Annual Report 2013

Key Facts and Business Environment

Retailing formats located inside and near stations
The Group’s Retailing Business is mainly focused on stores inside
and near station buildings (Ekinaka, Ekichika). Outlets and operators include station kiosks such as Lagare shop, the convenience
store chain asnas, and formats run with partners. We also operate
the general merchandise formats COLOR FiELD and DOUBLEDAY.
We are extending these businesses beyond areas served by ourlines and boosting their brand power and competitiveness.
An asnas convenience store in Umeda
Hankyu Building

Many of the retail formats and stores run by the Group’s Retailing
Business can expect comparatively stable sales revenues, thanks
to their location within stations and their wide range of businesses. These have been strengths of the Group’s operations.
However, our station-based retailing operations will continue
to face difficult conditions. A long-term increase in train use isunlikely amid with rising numbers of senior citizens and a lower
birth rate. In addition, the number of in-station shops at otherrailway operators is on the rise, forcing our partner companies tobe more rigorous in site evaluation.
Against this backdrop, the Group is taking measures tostrengthen competitiveness and improve business efficiency
in each retail format. In order to make our stations pleasanter
places for customers to frequent, we are also improving theappeal of our stations and retail outlets mainly through majorrenovations of in-station stores at the Hankyu Umeda Station,

Hankyu Corporation’s largest terminal.
From fiscal 2014 onward, we will eliminate the core
Retailing Business and transfer its operations to the core Urban
Transportation Business in order to strengthen stores inside
and near station buildings as well as further increase the valueof Group railway lines. Promoting the expansion of Urban
Transportation as an integrated business, we will continuebuilding on our previous initiatives (including the retention of
consumption along Group railway lines and offering a diverse
array of stores to reinvigorate and improve the attractiveness of
our railway lines). In addition, we will enhance the attractivenessand competitiveness of facilities inside and near stations, startingwith the continually developing Umeda area.
The Book 1st. bookstore chain was sold to an outside company
on 1st April 2013.

3

Core Businesses:
Overview and Outlook

Expand Urban Transportation as an integrated business

Section

Performance for the Fiscal 2013

Increased earnings based on cost reductions, despite decreased revenues
mainly due to business restructuring in certain areas
In store strategy, we undertook renovation work to boost thecompetitiveness of existing stores. In addition, we continued
actively working to enhance our store network, including opening a new asnas convenience store on the first basement floorof the Hankyu Sanban Gai shopping centre (Kita-ku, Osaka) andtwo Cook Deli Gozen shops (which sell delicatessen items), one

at Suminodo (Daito City, Osaka Prefecture) and one at Kishiwada
CanCan (Kishiwada City, Osaka Prefecture).
As a result, revenues from operations in the Retailing Businessdecreased 1.1%, or ¥600 million, year on year to ¥53,253 million.
However, operating income increased 4.1%, or ¥54 million, to¥1,387 million primarily thanks to efforts to curb costs.
Hankyu Hanshin Holdings

Annual Report 201359

Forecasts for Fiscal 2014 Onward(Numerical Targets for Each Core Business in the New Segment Classification)

In order to facilitate further growth in each core business while improving enterprise value Groupwide, certain core businesses
shown below were restructured in April 2013. The numerical targets for each core business on the following pages list figures basedon the previous core business segments used until fiscal 2013 and the new core business segments for fiscal 2014 and fiscal 2016.

Core Business Restructuring (From 1st April 2013)
Previous

From fiscal 2014 onward■ Urban Transportation■ Urban Transportation

Railway operations
Automobile
Retailing
Advertising
Other■ Real Estate■ Entertainment and Communications■ Real Estate

SportsStage
Communication and media and other businesses
Advertising business of Hankyu Corporation
Hankyu Communications
Hanshin Contents Link
Itec Hankyu Hanshin and Bay Communications, etc.

Real estate leasing
Real estate sales and other business■ Entertainment and Communications
SportsStage
Communication and media and other businesses
Itec Hankyu Hanshin and Bay Communications, etc.

Eliminate intermediateholding company
system■ Travel and International Transportation■ Travel■ Hotels■ International Transportation■ Retailing■ Hotels

Bookstore chain business (Book 1st.)

Other/Group adjustment

Other/Group adjustment
Sold to an outsidecompany

Operating Income by Core Business (comparison of previous and new segments)
Prior to Core Business Restructuring (Previous Segments)(¥ billion)

After Core Business Restructuring (New Segments)(¥ billion)

FY2014 Compared with FY2016
Est. previous segments Plan

FY2013Results

FY2014Est.

Comparedwith FY2013

FY2016
Plan

Comparedwith FY2014

Urban Transportation

34.7

32.6

-2.1

31.7

-0.9

Urban Transportation

34.9

+2.3*

34.4

-0.5

Real Estate

37.0

36.0

-1.0

34.9

-1.1

Real Estate

36.3

+0.3

35.2

-1.1

9.9

-1.3

10.9

+1.0

Comparedwith FY2014

Entertainment andCommunications
Travel andInternational Transportation

12.6

11.2

-1.4

12.7

+1.5

Entertainment andCommunications

4.4

4.5

+0.1

5.1

+0.6

Travel

2.5

—

2.6

+0.1

Hotels

0.5

0.9

+0.4

1.4

+0.5

International Transportation

2.0

—

2.5

+0.5

Retailing

1.4

1.2

-0.2

1.2

0

Hotels

0.9

—

1.4

+0.5

Total of six core businesses

90.6

86.4

-4.2

87.1

+0.7

Total of six core businesses

86.4

—

87.1

+0.7

Total operating income

87.9

84.0

-3.9

85.0

+1.0

Total operating income

84.0

—

85.0

+1.0

* The ¥2.3 billion increase recorded by Urban Transportation includes thetransfer of the Retailing Business and advertising operations.

60 Hankyu Hanshin Holdings

Annual Report 2013

Urban Transportation
In fiscal 2014, we forecast revenues from operations to increase 18.9%, or ¥36.7
billion, year on year to ¥230.3 billion. Despite revenue levels in the railway and bus
and taxi businesses expected to remain on par with the previous fiscal year, thisforecast takes into account the transfer of advertising operations and the Retailing
Business accompanying the restructure of core businesses. We forecast operating
income to edge up 0.4%, or ¥0.2 billion, to ¥34.9 billion because of the transfer of
the abovementioned businesses, despite expected hikes in power and fuel costs
caused by higher electricity rates as well as a forecasted increase in repair expenses.
For fiscal 2016, we project revenue levels in the railway and bus and taxi
businesses to be nearly on par with fiscal 2014, while in advertising operations,
we anticipate new revenue-generating media to be available following thecompletion of modernising works at Hankyu Umeda Station. As a result of
these and other factors, we project revenues from operations to increase a
1.2%, or ¥2.7 billion, to ¥233.0 billion compared with our forecasts for fiscal
2014. However, we project operating income to be almost on par with fiscal
2014 at ¥34.4 billion due largely to depreciation and amortisation expenses
accompanying capital expenditure in new rolling stock construction in therailway business, despite an expected increase in revenue.

■■■ Operating income

Revenues from operations

Operatingincome(¥ billion)
50

Revenues
from operations(¥ billion)
250

191.1 191.5 191.9 192.9 192.7

40

32.2 32.3 31.0

30

32.3

29.4

230.3

233.0

193.6 [193.2][194.5]

34.7

34.9

[32.6]

200

34.4[31.7]

150

20

100

Section35002008 2009 2010 2011 2012 2013

2014

(Est.)

0
(FY)

2016

(Plan)

Core Businesses:
Overview and Outlook

10* Figures in the brackets refer to core businesses prior to restructuring.

Hankyu Corporation and Hanshin Electric Railway: Performance Forecasts (Fiscal 2014)
Fare revenues (¥ million)*

HankyuHanshin

Total
Total

Passenger volumes (thousands)*

FY2014FY2013

Change%FY2014FY2013

Change%91,61730,18891,14130,410

476
-221

0.5%
-0.7%

618,139
220,672

615,324
221,133

2,814
-461

0.5%
-0.2%

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

Real Estate
In fiscal 2014, we forecast revenues from operations to increase 5.2%, or¥10.3 billion, to ¥207.0 billion, which factors in full-year rental income for
the Umeda Flagship Store of Hankyu Department Stores within Umeda
Hankyu Building as well as improved occupancy rates at the Umeda
Hankyu Building Office Tower. However, operating income is forecast to
decrease 1.9%, or ¥0.7 billion, to ¥36.3 billion because of the projected
impact of intensifying competition on existing rental facilities.
For fiscal 2016, we project revenues from operations to rise 3.1%, or¥6.5 billion, to ¥213.5 billion compared with our forecasts for fiscal 2014.
This mainly assumes that the Umeda Hankyu Building and other development properties will enter a stable rental income phase as well as higher
earnings capability by strengthening real estate leasing management
models and cost effectiveness. However, we project operating income todecrease 3.0%, or ¥1.1 billion, to ¥35.2 billion compared with our forecasts
for fiscal 2014. In spite of high income levels anticipated in fiscal 2014
for the condominium subdivision business, this plan mainly reflects the
projected impact of consumption tax rate hikes in fiscal 2016 and lower
rental income following the commencement of the Umeda 1-1 Project.

■■■ Operating income
Operatingincome(¥ billion)
80

Revenues

196.7
179.8

207.0
[205.4]213.5 from operations(¥ billion)
200[212.2]

176.1

170.2 168.5

60

40

Revenues from operations

150

152.7
41.7
33.7

37.0 [36.0]36.3 [34.9]35.2

30.9
24.0

100

29.1
50

20

0

2008 2009 2010 2011 2012 2013

2014

(Est.)

2016(Plan)0(FY)* Figures in the brackets refer to core businesses prior to restructuring.

Hankyu Hanshin Holdings

Annual Report 201361

Entertainment and Communications
In fiscal 2014, we forecast revenues from operations to decrease 2.7%,
or ¥2.9 billion, year on year to ¥105.7 billion. In spite of an anticipatedincrease in revenue from broadcasting rights fees caused by a rise in thenumber of Hanshin Tigers home games, this forecast is mainly basedon the transfer of advertising operations to the Urban Transportation
Business and an expected decline in the number of theatrical performances other than those held at the Takarazuka Grand Theatre and theTokyo Takarazuka Theatre in the stage business. Operating income isforecast to fall 21.4%, or ¥2.7 billion, year on year to ¥9.9 billion primarily
due to the abovementioned decrease in revenue as well as the stage
business’ efforts to expand advertising to promote the centennial of the
Takarazuka Revue in 2014.
For fiscal 2016, we project revenues from operations to climb 5.7%,
or ¥6.0 billion, to ¥111.7 billion, and operating income to rise 10.1%,
or ¥1.0 billion, to ¥10.9 billion from our forecasts for fiscal 2014. These
plans mainly assume growth in the cable television business and information technology services along with lower expenses after expanded
advertising to promote the centennial of the Takarazuka Review runs its
course in fiscal 2014.

■■■ Operating income

Revenues from operations

Operatingincome(¥ billion)
20

105.8
15

107.9

99.4

108.6

103.4

[111.7]

10

111.7

105.7

102.3

90

[12.7]

12.6
10.8 10.7 11.1

Revenues
from operations(¥ billion)[119.0]120

10.0 10.1[11.2]

9.9

10.9

60

30

5

0

2008 2009 2010 2011 2012 2013

2014

(Est.)

2016(Plan)0(FY)* Figures in the brackets refer to core businesses prior to restructuring.
* From fiscal 2014 onward, Hankyu Railway’s transportation and advertising
operations will be transferred to the Urban Transportation Business.

TravelIn fiscal 2014, we forecast revenues from operations to increase 2.3%, or¥0.8 billion, year on year to ¥34.9 billion and operating income of ¥2.5
billion, on par with favourable performance in fiscal 2013. Although
tourist numbers for such countries as China and South Korea are
expected to decline, these forecasts assume robust sales of mainstay
European travel packages as well as destinations including North andSouth America.
For fiscal 2016, we project revenues from operations to rise 5.7%, or¥2.0 billion, to ¥36.9 billion, and operating income to increase 4.0%, or¥0.1 billion, to ¥2.6 billion compared with our forecasts for fiscal 2014.
These plans assume continuous growth based on expansions in product lineups and sales channels, including upgrades in the reservation
environment.

■■ Operating income

Revenues from operations

Operatingincome(¥ billion)
4

Revenues
from operations(¥ billion)
40

36.9
3

33.4

34.1

32.1

31.3
29.8

29.8

2.5

34.9
2.5

30

2.6
20

2

1.4

1.2

10

1

0.7

0.6
0

0

2008

2009

2010

2011

2012

2013

2014

(Est.)

2016(Plan)0(FY)* D ue to the restructuring of core businesses, the Travel Business andInternational Transportation Business have been separated into independent core businesses from fiscal 2014 onward. Consequently, between
fiscal 2008 and fiscal 2013, actual figures for the Travel Business are shown
separately from those for the core Travel and International Transportation
Business and exclude expenses shared by both businesses, such as corporate expenses.

62 Hankyu Hanshin Holdings

Annual Report 2013

Forecasts for Fiscal 2014 Onward(Numerical Targets for Each Core Business in the New Segment Classification)

International Transportation■■ Operating income
Operatingincome(¥ billion)
5

Revenues from operations
Revenues
from operations(¥ billion)
50

46.0

4

33.1

36.5

37.8

36.7

36.0

38.6

33.9

3

40

30

2.5

2.3
2

2.0

1.8

1.7

1.5

20

10

1

0.3
0

0

-0.2
-1

2008

2009

2010

2011

2012

2013

2014

(Est.)

2016(Plan)(FY)

Section3

Core Businesses:
Overview and Outlook

In fiscal 2014, we forecast revenues from operations to decline 1.9%, or¥0.7 billion, year on year to ¥36.0 billion due to a steady fall in revenue
expected mainly in the first half amid continually severe operating conditions. However, operating income is forecast to improve 11.1%, or ¥0.2
billion, to ¥2.0 billion primarily because of a gradual rebound in demand
expected throughout the year mainly in the ASEAN region and East Asia
as well as efforts to cut costs by improving operational efficiency.
For fiscal 2016, we project revenues from operations to rise 7.2%,
or ¥2.6 billion, to ¥38.6 billion and operating income to grow 25.0%,
or ¥0.5 billion, to ¥2.5 billion from our forecasts for fiscal 2014. These
plans assume ongoing growth amid economic expansion in emerging
markets centred in Asia.

* D ue to the restructuring of core businesses, the Travel Business andInternational Transportation Business have been separated into independent
core businesses from fiscal 2014 onward. Consequently, between fiscal 2008
and fiscal 2013, actual figures for the International Transportation Businessare shown separately from those for the core Travel and International Transportation Business and exclude expenses shared by both businesses, such as
corporate expenses.

HotelsIn fiscal 2014, we forecast operating income to jump 80.0%, or ¥0.4
billion, year on year to ¥0.9 billion. Despite higher electricity rates, thisforecast mainly reflects an improvement in profit and loss following theelimination of unprofitable hotels during the previous fiscal year as wellas the contribution of full-year earnings from REMM Shin-Osaka, which
opened in the previous fiscal year.
For fiscal 2016, we project operating income to increase 55.6%, or¥0.5 billion compared with our forecasts for fiscal 2014 to ¥1.4 billion
mainly because of efforts to increase revenues of existing hotels andcost-cutting measures based on structural reforms.

■■ Operating income

Revenues from operations

Operatingincome(¥ billion)
4

Revenues
from operations(¥ billion)
80

69.2

66.4

3

61.0

65.2

64.1

64.7

64.2

65.2
60

40

2

1.6

1.4
0.9

1

0.5

20

0.5

0

-0.6

-1

-2

2008

2009

-1.7

2009

2011

-0.3

2012

2013

2014

(Est.)

2016(Plan)(FY)* Food and drink businesses operated by the Retailing Business segment
have been transferred to the Hotel Business segment, as of fiscal 2011.

Hankyu Hanshin Holdings

Annual Report 201363

S ec t i o n4Social Responsibility and Management Organisation

Message from the President

By applying the Group’s
organisational strengths to risk
management, we will meet the
expectations of stakeholders as“a corporate group trusted by society.”
August 2013

Kazuo Sumi

President and Representative Director

For over 100 years, the Hankyu Hanshin Holdings Group has

and countermeasures often do not function as expected,

grown with the local community, primarily in areas alongrequiring rapid and precise actions based on a calm assess-its railway lines, and built up relations of mutual trust. The

ment of the situation at hand. Under these circumstances,mutual trust we have fostered with the local community

it is essential for the president, executives and employees

is a priceless asset that is essential in our efforts to be

to communicate, make quick decisions and act with a“a corporate group trusted by society” and, in turn, achievestrong sense of mission rooted in values that “satisfy the

our goal of further growth.

expectations of society.” This is the only way to apply theWhat it means to be “trusted by society” is bestGroup’s organisational strengths to risk management.

expressed by meeting the expectations of all stakeholders,

To achieve this, it is indispensable to encourage regular

beginning with customers. For instance, although thecommunication throughout the Group that creates mutual

importance of risk management in business goes without

understanding, promotes shared values and cultivates thissaying, the implementation of risk management requires

strong sense of mission.

ceaseless dedication. Each Group company and segment

To what extent society trusts the Group is clearlyworks tirelessly to reduce and manage every conceivable

dependent on how it responds to emergencies.

risk by undertaking consistent identification and analysis. To

Furthermore, the degree to which we are judged by society

this end, we examine multifaceted measures to counter risk

is directly proportional to the scope of an emergency. By

and repeatedly revise them to reflect changing conditions.

cohesively preparing for and overcoming unforeseen emer-

In particular, we thoroughly manage safety risks given the

gencies, we will solidify our position as “a corporate group

general public’s reliance on the services offered by thetrusted by society,” one of the operating fundamentals

Urban Transportation Business and other segments.

essential for achieving continuous growth.

Despite society’s expectations, we cannot completely eliminate unforeseen risks no matter how much
we reduce and manage risk. This fact was once again
made clear to us in the aftermath of the Great East Japan
Earthquake. In an unexpected emergency, existing plans

64 Hankyu Hanshin Holdings

Annual Report 2013

Management Organisation■

Corporate GovernanceGrants approval in cases where a Group company takes actions
that significantly affect Group management (for example, wheninvestments rise above a certain threshold).
In this way, the Company aims to improve its supervision andoversight of all Group companies, and raise overall Group governance■ Our Corporate Governance Systemstandards.

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

In further governance measures, our Board of Directors, which

company, and conduct of operations is basically the responsibility

includes external directors, receives reports with regard to the aboveof Group member companies. Hankyu Hanshin Holdings’ principal

matters, and approves management decisions. The Company has setrole is supervision and oversight of the whole Group — meaning

up a Group Management Committee including representatives ofthat these functions are separate from conduct of Group businesses.

core businesses of the Group to undertake preliminary reviews.

Under this structure, the Company:

In addition to these initiatives, and as part of our efforts to■

Makes decisions regarding Group management policy and strategy;

strengthen the Group’s overall capabilities, the Group is also strength-■

Approves the medium-term and annual management plans of allening governance with regard to fund procurement. Measurescore businesses;

include centralising funding under the Company, and ensuring that■

Requests reports on progress in management plans from time tonecessary funds are distributed to the operating companies withintime from the “operating companies” (that is, those that actuallyspecific parameters laid down in their business plans approved byrun the businesses); andthe Company.

Corporate Governance System
SectionGeneral Meeting of Shareholders
Appointment/
Dismissal

Board of Directors
Full-time: 5
Call/Report on
execution situation

Part-time: 9(including 2 External
Directors)

Audit

Selection/
Dismissal/Supervision

President

Accounting audit

Audit & Supervisory Board

ReportStanding Audit & Supervisory External Audit & Supervisory
Board Members: 2
Board Members: 3

Cooperation

ReportReportAppointment/
Dismissal

Cooperation

Accounting Auditors(CPAs)

Staff of Audit &Supervisory Board Members

4

Social Responsibility andManagement Organisation

Appointment/
Dismissal

Group Auditing Division

CallGroup Management
Committee
Participate

Participate(as observer)

Audit

Group Companies
Directors (representative of each core business)■ Management Organisation(1) Board of Directors and Directors
1. Board of Directors

restructuring within the Group.
The Board also received reports concerning the progress being

The Board of Directors of Hankyu Hanshin Holdings, Inc. works to real-

made in creating a fully functioning internal control system. Meetings

ise improved corporate governance for the entire Group by the meansof the Board of Directors were held 9 times during fiscal 2013. The ratedetailed in the above section “Our Corporate Governance System.”of attendance at these meetings was 83% for the external directors

In fiscal 2013, the Board gave its approval to the Group’s budget

and 96% for the external Audit & Supervisory Board members.

and accounts settlement, to various management plans, including

2. Directors

a revised current Medium-Term Management Plan. In addition, theOur Board of Directors has 14 members, and has an emphasis on

Board of Directors reported to the operating companies on build-strengthening the flexibility of management and supervisory func-

ing new rolling stock, real estate development plans, and businesstions. Nine of these are part-time directors, including two external

Hankyu Hanshin Holdings

Annual Report 201365

table a wealth of experience in corporate management. Our aim is(3) External Directors and External Audit & Supervisory Board
Members

to strengthen our supervisory and oversight function and raise the

The Company appoints independent external directors and Audit &standard of decision-making. The term of office of directors is set

Supervisory Board members with the aim of further enhancing the gov-

at one year, to clarify management responsibilities following theernance of the Group through their contributions to meetings of the Board

introduction of anti-takeover measures (prevention of large-scaleof Directors and the Audit & Supervisory Board, as well as other activities.

directors, who are independent of the Company and bring to theCompany share purchases).

The external directors appointed to the Board are selected fromamongst persons with extensive experience in corporate manage-(2) Audit & Supervisory Board, Audit & Supervisory Board
Members, and Ensuring Effectiveness of Auditing

ment, with the aim of strengthening the management oversight func-

The Company adopts the Audit & Supervisory Board system to ensurealso in the expectation that the external directors will provide advice

adequate management oversight. We have five Audit & Supervisory

to the Company’s management from a broad perspective. Similarly,

Board members, who monitor the business operations and financial

the external Audit & Supervisory Board members whom we appoint

position of the Company and its subsidiaries, and audit the perfor-

are selected from amongst persons possessing high-level specialist

mance of duties by the directors. Three of the five Audit & Supervisory

expertise in the fields of compliance and business administration.

tion of the Board of Directors with respect to the Group as a whole, andBoard members are external, to provide an independent viewpoint

When selecting candidate external directors and external Audit &and ensure a high degree of professionalism in Group auditing. In thisSupervisory Board members for appointment, we employ the criteria

way, we are working to further ensure sound decision-making in thelaid down by the Tokyo Stock Exchange in evaluating the independence

conduct of operations. We provide full backup to Audit & Supervisoryof the candidates. By the use of these selection criteria, we ensure that

Board members, for example by involving them in the Groupthe appointment of external directors and external Audit & Supervisory

Management Committee and other meetings within the Group.

Board members does not constitute a problem of any kind, and that their

The Audit & Supervisory Board meets once a month, in principle, toappointment poses no risk of conflict of interest with general shareholders.

discuss and pass resolutions on important matters.
In addition, as part of the auditing of the Group’s business

Relations with External Directors

operations, the Audit & Supervisory Board members peruse whenNameappropriate auditing plans and results of audits of the Group Auditing

Noriyuki
Inoue

Division, composed of internal audit staff. The Audit & Supervisory
Board members also receive from the Group Auditing Division regular
reports (and ad hoc reports when required) on internal audits at the(Independent
Director)

Company and its subsidiaries, including on the state of operation of
the whistle-blowing system.
At the same time, they receive regular status reports from the

ShosukeMoriaccounting auditors (CPAs), and take part in on-site audits by the(Independent
Director)accounting auditors including those of Group companies.
Please note that specialist staff members are appointed to assist
the Audit & Supervisory Board members in the performance of theirduties. To ensure the independence of these staff members, priordiscussions are held with the Audit & Supervisory Board members
over matters such as personnel changes and evaluations.
Besides, the President of the Company holds regular meetings
with the Audit & Supervisory Board members to exchange opinions,and ratify decisions regarding issues facing the Company, risks to which
the Company is exposed, progress in improving the environment forauditing and major issues encountered by the Audit & Supervisory
Board members in the performance of their duties. Management mustalso hold preliminary discussions with the Audit & Supervisory Board
members for amendment or deletion of any regulations pertaining
to the function of the Audit & Supervisory Board members, such as
matters involving corporate ethics.

66 Hankyu Hanshin Holdings

Annual Report 2013

Reasons for Appointment

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

Relations with External Audit & Supervisory Board Members
Name

Takaharu
Dohi(Independent
Board Member)

Haruo
Sakaguchi(Independent
Board Member)

Junzo
Ishii
(Independent
Board Member)

Reasons for Appointment

Former prosecutor-general, currently a lawyer. Appointed toadvise on more compliance-based management and for his
ability to provide independent input.
Currently a lawyer. Appointed to advise on more compliance-based management and for his ability to provide independent input.
Former Professor of Business Administration within the Graduate
School of Kobe University, currently President of the Universityof Marketing and Distribution Sciences. Appointed for his ability
to express useful opinions based on his high-level specialist
expertise in business administration and for his ability to provide
independent input.

Management Organisation

Attendance at Meetings of the Board of Directors andOther Important Meetings■ Compensation for Directors andExternal Directors

Our system for determining compensation for directors is designed to(Figures for Fiscal 2013)

Audit & Supervisory Board Members

Name

Attendance at meetings of the Board of Directors

incentivise contributions that enhance the Group’s enterprise value andNoriyuki Inoue
Shosuke Mori

Attended 7 of 9 meetings
Attended 8 of 9 meetingsbusiness performance. In this system, compensation comprises twoExternal Audit & Supervisory Board Members

the director, and a bonus-type element linked to business performance.

Name

Takaharu Dohi
Haruo Sakaguchi
Junzo Ishii

Attendance at meetings of the Attendance at meetings of theBoard of Directors
Audit & Supervisory Board

Attended 8 of 9 meetings
Attended all 9 meetings
Attended all 9 meetings

Attended 11 of 12 meetings
Attended all 12 meetings
Attended all 12 meetingselements: a basic portion determined according to the post held byHalf of the performance-linked compensation is paid into a fundused for the acquisition of shares in the Company (except in cases
in which stock option-based compensation is the same amount or
greater than was given by the Company or its subsidiaries).
However, the compensation paid to part-time directors, including■ Other Deliberative Bodies

external directors, and to Audit & Supervisory Board members, comprises
only the portion determined by post held, in light of the nature of their duties.

(1) Group Management Committee
The Group Management Committee, comprising full-time Directors(President, representative directors, head of Personnel and General
Affairs Division and head of Group Planning Division) and representatives of each core business, meets to discuss resolutions of the Boardof Directors, Group company management strategy and businessplanning and systems and rules for maintenance of the holding
company system, and major Group management matters, such as

The total compensation paid to directors and Audit & Supervisory
Board members is kept within the total compensation amount approvedby the Company’s shareholders at the General Meeting of Shareholders.
Compensation for individual directors is determined by resolution of the Boardof Directors, while compensation for individual Audit & Supervisory Board
members is determined by deliberation of Audit & Supervisory Board members.
Note: The payment of retirement benefits to directors and Audit & Supervisory Board members was
discontinued in April 2004 in the interests of greater transparency in the compensation system.

Please note that the Company does not offer stock options to its
directors.

(2) Core Business Strategy Councils
Each core business has a Core Business Strategy Council, comprising

However, the Board of Directors of the Company has passed a

the President, representative directors, the director in charge of theresolution to issue warrants as a form of stock option-based com-

Group Planning Division of the Company and executives of each core

pensation to the full-time directors (excluding directors concurrently

business. The councils deliberate future business development forserving as employees of Hanshin Electric Railway Co., Ltd.) of its sub-each core business and discuss business plans and progress manage-

sidiaries, Hankyu Corporation and Hanshin Electric Railway Co., Ltd.

ment (performance evaluation).

This measure has been taken to ensure that the directors of these two

4Social Responsibility andManagement Organisation

investments beyond set parameters and reorganisations.

Sectioncompanies, which are core members of the Group, share equally with(3) T he Group Presidents’ Meeting — Initiatives to foster
solidarity within the Groupthe shareholders both the possibility of gain in the event of a rise in

The Hankyu Hanshin Holdings Group comprises over 150 groupshare price falls, and that, therefore, they will be further motivated tocompanies. The Group Presidents’ Meeting, held twice a year, brings

pursue the improvement of their company’s business performance andtogether presidents of those Group subsidiaries and affiliates. It is

the enhancement of its enterprise value over the medium-to-long term.

designed to foster a deeper sense of solidarity within the Groupand ensure that the Group philosophy and management policies
permeate the whole organisation. The Group Presidents’ Meeting

their company’s share price and the risk of loss in the event that theCompensation Paid to Directors andAudit & Supervisory Board Members

aims to encourage a joint sense of commitment to the MediumTerm Management Plan. Awards are made to companies that boost
earnings or individuals and groups that successfully launch initiatives
or make significant contributions at their units

Number of Meetings of Deliberative Bodies Held
(Figures for Fiscal 2013)

Group Management Committee

13 meetings

Core Business Strategy Councils

3 meetings

The Group Presidents’ Meeting

2 meetings

Directors(external)
Audit & Supervisory Board Members(external)
Total(external)

No. of recipients

Total paid out in fiscal 2013
(Millions of yen)

15
(2)
6
(3)
21
(5)

118
(16)
17
(6)
136
(22)

*1 Recipients of compensation include one director and one Audit & Supervisory Board member
who retired at the conclusion of the General Meeting of Shareholders held on 14th June 2012.
*2 In addition to the above, compensation received by external directors and Audit & Supervisory
Board members from subsidiaries of the Company for their duties as directors and Audit &Supervisory Board members amounted to ¥22 million for the fiscal 2013.

Hankyu Hanshin Holdings

Annual Report 201367

Of the Company’s full-time Directors and Audit & Supervisory

Internal Control System

Board members, directors Kazuo Sumi, Mitsuo Nozaki and Tsuneo
Wakabayashi, and Audit & Supervisory Board member Tsunenori
Kawashima are also senior executives at the Company’s subsidiary
Hankyu Corporation. Director Shinya Sakai, Masao Shin, and Audit &Supervisory Board member Masayoshi Ishibashi, are also senior exec-■ Overview

utives at the Company’s subsidiary Hanshin Electric Railway Co., Ltd.

Recognising the importance of ensuring that the business operations

They have received additional compensation from each company.

of the Company are conducted in an appropriate manner, we haveestablished an internal control system for the entire Group, and revise
it when deemed necessary. As things stand, our internal control sys-

■ Dialogue with Shareholders and Investors
Measures taken to enhance the effectiveness of theCompany’s General Meeting of Shareholders and to
facilitate the exercise of voting rights
Remarks

Early dispatchof notices ofconvocation

To allow shareholders sufficient time to examine theitems for resolution at the shareholders’ meeting before
exercising their voting rights, we endeavor to send out
the notices of convocation at the earliest possible date.
We sent out such notices on 24th May 2013, 21 days
before the General Meeting of Shareholders.

Avoiding the“busiest day”
for shareholder
meetings

To enable as many shareholders as possible to attend
our general meeting of shareholders, we held our 2013
General Meeting of Shareholders on 14th June, 13 days
before the “busiest day” on which a large proportion ofJapanese companies hold their general shareholders’meetings.

Online andelectronic voting

To enable shareholders who cannot attend our generalshareholders’ meetings to nevertheless exercise theirvoting rights, as well as to make voting more convenient,
we accept votes made via the internet, and we also
participate in the electronic voting platform operated
by ICJ Inc.

Other

Notices of convocation of general shareholders’meetings and of resolutions passed at the meetings
are posted on the Company’s website. We also posttranslations of the notices of convocation into English.

Investor Relations Activities
As a rule, the Company arranges results meetings for analysts andinstitutional investors in Japan after earnings announcements twicea year. Earnings results and business plans are discussed by senior
management representatives.
Our website (http://holdings.hankyu-hanshin.co.jp/ir/) includes(mostly Japanese-language) materials necessary for investment
judgements (earnings reports, securities reports, due disclosurematerials, and summaries of results meetings). The website also
carries a profile of the Group and its competitive strengths, mainly for
individual investors.

68 Hankyu Hanshin Holdings

Annual Report 2013

tem is characterised as follows.
A Group Management Philosophy was compiled following themanagement integration of Hankyu Holdings, Inc. and Hanshin
Electric Railway Co., Ltd., along with a Group mission (our goals),statement of values (what we consider important) and a code of
conduct (what actions to take to realise them). We ensure that all
employees from executive down understand them.
■ W e ensure compliance-focused management by compiling anddistributing a Compliance Manual, and have established a dedicatedwhistle-blowing system. (For further information on the Company’s
compliance activities, please refer to the following section.)■ W e have established the Group Auditing Division, composed ofinternal audit staff under the direct control of the President, forindependent monitoring of Groupwide business activities. It carries
out internal audits into Hankyu Hanshin Holdings Group and all its
operating companies.
■ To create a structure for ensuring appropriate operations, the Groupvests Audit & Supervisory Board members of each Group company
with authority not only in accounting but also in operational audits,
and at the same time provides guidance to smaller Group companies on Board of Directors resolutions for creation of an internal
control system.
■ 
A udit & Supervisory Board members and the Group Auditing
Division receive regular reports from the Risk Management Officewith regard to creation and operation of internal controls at theCompany and its subsidiaries (including implementation status forrisk management and promotion of compliance-based management measures). Through such measures, they deepen their links
with, and strengthen the role of, internal control divisions.
■ W ith regard to systems for “Management Assessment and Audit
Concerning Internal Control Over Financial Reporting,” a section of
the Financial Instruments and Exchange Act, the Company responds
appropriately by carrying out management evaluations on a consolidated basis, in line with in-house rules.
■

Management Organisation■ Measures for Avoidance of Contact with

■ Corporate Ethics Consultation Desk

To ensure compliance and protect the interests of the Company, we

We have set up a dedicated whistleblower hotline enabling all

have a basic policy of avoiding all contact with antisocial elements

employees to discuss or quickly bring to management’s notice sus-that pose a threat to public order and safety, such as criminal gangs

pected or known legal violations and unethical conduct. Businessand companies associated with them, and sokaiya racketeers who dis-partners are also welcome to use this consultation and notification

rupt shareholder meetings, and of never yielding to extortion. Thesefacility, and when necessary we will use lawyers and other outside

policies are basic policies in our internal control system and are clearlyspecialists to improve its effectiveness.

Antisocial Elements(internal whistleblower procedures)stated in the Hankyu Hanshin Holdings Group Compliance Manual
distributed among executives and employees of Group companies.
Specific measures include routinely strengthening communications with external organisations such as lawyers and the police, andCorporate Ethics Consultation Desk

introducing into all contracts signed by Group companies’ clausesthat forbid contact with antisocial elements.
In addition to working to raise awareness of this issue throughReports

information exchange and a range of employee training courses, we

Audit &
Supervisory
Board
MemberReports

Audit &
Supervisory
Board
Memberare aggressively involved in regional activities and gatherings aimed
at rooting out antisocial elements.
When an incident does occur, we respond as a single organisa-

Consultation
Desk

Reports

President

Directs

Consultation
Desk

Reports

Presidenttion, rallying round the division in charge, and work in partnership
Approves/Directs

with outside experts.

Consultation
Desk

Compliance
As a system to ensure compliance-focused management, the Group
has set up a dedicated compliance office, and is working to raiseawareness of compliance issues among executives and employees bymeans of the measures detailed below.

■ Compliance Manual and Training
Programmes

The Company’s Compliance Manual and Compliance Card express
the Company’s determination not to tolerate violation of laws or■ Establishment of Risk Management

Committees
Overviewof Group Compliancethe case of toidentificationof a major compliance[Examples] issue during the•InInformation
Group companies
of an
EthicsConsultation, a risk management committee is•course
Guidanceandtraining
Compliance promotion officefor Groupas
companies
Internal
whistle-blowing,
convenedsoon as possible to discuss anddecideon appropriate
responsible for planning and• Risk management
organising seminars and other•responses.
Risk Managementawareness-raising activities
Committee
secretariat
In addition,
we are setting up compliance promotion offices• Corporate Ethics Consultation Deskat(internal
major Group
companies
such as Hankyu Corporation, Hanshin
whistle-blower
procedures)Electric
Railway
Co.,
Ltd.,
HankyuHanshin Express Holdings Corp. and• Internal auditing
Compliance leaders
Hankyu Hanshin Hotels Co., Ltd. At other companies
we are appoint-social norms or betrayal of customer trust, by any Group employee

HankyuHanshinHoldings
ing“complianceleaders,”
to ensure our response
is ofon a Groupwide
departmentsfrom executives down. It also aims to raise awareness by pointing out

basis.

Liaise with compliancecases where compliance errors can easily be made.
The Company provides intensive compliance training on a

own training programmes tailored to job grade and function, withthe aim of further increasing compliance awareness.

higher-level companies

Group Company

orGroup Company

orHanshinElectric Railway

Group Company

orGroup Company

orHankyu Travel
International

Group Company

Hankyu Corporation

Groupwide basis for new employees, midcareer hires and newly
appointed executives. In addition, all Group companies arrange their

4

Social Responsibility andManagement Organisation

Reporting of investigation
progress and findings

SectionGroup Company

Group Company
Hankyu Hanshin
Express
Hankyu Hanshin Holdings
Annual Report 2013
Group Company

69Consultation
Desk

Reports

President

Directs

Consultation
Desk

Reports

Management Organisation
President

Approves/Directs

Reporting of investigation
progress and findings

ConsultationDesksystem was approved at the General Meeting of Shareholders held on

Overview of Group Compliance14th June 2012, and remains in effect for three years.
For more details (in Japanese) of the Company’s basic policies[Examples]• Information to Group companies• Guidance and training
for Group companies• Risk management• Risk Management
Committee secretariat• Corporate Ethics Consultation Desk
(internal whistle-blower procedures)• Internal auditing

Compliance promotion officeInternal whistle-blowing,
responsible for planning andorganising seminars and otherawareness-raising activities

Compliance leaders

Hankyu Hanshin Holdings

Hankyu Corporation

Liaise with compliancedepartments ofhigher-level companies

regarding governance of joint-stock companies including thesetakeover prevention measures, please see:
http://holdings.hankyu-hanshin.co.jp/ir/library/others/data/bouei.pdf

Risk Management

Group Company

or

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

Group Company

orare managed by the Risk Management Office, while risks arising inGroup Company

ormanagement units within the divisions themselves. In both cases,

Group Company

orrisks are identified and analysed, and risk management systems are

the business operations of individual divisions are managed by risk

HanshinElectric Railway

overhauled from time to time. We evaluate the likelihood of materiGroup Company

alisation of each risk and its frequency, as well as the extent of impact

Group Company

in the event of materialisation and its importance. On that basis, weHankyu Hanshin
Express

Group Company

its impact (“risk mitigation measures”). These measures are docu-

Hankyu Hanshin
HotelsGroup Company

Hankyu Travel
International

draw up measures to prevent the materialisation of risk or to mitigate
mented in the form of risk management manuals, and the results ofGroup Company

risk analysis and how such a risk is being handled when a risk arises
are, reported, as appropriate, to the Board of Directors.
We have also established a liaison system enabling the effective

Group Company
Cross-Organisational Companies

transmission of information in the event of unforeseen circumstances.
orUnder this system, in the event of materialisation of a risk, executives
and employees immediately take risk-mitigation measures as specified in the above-mentioned documentation and other measures toprevent the further spread of the impact. They also submit reports to

Measures to Prevent Takeovers

pre-appointed risk management liaison personnel.
The Company provides supervision to all companies in the Groupso that the same system is operated by them all, and has set upa system enabling the transmission to the Company of accurate

To secure and further enhance the enterprise value of the Company,

information in the event of an unforeseen development.

and therefore the common interests of its shareholders, we believe

A particular area of importance in this regard is the Company’sthat it is imperative to conduct business operations from a medium-core railway business, which entails direct risk to people’s lives throughto long-term perspective, to build and maintain a relationship of trust

accidents. Even in the event of a minor mistakes and problems where nowith local government institutions and residents in the areas served

individual responsibility arises, it is important to make every effort to bringby our railway lines, and to place the highest management priority on

the number of problems and mistakes that could cause an accident as

strengthening cohesion and collaboration within the Group, so as toclose to zero as possible, by continuing to meticulously railway businessenhance the Group’s comprehensive power.

staff, and share and analyse data. Such painstaking efforts to forestall

For this reason, we have introduced a system to prevent a takeoverof the Company whereby, in the event of the appearance of a potential

even one human error are one of the foundation stones on which theCompany ensures safety of operations and meets public expectations.

buyer of the Company that wishes to raise their stake above 20% ormore of the Company’s outstanding shares, new share subscription

In the following pages, readers will find a summary of the safety

rights are granted to shareholders who are, de facto, shareholders othermanagement systems at Hankyu Corporation and Hanshin Electricthan the potential buyer, to confirm a potential buyer’s intention. This

Railway, both of which are our major private sector railway operators.

70 Hankyu Hanshin Holdings

Annual Report 2013

Safety Management System■ Basic Safety Policy and Objectives
Hankyu Corporation and Hanshin Electric Railway put the highest priority on ensuring safe operations in our business activities. As described
below, we have formulated a basic policy on safety and are doing whatever we can to prevent accidents, based on the goal of maintaining zeroaccidents for which we bear responsibility.

Hankyu Corporation Safety Policy (Code of Conduct)

Hanshin Electric Railway Safety Policy

The president and directors of the Company are required to establish a framework that ensures all business activities place the highest priority on safety.
Utilising the Company’s civil engineering facilities, electrical facilities, rollingstock, and the expertise of its employees, the Company’s basic policy for ensuring safety in transport and other operations shall be determined in accordancewith the following.

Maximum priority on safety
The president, directors and employees shall do whatever they can to ensure safety of operations, based on
the understanding that putting the highest priority on
ensuring safety is the mission of railway businesses.

Code of Conduct for Safe Transport Operations*• Ensure safe transport• Comply with all relevant laws and regulations• Be fully aware of operating conditions and ensure equipment is safe
• Enforce check procedures and put the highest priority on safety• Place priority on human life
• Provide information accurately and rapidly• Continue making improvements and reforms

Compliance with laws and regulations
The Company shall comply with all laws and regulations
related to safety and apply them rigorously and sincerely
in its operations.
Maintenance of safety management systems
The Company shall implement continuous verification
procedures to ensure safety management systems areoperating appropriately.

* Only titles for Code of Conduct items have been shown due to space restrictions. The full Code of Conduct
provides detailed explanations for each item.

■ Transport Safety Organisations

Section4

Organisation Chart (Hanshin)
The Railway Safety Council has
been established as an organisation that specialises in promoting
safety management.

President
Directors

President
Directors

Head of Urban
Transportation Business(Chief Safety Manager:
director)

Urban Transportation
Business
Railway Safety Council

Deputy Head of Urban
Transportation Business

Manager, Urban
Manager,Manager,
Transportation Planning
Transport Division
Technical Division(Head of Investment(Chief Train Operations (Chief Civil Engineeringand Financing Team)Manager)
Facilities Manager)

Manager,
Kobe Line Operations

Manager,
Takarazuka Line Operations

Manager,
Technical Division(Chief Electrical
Facilities Manager)

Manager,
Technical Division(Chief Rolling StockManager)

Chief Train Operations Manager*(Deputy Head of Urban
Transportation Business)

Manager,
Transport Division

Manager,
Kyoto Line Operations

Deputy Operations
Deputy Operations
Deputy Operations
ManagerManagerManager(Crew Training Manager) (Crew Training Manager) (Crew Training Manager)

Position

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

Social Responsibility andManagement Organisation

Organisation Chart (Hankyu)

Chief Safety Manager(Head of Urban
Transportation Business)

Manger,Electrical Division

Manager,
Rolling Stock
DivisionManager,Engineering
Division*Previously, the manager of the Transport Division served as
the Chief Train Operations Manager. Following theestablishment of the Deputy Head of the Urban
Transportation Business, however, the Deputy Head serves
as the Chief Train Operations Manager from fiscal 2014
onward.

Role

President
Chief Safety Manager(Head of Urban Transportation Business)
Chief Train Operations Manager(Deputy Head of Urban Transportation Business*)

Ultimate responsibility for ensuring transport safety

Manager, Transport Division

Assists in train operations under the direction of the Chief Train Operations Manager

Chief Crew Training Manager(Hankyu: Deputy Operations Managers of each line;
Hanshin: Heads of East and West Rolling Stock Yards)

Responsible for ensuring all crew are properly qualified (appropriate qualifications, knowledge
and skills), under the direction of the Chief Train Operations Manager

Other Safety Managers

Individuals in each division responsible for ensuring facilities under their management do not
act as an obstacle to transport safety, under the direction of the Chief Safety Manager

Responsible for overseeing all activities related to ensuring transport safety
Responsible for managing all aspects of train operations, under the direction of the Chief Safety
Manager* In the case of Hankyu Corporation, this role is filled by the Manager or Deputy Manager of the Transport Division.

Hankyu Hanshin Holdings

Annual Report 201371

■ Initiatives to Reinforce the Safety Management System (Using the PDCA Cycle)
By applying our safety management system (PDCA cycle) to a range of safety initiatives, we are aiming to create a virtuous cycle of improvement
based on even higher safety goals.

Outline of Safety Management System

Creation of safety control plans
and systems

Safety management implementation and operation
1 Awareness raising and drills

Formulation of annual plans, etc.
(Safety policy for each fiscal year withinitiatives targeting specific areas)

P.73

2 Equipment initiatives and inspections

Plan

P.76

Do

Safety management
regulations
Define policies to adhere to inbusiness operations to ensure
safe transport operations, aswell as specific initiatives, management systems and methods
for the implementation of thesepolicies

Continuous improvement

Act
Improvements (proposals for improvements)
and revisions to safety management plans
and systems

Check
Safety management and operational checks
Internal audits
Evaluation of transport safety management by MLIT

Revisions to the Railway Business Law in October 2006 required railway companies to create new safety management systems dedicated totransport safety. Under our new safety management system, we are targeting even higher levels of safety by applying the PDCA cycle, ensuring
compliance with all related laws and regulations, conducting operations that place the highest priority on safety, and fostering greater awarenessof safety issues among employees from directors down.
From page 73 to 77, we explain in more detail points    1 —    2 of “Do = safety management implementation and operation” in the above

diagram.

72 Hankyu Hanshin Holdings

Annual Report 2013

Safety Management System

1 Awareness Raising and Drills
Activities to Raise Safety Awareness in Hankyu Corporation■ On-site Inspections Undertaken by the President and Chief Safety Manager
On-site inspections undertaken by the President and Chief Safety Manager (Head of Urban Transportation Business) verified actual conditions
and deepened communication through direct dialog with front-line employees.

■ Management Area Meetings

Section4

Social Responsibility andManagement Organisation

Communication and cooperation among divisions regarding current
operations are indispensable for maintaining and improving thesafety of railway operations on site. For this reason, we held management area meetings that gather front-line personnel working at train
operations, civil engineering facilities, electrical facilities and rollingstock at Nishiomiya, Jyuso and Shojaku (which are integrated railway
facilities) to exchange opinions and share information on safety.

■ Safety Lectures and Seminars
We work to improve employee safety awareness by inviting outside
lecturers to hold lectures and seminars on transportation safety.

Main content
Safety lecture: A lecture on methods for analysing the causes ofaccident given by the Railway Technical Research InstituteHankyu Hanshin Holdings

Annual Report 201373

Activities to Raise Safety Awareness at Hanshin Electric Railway■ Create a Corporate Culture That Prioritises Safety and Rigorously Ensure Compliance
Inspections, lectures and visits by the President, Chief Safety Manager(Head of Urban Transportation Business) and managers further
improve employee safety awareness. We are also rigorously ensuring
compliance.

■ Information Sharing through the Railway Safety Council
In principle, Hanshin Electric Railway holds meetings of its Railway

incidents, and potential accidents and near accidents. Based on the

Safety Council twice every month. The Council is chaired by the head

results of this analysis, it formulates countermeasures to preventof the Urban Transportation Business, and its members are madereoccurrence, and issues instructions to the Railway Safety Liaison

up of other managers from within this business. The Council hears

Team* and related divisions.

reports from relevant managers regarding accidents, safety incidents,* Railway Safety Liaison Team: Comprising managers from each railway business division, this teamis responsible for sharing information about operations, accidents, and issues in each division, anddiscusses and reviews causes and measures to prevent recurrence.

and potential accidents and near accidents, and shares information
about these reports. It analyses the causes of these accidents, safety■ Ensuring the Information Sharing System Continues to Function Properlywith employees on a daily basis, with details fed back to the front

Presentation and award received at the Train Operation
Research Presentationlines when the causes of accidents, safety incidents, and potential

At the 33rd Train Operation Research Presentation hosted by theaccidents and near accidents are identified and countermeasures

Japan Train Operation Association in November 2012, we announced

developed.

our initiative entitled: “Safety Ethos for Locking and Unlocking

Hanshin Electric Railway endeavours to ensure active communication

For incidents that were caused by human error, each division andOperations and the Recording of 468 Days without an Accident.” At

the Railway Safety Liaison Team assess the effectiveness of measuresthis presentation, we announced and received an incentive award

to prevent any recurrence and report where necessary to the Railway

for initiatives to identify methods to eliminate human error when

Safety Council. This approach has given the Company a greater capa-

attaching and detaching rolling stock at Amagasaki Station along

bility to assess the effectiveness of countermeasures.

with examples of successful preventive measures.

74 Hankyu Hanshin Holdings

Annual Report 2013

Safety Management System

The Content of Drills Undertaken
by Hankyu Corporation and Hanshin Electric Railway
Hankyu Corporation and Hanshin Electric Railway both conduct specific training programmes in their train operation, civil engineering (workshop)
facility, electrical facility, and rolling stock divisions, as well as exercises to prepare for specific emergency situations. Both networks also hold theirown independent joint drills for emergencies where cooperation across business divisions is required.

■ Joint Drills: Hankyu Corporation

Schematic exercise (held August 2012)
Communication drills assuming the occurrence of an earthquake and tsunami originating in the Nankai TroughPractical emergency drill (held December 2012)
Emergency evacuation guidance and restoration drill assuming a train fire and trackflooding on a Kyoto subway line
Section

4

In May and December 2012, Hanshin Electric Railway held tsunami

methods from trains, the safety of the evacuation route and the time

drills using actual rolling stock in conjunction with each division ofrequired to evacuate. Upon completing tsunami countermeasures in

the Urban Transportation Business on the Hanshin Namba Line’s

December that included installing emergency ladders on bridges, weShinyodogawa River Bridge. Before undertaking tsunami coun-

held tsunami evacuation drills assuming evacuation guidance is given

termeasures in May, we conducted drills to verify passenger exit

to passengers exiting a train stopped on one of those bridges.

Verification drills (held May 2012)

Tsunami evacuation drill(held December 2012)

Distance marker

Social Responsibility andManagement Organisation■ Held Tsunami Drill

Exit ladder■ Held Joint Drills at the Daimotsu Training Centre
In October 2012, Hanshin Electric Railway conducted drills jointly withtrain collision has occurred during a train crossing inspection being

the Electrical and Transport divisions assuming that an occupational

performed by an Electrical Division staff.

accident has occurred. The Daimotsu Training Centre was opened
in fiscal 2010 as a general-purpose technical training facility that was
upgraded in fiscal 2012 to improve expertise and skills regarding
electric power facilities and track maintenance and transfer thoseskills to subordinates. The Daimotsu Training Centre conducted
drills on providing first aid to accident victims and accident-related
notifications by Electrical Division and on-board staff assuming a

Hankyu Hanshin Holdings

Annual Report 201375

2 Equipment Initiatives and Inspections
Hankyu Corporation and Hanshin Electric Railway both take a wide range of steps to improve safety using equipment and infrastructure. Below, we
explain some of the main initiatives.

■ Overpass and Underground Construction Work
Both companies are pushing ahead with the construction of multiple

Grade separation (track ele-rail overpasses to reduce the number of level crossings and improvevation) works are currently under

traffic flow near train lines. Elevated or underground sections now

way on the Hankyu Kyoto Lineaccount for large portions of Hanshin Electric Railway’s Hanshin Main

near Awaji and Rakusaiguchi sta-

Line (87%) and its Hanshin Namba Line (90%), including the new exten-

tions, and on the Hanshin Mainsion from Nishikujo Station to Osaka-Namba Station. All of Kobe Rapid

Line between Sumiyoshi andTransit Railway Line is in underground. This work to raise the tracks has

Ashiya and between Koshien

led to a marked drop in the number of level-crossing accidents.

and Mukogawa.

Viaduct construction site

■ Controlling Rail Traffic with Automatic Signal, Point and Signage Systems
Both companies utilise computer-based systems to control rail traf-

on preprogrammed information for all trains and stations (such as

fic. Hankyu Corporation uses the Total Traffic Control (TTC) system,

departure times, line numbers, destinations, and train types). The

while Hanshin Electric Railway uses the Programmed Traffic Control

computers at the heart of these systems (central control systems, PTC(PTC) system. The companies’ TTC and PTC centres automaticallycomputers) are systemised with multiple backups and inbuilt redun-

control signals, points, and platform signs and announcements based

dancy to ensure a high level of reliability in the event of a problem.

■ Upgrading Automatic Train Stopping Equipment
Automatic Train Stop (ATS) equipment automatically slows down orstops trains when drivers fail to notice or respond to, or misinterpretsignals or signalled speed limits. Hankyu Corporation and Hanshin
Electric Railway both use continuous speed-checking type ATS systems on all their lines*, including branch lines, ensuring a high level

Continuous speed-checking type ATS system:
Hankyu Corporation’s continuous speed-checking ATS system
Under

115km/hUnder

Train speed

70km/hUnder

50km/hUnderof safety.

30km/hUnder* B etween Sakuragawa and Osaka-Namba stations on the Hanshin Namba Line, Hanshin Electric
Railway relies on an onboard control-point continuous speed-checking type ATS system that
Kintetsu Corporation employs.

Proceedsignal20km/hCautionsignalStopsignalIn an effort to further improve safety, Hankyu Corporation has
been adding a new pattern control system to its existing ATS equip-

Control point

Control point

ment. This new control system is aimed at preventing overrun intolevel crossings, failure to stop at designated stations, and collisions inwhich a train runs into the end block of lines. This system is already inoperation on rail lines.
Both companies are also working to improve safety by installing
ATS equipment on sharp curves and branches in lines to prevent
derailments caused by excessive speed.

Obstruction signal

ATS pickup

ATS indicator in driver’s cab

Speedometer in driver’s cab

In March 2011, Hankyu Corporation finished compilation of independent safety standards stricter than those of the Ministry of Land,
Infrastructure, Transport and Tourism. In May 2011, Hanshin Electric
Railway completed installation of Automatic Train Stop (ATS) facilities
at all 28 junctions on its network.
Hankyu Corporation is planning to introduce a safety system

76 Hankyu Hanshin Holdings

Annual Report 2013

Safety Management Systemenabling automatic braking of rolling stock using ATS, even if theand June 2012. This system is already being used at the Nishinomiya

driver misses a ‘stop’ shunting signal in a train depot. This measure is

depot and installation work is currently underway at the Shojaku andintended to avoid damage to points if a train jumps a ‘stop’ light, as

Katsura depots.

happened at Nishinomiya depot on the Kobe Line in November 2011

■ Initiatives to Improve Platform Safety
At Hankyu Corporation and Hanshin Electric Railway, the following measures prevent objects and people falling onto the track from the platform,
and forestall accidents:(1) Installation of yellow warning-line tiles on platform(3) Installation of emergency alert devices

To stop visually-impaired and other passengers from falling off the

When somebody or something falls onto the track, the event is

platform, we have installed yellow warning-line tiles next to the tactile

detected by special mats under the platform edge, or an emergency

tiles (with bumps that can be felt through shoe soles) so that a blindstop button on the platform can be pressed. These set off alarm

passenger can tell which side of the yellow warning-line he or she is.

indicators and an emergency buzzer for crews and station staff,

Both Hankyu Corporation and Hanshin Electric Railway have

preventing serious accidents. On Hanshin lines, we have completed

already completed the installation of yellow warning-line tiles at all
stations in fiscal 2013.

installation of emergency stop buttons at all stations.
We are currently taking measures to further improve safety on
Hankyu lines through the installation of platform emergency stop
buttons that work in tandem with the ATS system installed at all

Section4

stations.

Social Responsibility andManagement Organisation

Yellow warning-line tile attached to a platform that conforms
to standards established by the Japan Industrial Standards
Committee

Emergency stop buttons(Hanshin)In addition, both companies installed shelters below platforms(2) Platform widening

and steps to climb back onto platforms.

At Mukogawa Station on the Hanshin Main Line (up-line to Osaka),
we have broadened the platform by about 1.5m to alleviate rush-hour
crowding and enhance safety.

1.5m

Platform evacuation steps(The dotted line to left shows a bar-type step and the one on
the right indicates a ladder-type step)

Mukogawa Station up-line platform

Hankyu Hanshin Holdings

Annual Report 201377

Corporate Social Responsibility— Social Contribution & Environmental Protection Activities

Social Contribution Activities

Moving forward with our customers
over the next century
Promoting the Hankyu Hanshin Dreams and Communities of the Future Project
For over 100 years, the Hankyu Hanshin Holdings Group has grown with the local community, primarily in areas along its railway lines, and built up
relations of mutual trust. To ensure that the Group will continue to exist and prosper over the next century as a member of the local community,
in April 2009 we launched the Hankyu Hanshin Dreams and Communities of the Future project as a community contribution initiative.

Basic Policy
Environmentfriendly
development

We intend to promote the creation of towns and cities along our railway lines that people will truly want to live in.
As a Group with strong local roots, we are committed tosustainable community building with environment-friendly
developments that provide local residents with security, peaceof mind and cultural enrichment.

PriorityAreas

We are creating opportunities for the

Humanhealthy development of ambitious children,
capitalupon whose shoulders the task of building
development
the communities of the future rests.

■ Social contribution activities of each Group■ Hankyu Hanshin Dreams and Communities

Holding the Million Person Candle Night in Osaka City

This grant programme is exclusively for citizens’ groups located along
Hankyu Hanshin lines. We provide grants to citizens’ groups that contribute to the creation of desirable local living environment and developmentof the next generation by matching funds accumulated from Group
employee donations. Over the past four years, we have donated at total of¥19.5 million to 42 organisations.

company— In fiscal 2013, 82 activities were undertaken

Hanshin Electric Railway, Hankyu Corporation

We run a range of events in Umeda
during both summer and winter,
including candle art exhibitions andseminars on the environment. The
lighting of the candles is aimed at
encouraging people to think moredeeply about sustainable living.

of the Future Fund for support of citizens’
activities

Dreams and Communities of the Future Fund structure
Employees
Donations mainly through payroll deductions

Charity concert for parents and children in the Hankyu
Dreams and Communities programme Hankyu Corporation
We hold concerts with full orchestras
at the Umeda Arts Theater’s approximately 1,900-seat main hall withthe purpose of presenting musicalinstruments to children. All proceedsfrom the ticket sales are donated toAshinaga Scholarship Fund.

Hankyu Hanshin Dreams andCommunities Challenge Troop

Hankyu Hanshin Holdings

In the case that the endowment
reaches ¥3 million

Hankyu Hanshin HD will matchamounts over ¥3 million¥3 million + ¥3 million = ¥6 million, which is allocated as grants to local citizens’ groups
Group AGroup B

■ Social contribution
Group companies

We hold summer hands-on learning
programmes for elementary school
students. As a member of the local
community, the Group provides amultitude of “experience” and “learning” opportunities that contribute to
the healthy development of children,
who are the future, by leveraging ourlong-standing businesses, various
facilities and personnel.

78 Hankyu Hanshin Holdings

Endowment consisting of funds accumulated
through Group employee donations

Annual Report 2013

point system

We support regional andsocial contribution activities by
establishing a system that grants
points to Group employees andretired employees for related
volunteer activities.

Group CGroup DGroup employee andretired employee activities• Volunteer activities• Participate in events sponsoredby departments• Purchase Fairtrade products,
etc.

Point exchange(once a year in June)• Donating to Dreams andCommunities of the Future Fund
• Plant seedlings on Mt. Rokko• Exchanging for Fair Trade products,
etc.

Point
application

For more detailed information, please visit this (Japanese-language) website:

http://www.hankyu-hanshin.co.jp/yume-machi/

Environment Protection Activities

Improving local communities andliving environments for our children
The Group has compiled environmental basic concepts and policies and pursues environmental protection activities. Earlier measures to saveenergy in light of the need to curb global warming have been stepped up since the Great East Japan Earthquake, as strengthened measures tosave electricity have become a pressing public need.

Basic Concept

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

■ Curb global warming and save energy■ Renewable energy“Setsu-1” Grand Prix held

Installation of solar panels

Between June and September 2012, we
held participatory events to encourage
power-saving by employees in theirhomes. Owing to the participation of
about 2,000 employees from 74 Group
companies, over 100,000kWh of electricity were reduced, or 14.1%, comparedwith fiscal 2012.

We have installed solar panels
capable of generating a total of
325kW at seven Group-company
facilities, including Settsu-Shi
Station and the “Silver Umbrella”
roof of the Hanshin Koshien
Stadium. The electricity generated is used at these facilities.

Installing LED lighting■ Reducing waste and encourage resource

Takarazuka Grand Theatre

4Social Responsibility andManagement Organisation

We are progressively installing LED lighting at stations and Group facilities
along Hankyu and Hanshin lines. LED lighting reduces electricity consumption, while its long lifespan contributes to waste reduction.
For instance, the installation of LED lighting at underground sections
along the Hankyu Kyoto Line, from Saiin Station to Kawaramachi Station,
has been selected by the Ministry of Environment as a model project. By
installing LED lighting in 4,261 light fixtures and signs, we have reduced asignificant amount of CO2.

Sectionrecycling
100% biodiesel buses
Hankyu Bus operates four of its
buses purely on biodiesel fuels
refined from used edible oils.
The oil is collected primarily fromGroup hotels and food factories
as well as in cooperation withresidents of Hankyu Realty’s Geobranded condominiums.

■ Protect the natural environment
Donation of environmentally-friendly toilets, andforestry protection
An underground section of the
Hankyu Kyoto LineFor more detailed information, please visit this (Japanese-language) website:

http://holdings.hankyu-hanshin.co.jp/eco/Hankyu Travel International has
donated environmentally-friendly
toilets, which use bacterial techniques to break down humanwaste, to such tourist areas as
Yakushima Island (World Heritage).
In addition, Hankyu Travel
International employees volunteer
in tree thinning activities.

Hankyu Hanshin Holdings

Annual Report 201379

Directors and Audit & Supervisory Board Members(As of 14th June 2013)

Directors

Kazuo Sumi

Shinya Sakai

President andRepresentative Director

1973 Joined Hankyu Corporation
2000 Director, Hankyu Corporation
2002 Managing Director, Hankyu Corporation
2003 President, Hankyu Corporation (Current position)2005 President, Hankyu Holdings
2006 President, Hankyu Hanshin Holdings (Current position)

Representative Director

1970 Joined Hanshin Electric Railway
2002 Director, Hanshin Electric Railway
2005 Managing Director, Hanshin Electric Railway
2006 President, Hanshin Electric Railway
2006	Representative Director, Hankyu Hanshin Holdings(Current position)2008 Chairman, Hanshin Tigers Baseball Club (Current position)2011 Chairman, Hanshin Electric Railway (Current position)

Noriyuki Inoue

Shosuke Mori

Isao Matsuoka

Director (External*)

Director (External*)

Director (Part-time)1957 Joined Daikin Industries
1994 President, Daikin Industries
2002 Chairman and CEO, Daikin Industries (Current position)
2003 Director, Hankyu Corporation2005 Director, Hankyu Holdings
2006 Director, Hankyu Hanshin Holdings (Current position)

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

Shunichi
Sugioka1957 Joined Toho
1977 President, Toho
1985 Director, Hankyu Corporation
1995 Chairman, Toho2005 Director, Hankyu Holdings
2006 Director, Hankyu Hanshin Holdings (Current position)2009 Honorary Chairman, Toho (Current position)

Takaoki Fujiwara

Ichiro Namai

Director (Part-time)

Director (Part-time)

Director (Part-time)1964 Joined Hankyu Department Store
2000 President, Hankyu Department Store
2000 Director, Hankyu Corporation2005 Chairman, Hankyu Department Store2005 Director, Hankyu Holdings
2006 Director, Hankyu Hanshin Holdings (Current position)2007 Chairman and CEO, H2O Retailing (Current position)2008	Chairman, Hankyu Hanshin Department Stores(Current position)

1975 Joined Hanshin Electric Railway
2005 Director, Hanshin Electric Railway
2007 Managing Director, Hanshin Electric Railway
2011 President, Hanshin Electric Railway (Current position)2011 Director, Hankyu Hanshin Holdings (Current position)

1971 Joined Hankyu Express International
2000 Director, Hankyu Express International
2008 Vice president, Hankyu Travel International
2010	President, Hankyu Travel International(Current position)2013 Director, Hankyu Hanshin Holdings (Current position)

Audit & Supervisory Board Members

Tsunenori Kawashima

Masayoshi Ishibashi

Takaharu Dohi

Standing Audit & Supervisory
Board Member

Standing Audit & Supervisory
Board Member

Audit & Supervisory
Board Member (External*)

1977 Joined Hankyu Corporation
2002 Director, Hankyu Corporation2005 Director, Hankyu Holdings
2005 Managing Director, Hankyu Corporation
2006 Representative Director, Hankyu Holdings
2006 Representative and Managing Director, Hankyu Corporation
2006 Representative Director, Hankyu Hanshin Holdings
2009	Standing Audit & Supervisory Board Member,
Hankyu Corporation (Current position)2012	Standing Audit & Supervisory Board Member,
Hankyu Hanshin Holdings (Current position)

80 Hankyu Hanshin Holdings

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

Annual Report 20131958 Prosecutor
1996 Prosecutor-General (until 1998)
1998 Lawyer (Current position)
2002	Audit & Supervisory Board Member,
Hankyu Corporation (Current position)2005 Audit & Supervisory Board Member, Hankyu Holdings
2006	Audit & Supervisory Board Member,
Hankyu Hanshin Holdings (Current position)

Seisaku Okafuji

Hiroshi Desaki

Nobuo Minami

Director (Part-time)

Director (Part-time)

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

1980 Joined Hankyu Corporation2007 Director, Hankyu Corporation2011 Managing Director, Hankyu Corporation2012 President, Hankyu Hanshin Hotels (Current position)2012 Director, Hankyu Hanshin Holdings (Current position)

1977 Joined Hanshin Electric Railway
2007 President, Hanshin Tigers Baseball Club (Current position)2008 Director, Hankyu Hanshin Holdings (Current position)2008 Director, Hanshin Electric Railway (Current position)

Mitsuo Nozaki

Masao Shin

Tsuneo Wakabayashi

Director

Director

Director

In charge of Personnel andGeneral Affairs Div.

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

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

1981 Joined Hankyu Corporation2005 Director, Hankyu Corporation
2006 Director, Hankyu Holdings
2006 Director, Hankyu Hanshin Holdings (Current position)2007	Managing Director, Hankyu Corporation2013	Senior Managing Director, Hankyu Corporation(Current position)

1981 Joined Hanshin Electric Railway
2006 Director, Hanshin Electric Railway
2006 Director, Hankyu Hanshin Holdings (Current position)2008	Managing Director, Hanshin Electric Railway(Current position)

1983 Joined Hankyu Corporation2007 Director, Hankyu Corporation2009	Managing Director, Hankyu Corporation2011 Director, Hankyu Hanshin Holdings (Current position)2013	Senior Managing Director, Hankyu Corporation(Current position)

Section4

Social Responsibility andManagement Organisation*	Mr. Noriyuki Inoue and Mr. Shosuke Mori satisfy the qualificationsof external directors as provided in Article 2, Paragraph 15 of the
Corporate Law.
The Company has submitted notifications to the stock exchanges
on which its shares are listed, naming Mr. Noriyuki Inoue and Mr.
Shosuke Mori as external (independent) directors.

Haruo Sakaguchi

Junzo Ishii

Audit & Supervisory
Board Member (External*)

Audit & Supervisory
Board Member (External*)

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

1986 Professor of Faculty of Commerce, Doshisha University
1989 Professor of Business Administration, Kobe University
1999	Professor of Business Administration, Graduate Schoolof Kobe University
2008	President of the University of Marketing andDistribution Sciences (Current position)2010	Audit & Supervisory Board Member,
Hankyu Hanshin Holdings (Current position)2010	Audit & Supervisory Board Member,
Hanshin Electric Railway (Current position)*	Mr. Takaharu Dohi, Mr. Haruo Sakaguchi, and Mr. Junzo Ishii satisfy
the qualifications of external Audit & Supervisory Board Members
as provided in Article 2, Paragraph 16 of the Corporate Law.
The Company has submitted notifications to the stock exchanges
on which its shares are listed, naming Mr. Takaharu Dohi, Mr. Haruo
Sakaguchi, and Mr. Junzo Ishii as external (independent) Audit &Supervisory Board members.

Hankyu Hanshin Holdings

Annual Report 201381

S ec t i o n

5Financial Section and Corporate Data

83 Consolidated Six-Year Summary
84 Consolidated Financial Review
87 Business Risks
90 Consolidated Balance Sheets92	Consolidated Statements of Income/Consolidated Statements ofComprehensive Income
93	Consolidated Statements of Changes in
Net Assets
94 Consolidated Statements of Cash Flows95	Notes to the Consolidated Financial
Statements

118 Major Group Companies
119 Investor Information

82 Hankyu Hanshin Holdings

Annual Report 2013

Consolidated Six-Year Summary
FY2008FY2009Result of Operations (millions of yen and thousands of U.S. dollars): *FY2010FY2011FY2012FY2013

FY2013

1¥752,300¥683,715¥653,287¥638,770¥649,703¥682,439$7,259,989

Operating income

90,724

77,82370,12664,74373,80987,921

935,330

EBITDA*

145,200

135,300

133,200

127,100

133,500

145,100

1,543,617

Income before income taxes and minority interests

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

661,617

Net income

627

20,55010,79318,06839,25239,702

422,362

Comprehensive income——

12,541

14,72844,99254,081

575,330

Capital expenditure

134,307

109,688

132,386

68,431

55,26759,512

633,106

Depreciation and amortisation

51,57754,79860,41859,66956,96854,540580,213

Revenues from operations

2

Cash Flows (millions of yen and thousands of U.S. dollars):
Cash flows from operating activities¥ 74,902¥108,597¥146,955¥103,252¥124,525¥127,655$1,358,032

Cash flows from investing activities(100,058)(115,047)(132,737)(62,516)(44,295)(58,923)(626,840)

Cash flows from financing activities

36,718

7,014(24,200)(39,544)(78,978)(69,195)(736,117)

Increase (decrease) in cash and cash equivalents

11,403(2,174)(9,680)

474

767

817

8,691

Cash and cash equivalents at end of year

31,16630,69021,44022,592

23,57225,581

272,138

Financial Position (millions of yen and thousands of U.S. dollars):¥2,348,476 ¥2,307,332 ¥2,337,331 ¥2,314,669 ¥2,274,380 ¥2,281,007 $24,266,032

Total assets
Total net assets
Interest-bearing debt

476,639

473,878

480,633

486,947

524,801

573,154

6,097,383

1,271,100

1,275,620

1,282,583

1,251,665

1,183,647

1,126,633

11,985,457¥  0.50¥ 16.28¥  8.55¥ 14.32¥ 31.13¥ 31.48$0.33

Per Share Data (yen and U.S. dollars):
Net income—Basic

0.41

16.18

8.51

14.27

31.13

31.47

0.33

Net assets

369.25366.96371.70377.17407.01443.63

4.72

Dividend

5.00

5.00

5.00

5.00

5.00

5.00

0.05

Operating income margin (%)

12.1

11.4

10.7

10.1

11.4

12.9

—

3

ROA (%)*

3.2

2.5

2.2

2.0

2.8

3.3

—

4

ROE (%)*

0.1

4.4

2.3

3.8

7.9

7.4

—

Interest-bearing debt/EBITDA (times)

8.8

9.4

9.6

9.8

8.9

7.8

—

Equity ratio (%)

Net income—Diluted

Ratios:

20.1

20.1

20.6

22.6

24.5

—

Debt/equity (D/E) ratio (times)*

2.7

2.8

2.7

2.6

2.3

2.0

—

Interest coverage ratio (times)*6

4.0

3.4

3.0

3.0

3.7

4.8

—

1,271,406

1,271,406

1,271,406

1,271,406

1,271,406

1,271,406—

19,89220,80520,93821,302

20,811

20,751—

5

Financial Section andCorporate Data

19.9
5

Section

Others:Number of outstanding shares (thousands)
Number of employees*1 The U.S. dollar amounts have been translated, for convenience only, at ¥94 = $1, the prevailing exchange rate on the Tokyo Foreign Exchange Market as of 31st March 2013.

*2 EBITDA = operating income + depreciation expenses + amortisation of goodwill attendant on the management integration of Hankyu and Hanshin
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/equity (average of period-start and period-end totals)*5 D/E ratio = interest-bearing debt/equity*6 Interest coverage ratio = (operating income + interest and dividend income)/interest expense

Hankyu Hanshin Holdings

Annual Report 201383

Consolidated Financial Review
Analysis of Operating Results for fiscal 2013 (fiscal year ended March 2013)
Revenues from operations for the year under review increased by¥32,735 million (5.0%) year on year to ¥682,439 million. This was
mainly due to a year-on-year increase in condominium sales in theReal Estate Business as well as a recovery centered on the Traveland Hotels businesses from the impact of the Great East Japan
Earthquake during the previous fiscal year. In addition, the Travel
Business benefited from robust performance in overseas travel.
In the Entertainment and Communications Business, revenues inthe stage revue business were firm, and Himeji Cable Television
Co., Ltd. along with other companies were added to the scope
consolidation.
Operating income posted a year-on-year increase of ¥14,111
million (19.1%) to ¥87,921 million thanks to the aforementioned
rise in revenues as well as successful cost-cutting initiatives by all of
the Group’s core businesses.
Ordinary income grew ¥9,520 million (14.6%) year on yearto ¥74,914 million mainly due to a decrease in interest expenses
in line with lower interest-bearing debt (consolidated basis). This
result occurred despite a decline in non-operating income causedby the absence of a rise in equity in income of affiliates, which wasrecorded in the previous fiscal year following an increase in the
Company’s equity stake in H2O Retailing Corporation (an affiliatedcompany under the equity method).
Net income increased by ¥450 million (1.1%) year on year to¥39,702 million primarily due to an improvement in net extraordinary loss. This result occurred despite a year-on-year rise in income
taxes, which had been deferred in the previous fiscal year as a resultof a revision of the taxation system, including a reduction in thecorporate income tax rate.
Summary of consolidated business results: please also see Interview
with the President (Fiscal 2013 Performance) on page 18.

Analysis of Operating Income(¥ million)

73,809FY2012+32,735

Increase revenues from operations-17,490

Increase in operating expenses and cost of sales of transportation
Increase in personnel expenses -28-1,389

Increase in expense

Decrease in taxes +110

+242

Decrease in depreciation and amortisation

Increase in selling, general andadministrative expenses-1,135

Increase in amortisation of goodwill -69

87,921FY2013

YoY difference +14,112

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

Real EstateEntertainment andCommunications

Travel andInternational
Transportation

FY2013

193,631

196,711

108,608

FY2012

192,718

176,114102,313Difference+913+20,597

YoY (%)

0.5%

11.7%

FY201334,711FY2012

32,342Difference

HotelsRetailing

Other

Adjustments

Consolidated

70,84064,69753,25336,045-41,348

682,439

67,57164,09053,85331,334-38,293649,703+6,294+3,269+607-600+4,710-3,055+32,735

6.2%

4.8%

0.9%

-1.1%

15.0%

-8.0%

5.0%

36,994

12,584

4,441

525

1,387

307

-3,031

87,921

29,133

10,141

3,171

-269

1,333

761

-2,80473,809+2,369+7,861+2,442+1,269

+794

+54

-454

-226

+14,111

YoY (%)

7.3%

27.0%

24.1%

40.0%

—

4.1%

-59.7%

-8.1%

19.1%

Reference page

P.43

P.48

P.52

P.55

P.57

P.59

*

—

—

Revenues from operations

Operating income/loss*Regarding other businesses, in spite of higher construction revenues, earnings fell mainly due to an upswing in advertising expenses in the card business.

84 Hankyu Hanshin Holdings

Annual Report 2013

Review of Financial Position
1. Assets, Liabilities and Net Assets

2. Cash Flows

Total assets at the end of the fiscal year under review increased by¥6,627 million from the previous term-end to ¥2,281,007 million.
This was mainly the result of an increase in the market value ofinvestment securities accompanying an upswing in stock prices
extending until the end of the fiscal year under review.
Total liabilities decreased by ¥41,725 million from the previous term-end to ¥1,707,853 million, due partly to a reduction ininterest-bearing debt.
Net assets increased ¥48,352 million from the previous termend to ¥573,154 million on an increase in retained earnings.
Equity came to ¥559,399 million, an increase of ¥46,106 million
over the previous fiscal year-end. This was the result of an increase
in retained earnings mainly due to the posting of net income aswell as a rise in valuation difference on available-for-sale securities
that primarily reflected higher stock prices.
As a result, the equity ratio stood at 24.5%, and ROE was 7.4%.

Cash and cash equivalents increased by ¥2,008 million from theprevious term-end to ¥25,581 million.
Net cash provided by operating activities amounted to¥127,655 million, net cash used in investing activities totaled¥58,923 million, and net cash used in financing activities was¥69,195 million.
The following is an analysis of year-on-year changes in eachcash flow category.

(1) Cash Flows from Operating Activities
Net cash provided by operating activities increased by ¥3,129 million from the previous fiscal year. This was largely due to an increasein operating income that offset a decrease in inventories.

(2) Cash Flows from Investing Activities
Net cash used in investing activities increased by ¥14,627 million.
This was chiefly due to a rise in expenditures for the purchases ofproperty and equipment.

(3) Cash Flows from Financing Activities
Net cash used in financing activities decreased by ¥9,783 million. Thiswas due partly to a decline in short-term borrowings.

Trends in Cash Flow Indicators
Equity ratio (%)

FY2009FY2010FY2011FY2012FY2013

20.1

20.1

20.6

22.6

24.5

Equity ratio (%) (market value basis)

24.4

23.4

20.9

20.0

31.5

Cash flows/interest-bearing debt ratio (times)

11.7

8.7

12.1

9.5

8.8

Interest coverage ratio (times)

3.4

3.0

3.0

3.7

4.8

3. Fund Procurement
During the fiscal year under review the outstanding balance ofinterest-bearing debt (consolidated basis) declined by ¥57,014
million to ¥1,126,633 million at the end of the fiscal period. This
reflected the fact that total net cash provided by operating
activities outweighed capital expenditure outlays, including for the5

Financial Section andCorporate Data

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

Sectionrebuilding of the Umeda Hankyu Building. The ratio of consolidated
interest-bearing debt divided by EBITDA (operating income before
amortisation), the benchmark we use for assessing the soundnessof our financial position, stood at 7.8 times (8.9 times in the previous fiscal year).

Hankyu Hanshin Holdings

Annual Report 201385

Consolidated Financial Review

Consolidated Capital Expenditure and Depreciation and Amortisation
Capital expenditure in the fiscal year under review (consolidated basis; including intangible assets) increased by ¥4,245 million (7.7%) year on
year to ¥59,512 million.
The following is a breakdown for each business segment.
FY2013YoY

Urban Transportation

25,441 (Millions of yen)

25.1 %

Real Estate

25,235-7.8

Entertainment and Communications

4,265

-3.8

Travel and International Transportation

1,663

67.1

Hotels

1,931

48.0

Retailing

702

-3.0

Other

401

23.7

Total

59,642

7.5

Adjustments

-129

—

Consolidated

59,512

7.7

Urban Transportation

Travel and International Transportation

With a focus on safety and service improvement, the railway business invested in elevated tracks (to allow lines to cross over roads
without the need for level crossings) and general facility improvements as well as in rebuilding and improving existing rolling stock.
In bus and taxi businesses, vehicles were upgraded.

In the Travel and International Transportation Business, Hankyu
Travel International Co., Ltd. upgraded core systems in the travelbusiness.

Real Estate
In the real estate leasing business, Hankyu Corporation completed
the rebuilding works at Umeda Hankyu Building and the construction of the Shin-Osaka Hankyu Building, as well as renovation andrepair work on rental buildings operated by Hankyu Corporation,
Hanshin Electric Railway Co., Ltd., and Hankyu Realty Co., Ltd.

HotelsIn the Hotels Business, Hankyu Hanshin Hotels Co., Ltd. newly
constructed the REMM Shin-Osaka hotel and carried out interior
refurbishing work on other hotels.

Retailing
In the Retailing Business, Hankyu Retails Corporation constructed
new directly operated outlets, including the asnas convenience
store in Hankyu Sanban Gai shopping centre.

Entertainment and Communications
In the communication and media business, Itec Hankyu HanshinCo., Ltd. undertook construction to install public wireless LAN,
while investments targeted acquisition of cable TV terminal equipment (Bay Communications Inc.). In addition, in the stage revue
business, Hankyu Corporation financed improvement and renewalof the Takarazuka Grand Theatre.

86 Hankyu Hanshin Holdings

Annual Report 2013

Depreciation and amortisation decreased by ¥2,428 million (4.3%)
from the previous year (consolidated basis) to ¥54,540 million.

Business Risks
The various categories of risk to which the business performance, stock price, financial position and other aspects of operations of the Hankyu
Hanshin Holdings Group are subject are detailed below. Nevertheless, these dangers do not encompass all risks attendant on Group activities andthere are risks other than those stated below which are difficult to foresee.
Information about future events that appears in this report was determined by the Group to be current as of 31st March 2013.

Legal Risk

Affiliated Companies

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

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

Progress in Large-Scale Development
Projects
The Group seeks to utilise its working assets more effectively
to facilitate the development of areas served by Hankyu andHanshin lines. To raise its asset effectiveness, the Group is pursuing the following initiatives: “Umeda 1-1 Project” (rebuilding of
the Dai Hanshin Bldg. and the Shin Hankyu Bldg.) and further
development of the International Culture Park “Saito” (a newtown). These projects are all seen as key to the Group’s future
growth, and management will be working to complete themas soon as possible. However, in the event of rapid and majorchanges in the business environment, affecting land prices orurban development plans, the business performance and financial position of the Group could be adversely affected.

Interest-Bearing Debt

In the case of a substantial decline in the market value of inventory assets, property and equipment and intangible assets,
investment securities, and other assets, the recording of impairment losses or valuation losses would likely have a negative
impact on the earnings performance and financial position of
the Hankyu Hanshin Holdings Group.

Natural Disasters
Operating as it does a very wide range of businesses in its Urban
Transportation, Real Estate, Entertainment and Communications,
Travel, International Transportation, and Hotels segments, theGroup has a correspondingly large assortment of facilities necessary for conduct of business, such as railway installations andbuildings and retail outlets for rent. In the event of earthquakes
or other major disasters, the business performance and financial
position of the Group could be adversely affected by damage tothese facilities.

Hankyu Hanshin Holdings

Annual Report 2013

Section5

Financial Section andCorporate Data

The balance of interest-bearing debt held by the Group as ofthe end of March 2013, on a consolidated basis, was ¥1,126,633
million.
As a result of the acquisition of shares in Hanshin Electric
Railway Co., Ltd. through a successful public tender offer (takeoverbid) on 27th June 2006, Hanshin Electric Railway has become
a consolidated subsidiary of Hankyu Holdings. This acquisition
has resulted in an increase in the balance of interest-bearing
debt of the Group. On the other hand, management integration between the Hankyu Holdings Group and Hanshin Electric
Railway Group has increased cash flows, so the Group is notexpected to have any significant difficulty in repaying its debts.
The Group will take measures to diversify its fund procurement methods to deal with an increase in interest-bearing debt
resulting from the integration, and will use all possible means
to minimise the negative impact of interest rate movements.
But in the unlikely event that interest rates rise suddenly and inexcess of our projections, this could exert an adverse effect on
the business performance and financial position of the Group.

Decline in the Market Value of Assets
Held by Members of the Hankyu Hanshin
Holdings Group87

Other Risks and Countermeasures
The following is the Group’s perspective provided in response to questions received from our investors in relation to the risks attendant on ourbusiness. Information about future events that appears in this report was determined by the Group to be current as of 31st March 2013 and is notintended to negate the possibility of these risks impacting the business performance, financial position and other aspects of operations of the Group.

Economic Environment-related Risks

Business-related Risks

Changes in the Financial Market

Demographic Change

Despite increases in the interest rate set by the Bank of Japanand the difficulties associated with market-based financing
accompanying changes in financial markets, the Group limits
its exposure to risk associated with interest rate increases byprioritising the undertaking of long-term loans with fixed interest rates. In addition, the Group secures financing by working
to establish back-up lines based on commitment lines set up
with correspondent financial institutions.
		 Nevertheless, in the event that financial markets were tochange dramatically, the business performance and financial
position of the Group could be adversely affected.

Due to the aging population, it is expected that capital
expenditure on safety measures and construction aimed atmaking facilities barrier-free will increase. At the same time,
due to future population decline caused by the falling birthrate, it is possible that transportation demand (for the Group’s
railways, buses and taxis) will recede, and that demand in otherbusinesses may also decline.
		 In order to respond to this challenge, the Group is working
with government and educational institutions on communitybuilding initiatives with a focus on peace of mind, educationand cultural enrichment. By doing so, we are working toenhance the appeal of the areas served by our stations so as
to ensure that our railway lines enjoy the patronage of large
numbers of people.

Foreign Currency Market Fluctuations
The Group assumes that sudden fluctuations in foreign currency markets will occur as economic conditions change.
However, foreign exchange rate contracts, currency swap contracts and currency option contracts are employed to avoid
the exchange rate fluctuation risks attendant on some foreign
currency-denominated assets and liabilities.
		 Nevertheless, although foreign currency market fluctuation risk is mitigated through the use of foreign currency
exchange-related derivative transactions, in the event thatsudden fluctuations exceed assumptions, the business performance and financial position of the Group could be adversely
affected.
		 The Group’s overseas sales constitute less than 10% of its
consolidated operating revenues.

Safety Management
In the Group’s core railway business, our passengers would
suffer greatly if an accident were to occur. We are keenly awareof the responsibility entrusted to us for our passengers’ lives.
Therefore, the cornerstone of our business is placing theutmost priority on ensuring the safety of customers.
		 Accordingly, the Group has upgraded all aspects of its
safety capabilities in the conviction that putting passengers
first and prioritising safety come above all else. We are engaged
in a wide variety of endeavours for ensuring that we go one
step further to offer our passengers even safer transportation.
(For safety measures in our railway business, please refer toPage 71.)

Risks Associated with Power Supply
Shortages and Electric Utility Rates
In the event of a shortage of power supply, train and otherservices may be disrupted. In addition, increases in electricutility rates are a factor driving up power and other costs. In
order to curb power usage to the maximum extent possible
while minimising its impact on earnings and expenses, theGroup is undertaking such measures as gradually introducing
energy-saving equipment and strengthening cost reduction
awareness among employees.

88 Hankyu Hanshin Holdings

Annual Report 2013

Business Risks

Natural Disasters and Acts of Terrorism
The Group’s businesses and transportation network infrastructure could be significantly damaged by natural disasters suchas earthquakes, typhoons and floods or acts of terrorism.
		 Hankyu Corporation and Hanshin Electric Railway Co.,
Ltd. have installed rain, wind and river water gauges in theareas along our railway lines for collecting observation data.
We also use real-time information provided by meteorologicalobservatories to ensure the safe operation of our trains. If an
earthquake of JMA seismic intensity 4 or above is detectedby a seismograph or predicted by an earthquake early warning system, all trains that operate in the zone in question will
immediately prepare for emergency stopping. For possible
acts of terrorism, or where suspicious items or persons are
identified or damage has occurred, we have risk-graded management response systems.
		 We have also developed emergency response systems
for minimising the social impact in the unlikely event of anincident which causes long-term disruption to transit services
or results in a great number of casualties.

Infectious Disease Outbreaks andEpidemics
Group businesses could be significantly affected if economic
activities were restricted or customers refrained from goingout due to an outbreak or epidemic of an infectious diseasesuch as SARS (Severe Acute Respiratory System) or H1N1 flu.
		 In response to the spread of infectious diseases such as
H1N1 flu, the Group has developed a Business Continuity Plan
(BCP) for each division, under the direction of core companies.
During the H1N1 outbreak in 2009 and 2010, ongoing surveys
into infection rates among employees and their families ineach division gave us a good idea of the scale of risk, minimising the impact of H1N1 on our business. Also, in the railway
business, which is a particularly important part of the social
infrastructure, we drew up plans in advance to minimise theimpact of any explosive spread of the disease, including multiple schedules assuming a shortage of railway staff.

Section5

Financial Section andCorporate Data

Hankyu Hanshin Holdings

Annual Report 201389

Consolidated Balance Sheets
As of 31st March 2012 and 2013

Millions of yen
2012
2013

Thousands of
U.S. dollars
2013

Assets:Current assets:
Cash and deposits...................................................................................................................................................................

¥   24,280¥   26,602$   283,000

Trade receivables.....................................................................................................................................................................

73,40475,181

799,798

Land and buildings for sale ..............................................................................................................................................

118,415

112,192

1,193,532

Finished products and merchandise...........................................................................................................................

7,219

7,024

74,723Work in progress.......................................................................................................................................................................

4,288

3,389

36,053

Materials and supplies..........................................................................................................................................................

3,858

3,971

42,245

Deferred tax assets..................................................................................................................................................................

7,625

6,802

72,362424,766

Other................................................................................................................................................................................................

36,44539,928

Allowance for doubtful receivables..............................................................................................................................

(251)

(318)

(3,383)

Total current assets.................................................................................................................................................................

275,286

274,773

2,923,117

Buildings and structures—net [NOTES 4 ③]..............................................................................................

578,925594,669

6,326,266

Machinery, equipment and vehicles—net [NOTES 4 ③]...................................................................

47,40444,521

473,628

Land [NOTES 4 ③ and ⑤]......................................................................................................................................

892,356

890,683

9,475,351
1,231,085

Noncurrent assets:
Property and equipment:

Construction in progress.............................................................................................................................................

131,434

115,722

Other—net [NOTES 4 ③]........................................................................................................................................

18,246

20,652219,702

Total property and equipment [NOTES 4 ① and ②]............................................................................

1,668,366

1,666,249

17,726,053

Intangible assets:
Goodwill................................................................................................................................................................................

38,43736,219385,309

Other [NOTES 4 ② and ③]....................................................................................................................................

17,157

17,405

185,160

Total intangible assets..................................................................................................................................................

55,59453,624570,468

Investment securities [NOTES 4 ③ and ④].................................................................................................

227,417239,9972,553,160

Deferred tax assets..........................................................................................................................................................

4,002

5,224

55,574

Other........................................................................................................................................................................................

44,321

41,675443,351

Investments and other assets:

Allowance for doubtful receivables.....................................................................................................................

(608)

(536)

(5,702)

Total investments and other assets......................................................................................................................

275,133

286,360

3,046,383

Total noncurrent assets........................................................................................................................................................

1,999,093

2,006,234

21,342,915

Total assets..................................................................................................................................................................................................

2,274,380

2,281,007

24,266,032

90 Hankyu Hanshin Holdings

Annual Report 2013

Millions of yen
2012
2013

Thousands of
U.S. dollars
2013

Liabilities:
Current liabilities:
Trade payables...........................................................................................................................................................................

¥   43,410¥   44,110$   469,255

Short-term borrowings [NOTES 4 ③]......................................................................................................................

316,545354,358

3,769,766

Current portion of bonds....................................................................................................................................................

35,00010,000106,383

Income taxes payable...........................................................................................................................................................

4,170

8,883

94,500Accrued expenses...................................................................................................................................................................

21,27520,983

223,223

Provision for bonuses............................................................................................................................................................

3,702

4,079

43,394

Other [NOTES 4 ③].............................................................................................................................................................

142,937

135,724

1,443,872

Total current liabilities...........................................................................................................................................................

567,043

578,140

6,150,426
1,191,489

Long-term liabilities:
Bonds...............................................................................................................................................................................................

102,000

112,000

Long-term debt [NOTES 4 ③]......................................................................................................................................

720,782

637,624

6,783,234

Deferred tax liabilities............................................................................................................................................................

147,840

160,017

1,702,309

Deferred tax liabilities related to land revaluation [NOTES 4 ⑤]............................................................

5,493

5,572

59,277

Provision for retirement benefits...................................................................................................................................

59,19459,439632,330

Provision for directors’ retirement benefits.............................................................................................................

875

724

7,702

Long-term deferred contribution for construction............................................................................................

21,55528,483303,011

Other................................................................................................................................................................................................

124,792

125,849

1,338,819

Total long-term liabilities....................................................................................................................................................

1,182,535

1,129,712

12,018,213

Total liabilities...................................................................................................................................................................................

1,749,578

1,707,853

18,168,649

Net assets:
Shareholders’ equity:
Common stock..........................................................................................................................................................................

99,474

99,474

1,058,234

Capital surplus............................................................................................................................................................................

150,027

150,027

1,596,032
3,267,106

Retained earnings....................................................................................................................................................................

276,059

307,108

Less treasury stock, at cost.................................................................................................................................................

(4,140)(4,209)(44,777)

Total shareholders’ equity..................................................................................................................................................

521,421552,400

5,876,596

Accumulated other comprehensive income:(8,044)

2,817

29,968

(131)

770

8,191

Revaluation reserve for land [NOTES 4 ⑤]...........................................................................................................

2,972

5,130

54,574Foreign currency translation adjustments...............................................................................................................

(2,924)(1,719)(18,287)

Total accumulated other comprehensive income.............................................................................................

(8,128)6,999

74,457

Subscription rights to shares.................................................................................................................................................

32

112

1,191

Minority interests [NOTES 4 ⑤].........................................................................................................................................

11,476

13,642

145,128

Total net assets.................................................................................................................................................................................

524,801

573,154

6,097,383

Total liabilities and net assets........................................................................................................................................................

2,274,380

2,281,007

24,266,032

Hankyu Hanshin Holdings

Annual Report 2013

Section5

Financial Section andCorporate Data

Valuation difference on available-for-sale securities..........................................................................................
Deferred gains or losses on hedges.............................................................................................................................

91

Consolidated Statements of Income
Years ended 31st March 2012 and 2013

Revenues from operations.............................................................................................................................................................................

Millions of yen
2012
2013
¥649,703¥682,439

Thousands of
U.S. dollars
2013$7,259,989

Costs of revenues from operations:Operating expenses and cost of sales of transportation [NOTES 5 ①]....................................................................
Selling, general and administrative expenses [NOTES 5 ②]...........................................................................................
Total costs of revenues from operations [NOTES 5 ③]......................................................................................................
Operating income................................................................................................................................................................................................

542,653
33,240575,894
73,809560,143
34,375594,518
87,921

5,958,968
365,691
6,324,660
935,330

Non-operating income:Interest income...............................................................................................................................................................................................
Dividends income.........................................................................................................................................................................................
Equity in income of affiliates...................................................................................................................................................................
Miscellaneous income................................................................................................................................................................................
Total non-operating income..................................................................................................................................................................

94
1,184
10,0243,501
14,805

111
1,186
4,302
2,294
7,895

1,181
12,61745,766
24,404
83,989Non-operating expenses:
Interest expenses...........................................................................................................................................................................................
Miscellaneous expenses............................................................................................................................................................................
Total non-operating expenses..............................................................................................................................................................
Ordinary income...................................................................................................................................................................................................

20,5582,662
23,221
65,39318,646
2,256
20,902
74,914

198,362
24,000222,362
796,957

Extraordinary income:Gain on sales of noncurrent assets [NOTES 5 ④]..................................................................................................................
Gain on contributions for construction...........................................................................................................................................
Gain on sale of securities..........................................................................................................................................................................
Other......................................................................................................................................................................................................................
Total extraordinary income.....................................................................................................................................................................

619
10,957534
953
13,064

806
5,783
1,206
397

8,574
61,521
12,830
4,223

8,193

87,160Extraordinary loss:
Loss on sales of noncurrent assets [NOTES 5 ⑤]...................................................................................................................
Loss on reduction of noncurrent assets..........................................................................................................................................
Loss on retirement of noncurrent assets [NOTES 5 ⑥]......................................................................................................
Loss on impairment of fixed assets [NOTES 5 ⑦]..................................................................................................................
Provision for loss on removal of property and equipment.................................................................................................
Restructuring costs.......................................................................................................................................................................................
Other......................................................................................................................................................................................................................
Total extraordinary loss..............................................................................................................................................................................
Income before income taxes and minority interests..................................................................................................................
Income taxes—current.....................................................................................................................................................................................
Income taxes—deferred.................................................................................................................................................................................
Total income taxes...............................................................................................................................................................................................
Income before minority interests.............................................................................................................................................................
Minority interests in income.........................................................................................................................................................................
Net income................................................................................................................................................................................................................

58
10,962499
20,212—
81
3,223
35,03843,4196,074(2,855)
3,219
40,200947
39,252

211
5,717
1,730
5,402
4,391
2,161
1,302
20,91562,192
13,701
7,532
21,23440,957
1,254
39,702

2,245
60,81918,40457,46846,713
22,98913,851
222,500
661,617
145,755
80,128225,894435,713
13,340422,362

Consolidated Statements of Comprehensive Income
Years ended 31st March 2012 and 2013

Income before minority interests.............................................................................................................................................................
Other comprehensive income:
Valuation difference on available-for-sale securities...............................................................................................................
Deferred gains or losses on hedges...................................................................................................................................................
Revaluation reserve for land...................................................................................................................................................................
Foreign currency translation adjustments.....................................................................................................................................
Share of other comprehensive income of associates accounted for using equity method..........................
Total other comprehensive income [NOTES 6 ①].............................................................................................................
Comprehensive income..................................................................................................................................................................................
(Details)
Comprehensive income attributable to owners of the parent........................................................................................
Comprehensive income attributable to minority interests................................................................................................

92 Hankyu Hanshin Holdings

Annual Report 2013

Millions of yen
2012
2013
¥40,200¥40,957

Thousands of
U.S. dollars
2013$435,713

2,756
96
1,136
(504)
1,306
4,792
44,992

6,735
900
—
1,287
4,201
13,12454,081

71,6499,574—
13,691
44,691
139,617575,330

44,108   88452,6701,411

560,319
15,011

Consolidated Statements of Changes in Net Assets
Years ended 31st March 2012 and 2013

Millions of yen
2012
2013
Shareholders’ equity:
Common stock:
Balance at beginning of year..............................
Changes of items during the period:
Total changes of items during
the period................................................................
Balance at end of year.............................................
Capital surplus:
Balance at beginning of year..............................
Changes of items during the period:
Total changes of items during
the period................................................................
Balance at end of year.............................................
Retained earnings:
Balance at beginning of year..............................
Changes of items during the period:
Dividends from surplus......................................
Net income................................................................
Reversal of revaluation reserve forland..............................................................................
Disposal of treasury stock.................................
Change in scope of consolidation..............
Total changes of items during
the period................................................................
Balance at end of year.............................................
Less treasury stock, at cost:
Balance at beginning of year..............................
Changes of items during the period:
Purchase of treasury stock...............................
Disposal of treasury stock.................................
Changes in equity in affiliates accounted
for by equity method-treasury stock......
Total changes of items during
the period................................................................
Balance at end of year.............................................

Accumulated other comprehensive income:
Valuation difference on available-forsale securities:
Balance at beginning of year..............................
Changes of items during the period:
Net changes of items other thanshareholders’ equity..........................................
Total changes of items during
the period................................................................
Balance at end of year.............................................

¥ 99,474¥ 99,474$1,058,234—
99,474—
99,474—
1,058,234

150,027

150,027

1,596,032—
150,027—
150,027—
1,596,032

243,264

276,059

2,936,798(6,334)
39,252(6,334)39,702(67,383)
422,362

53
(9)
(166)

(2,160)(2)(157)(22,979)(21)(1,670)32,795
276,059

31,048307,108

330,298
3,267,106(4,036)(4,140)(44,043)

(40)
21

(82)
13

(872)
138

(84)

—

—

(103)
(4,140)(69)(4,209)(734)(44,777)  488,729

521,4215,547,032(6,334)
39,252(6,334)39,702(67,383)
422,362

53
(40)
12
(166)

(2,160)
(82)
10
(157)

(22,979)(872)
106(1,670)

(84)

—

—

32,692
521,42130,978552,400

329,553
5,876,596(11,936)(8,044)(85,574)

3,891

10,862

115,553

3,891(8,044)

10,862
2,817

115,553
29,968Deferred gains or losses on hedges:
Balance at beginning of year..............................
Changes of items during the period:
Net changes of items other thanshareholders’ equity..........................................
Total changes of items during
the period................................................................
Balance at end of year.............................................
Revaluation reserve for land:
Balance at beginning of year..............................
Changes of items during the period:
Net changes of items other thanshareholders’ equity..........................................
Total changes of items during
the period................................................................
Balance at end of year.............................................
Foreign currency translation
adjustments:
Balance at beginning of year..............................
Changes of items during the period:
Net changes of items other thanshareholders’ equity..........................................
Total changes of items during
the period................................................................
Balance at end of year.............................................
Total accumulated othercomprehensive income:Balance at beginning of year..............................
Changes of items during the period:
Net changes of items other thanshareholders’ equity..........................................
Total changes of items during
the period................................................................
Balance at end of year.............................................

Millions of yen
2012
2013

Thousands of
U.S. dollars
2013¥    (232) ¥    (131)$    (1,394)

101

901

9,585

101
(131)

901
770

9,585
8,191

1,706

2,972

31,617

1,265

2,158

22,957

1,265
2,972

2,158
5,130

22,95754,574(2,464)(2,924)(31,106)

(459)

1,204

12,809(459)(2,924)

1,204(1,719)12,809(18,287)(12,927)(8,128)(86,468)

4,798

15,127

160,926

4,798(8,128)15,127
6,999

160,926
74,457

—

32

340

32

79

840

32
32

79
112

840
1,191

11,144

11,476122,085

331

2,166

23,043331
11,476

2,166
13,642

23,043
145,128

486,947

524,801

5,582,989(6,334)
39,252(6,334)39,702(67,383)
422,362

53
(40)
12
(166)

(2,160)
(82)
10
(157)

(22,979)(872)
106(1,670)

(84)

—

—

5,162

17,374

184,830

37,854
524,801

48,352
573,154514,383
6,097,383

Subscription rights to shares:
Balance at beginning of year...................................
Changes of items during the period:
Net changes of items other thanshareholders’ equity...............................................
Total changes of items during
the period.....................................................................
Balance at end of year..................................................
Minority interests:
Balance at beginning of year...................................
Changes of items during the period:
Net changes of items other thanshareholders’ equity...............................................
Total changes of items during
the period.....................................................................
Balance at end of year..................................................
Total net assets:
Balance at beginning of year...................................
Changes of items during the period:
Dividends from surplus...........................................
Net income.....................................................................
Reversal of revaluation reserve
for land............................................................................
Purchase of treasury stock....................................
Disposal of treasury stock......................................
Change in scope of consolidation...................
Change in equity in affiliates accounted
for by equity method-treasury stock...........
Net changes of items other thanshareholders’ equity...............................................
Total changes of items during
the period.....................................................................
Balance at end of year..................................................

Hankyu Hanshin Holdings

Annual Report 2013

Section5

Financial Section andCorporate Data

Total shareholders’ equity:
Balance at beginning of year..............................
Changes of items during the period:
Dividends from surplus......................................
Net income................................................................
Reversal of revaluation reserve forland..............................................................................
Purchase of treasury stock...............................
Disposal of treasury stock.................................
Change in scope of consolidation..............
Changes in equity in affiliates accounted
for by equity method-treasury stock......
Total changes of items during
the period................................................................
Balance at end of year.............................................

Thousands of
U.S. dollars
2013

93

Consolidated Statements of Cash Flows
Years ended 31st March 2012 and 2013

Millions of yen
2012
2013
Cash flows from operating activities:
Income before income taxes and minority interests..............................................................................................................
Depreciation and amortisation.............................................................................................................................................................
Loss on impairment of fixed assets....................................................................................................................................................
Amortisation of goodwill..........................................................................................................................................................................
Equity in (income) losses of affiliates.................................................................................................................................................
Increase (decrease) in provision for retirement benefits......................................................................................................
Increase (decrease) in allowance for doubtful receivables.................................................................................................
Increase (decrease) in provision for loss on removal of property and equipment..............................................
Restructuring costs.......................................................................................................................................................................................
Interest and dividend income...............................................................................................................................................................
Interest expense.............................................................................................................................................................................................
Loss (gain) on sales of noncurrent assets.......................................................................................................................................
Loss on reduction of noncurrent assets..........................................................................................................................................
Loss on retirement of noncurrent assets........................................................................................................................................
Loss (gain) on sale of securities.............................................................................................................................................................
Gain on contributions for construction...........................................................................................................................................
Decrease (increase) in trade receivables.........................................................................................................................................
Decrease (increase) in inventories......................................................................................................................................................
Increase (decrease) in trade payables...............................................................................................................................................
Increase (decrease) in other liabilities...............................................................................................................................................
Other......................................................................................................................................................................................................................
Subtotal...............................................................................................................................................................................................................
Interest and dividends received...........................................................................................................................................................
Interest paid......................................................................................................................................................................................................
Income taxes (paid) refunded...............................................................................................................................................................
Net cash provided by operating activities.....................................................................................................................................
Cash flows from investing activities:
Purchases of noncurrent assets............................................................................................................................................................
Proceeds from sales of noncurrent assets.....................................................................................................................................
Purchases of investment securities....................................................................................................................................................
Proceeds from sale of investment securities................................................................................................................................
Proceeds from sales of investments in subsidiaries resulting in change in scope of consolidation.........
Net decrease (increase) in short-term loans receivable........................................................................................................
Long-term loans advanced.....................................................................................................................................................................
Proceeds from collection of long-term loans receivable.....................................................................................................
Receipt of contributions for construction......................................................................................................................................
Other......................................................................................................................................................................................................................
Net cash used in investing activities..................................................................................................................................................
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings...................................................................................................................
Proceeds from long-term debt.............................................................................................................................................................
Repayment of long-term debt..............................................................................................................................................................
Proceeds from new bonds issued.......................................................................................................................................................
Redemption of bonds................................................................................................................................................................................
Dividends paid................................................................................................................................................................................................
Dividends paid to minority shareholders of consolidated subsidiaries.......................................................................
Other......................................................................................................................................................................................................................
Net cash used in financing activities.................................................................................................................................................
Effect of exchange rate changes on cash and cash equivalents........................................................................................
Increase (decrease) in cash and cash equivalents.........................................................................................................................
Cash and cash equivalents at beginning of year...........................................................................................................................
Increase in cash and cash equivalents from newly consolidated subsidiary............................................................
Cash and cash equivalents at end of year..........................................................................................................................................

94 Hankyu Hanshin Holdings

Annual Report 2013

Thousands of
U.S. dollars
2013¥ 43,419
56,96820,2122,806(10,024)
329
(635)
—
81
(1,278)20,558(567)
10,962499
582(10,957)(5,153)
15,316
3,184(4,328)
4,402
146,380
2,678(20,815)(3,717)
124,525¥ 62,192
54,5405,402
2,875(4,302)
(340)
(24)
4,391
2,161
(1,297)
18,646
(594)
5,717
1,730
(1,164)(5,783)(4,058)
8,516
659
5,289
(3,023)
151,530
2,701(19,028)(7,548)
127,655$  661,617
580,21357,46830,585(45,766)(3,617)(255)
46,713
22,989(13,798)
198,362(6,319)60,81918,404(12,383)(61,521)(43,170)
90,596
7,011
56,266(32,160)
1,612,021
28,734(202,426)(80,298)
1,358,032(76,901)
6,291(3,185)
2,597
602
184
(340)
1,291
20,5304,634(44,295)(83,506)
5,600(2,353)
4,515
—
21
—
389
16,134277(58,923)(888,362)
59,574(25,032)
48,032
—
223
—
4,138
171,638
2,947(626,840)

4,153
79,960(124,695)
9,941(40,000)(6,334)(314)(1,689)(78,978)(483)
767
22,592
212
23,572(8,924)
100,754(137,064)
19,882(35,010)(6,334)(344)(2,154)(69,195)
1,280
817
23,572
1,191
25,581(94,936)
1,071,851(1,458,128)
211,511(372,447)(67,383)(3,660)(22,915)(736,117)
13,617
8,691
250,766
12,670272,138

Notes to the Consolidated Financial Statements
1 FRAMEWORK FOR PREPARING CONSOLIDATED FINANCIAL STATEMENTS① Method of preparation for consolidated financial statements
The Company’s consolidated financial statements were prepared inaccordance with the “Regulations Concerning the Terminology, Forms
and Preparation Method of Consolidated Financial Statements” (Finance
Ministry Ordinance No. 28 of 1976).
② Audit verification
The Company’s consolidated financial statements for the fiscal year underreview (1st April 2012 to 31st March 2013) were audited by KPMG AZSA
LLC, as per Article 193-2 (1) of the Financial Instruments and Exchange Act.
③ Special measures to ensure the appropriateness of consolidated
financial statements and other reports
The Company makes special efforts to ensure the appropriateness of
its consolidated financial statements and other reports. In addition to

subscribing to related publications, it has joined the Financial AccountingStandards Foundation and participates in seminars and other events heldby the Foundation, audit firms and other relevant organisations to establish a system for understanding the accounting standards in detail andresponding suitably to changes made to them. The Company also compiles
and provides common manuals for preparing the consolidated financial
information on a group basis, and arranges training courses for accounting
staff at affiliates.
④ Translation into U.S. dollars
The U.S. dollar amounts have been translated, for convenience only, at¥94 = $1, the prevailing exchange rate on the Tokyo Foreign Exchange
Market as of 31st March 2013.

2 BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS① Scope of consolidation(a) Number and names of consolidated subsidiaries
Number of consolidated subsidiaries—100.
Names of primary consolidated subsidiaries are listed on Page 118.
Himeji Cable Television Co., Ltd. and 4 other companies, due to theirincreased significance, have been included in the scope of consolidation.
Meanwhile, Creative Hankyu Co., Ltd. and 4 other companies, due to amerger, and Hotel New Hankyu Kochi Co., Ltd., due to the sale of its shares,
have been excluded from the scope of consolidation.
(b) Names of major nonconsolidated subsidiaries
Hankyu Mediax Co., Ltd.
Nonconsolidated subsidiaries have been excluded from the scope of
consolidation because the total amounts of their entire assets, sales, net
income or loss (amount equivalent to equity interests), retained earnings(amount equivalent to equity interests), and other figures are limited, andthe effect on the consolidated financial statements as a whole is negligible.

② Items related to application of equity-method accounting(a) Number and names of affiliates for which equity method is applied
Number of affiliates for which equity method is applied—10.
Names of major equity-method affiliates
H2O Retailing Corporation, Kobe Electric Railway Co., Ltd., Toho Co., Ltd.,Tokyo Rakutenchi Co., Ltd.
(b) Names of nonconsolidated subsidiaries and affiliates for which equity
method is not applied
The nonconsolidated subsidiaries to which the equity method does not
apply (Hankyu Mediax Co., Ltd., etc.) and affiliates (OS Co., Ltd., etc.) use thecost method rather than the equity method because the total amounts of
their net income or loss (amount equivalent to equity interests), retained
earnings (amount equivalent to equity interests) and other figures arelimited, and the effect on the consolidated financial statements as a wholeis negligible.

④ Items related to accounting treatment and standards(a) Valuation standards and method for major assets
I. Securities
Available-for-sale securities
Available-for-sale securities with fair market values:
The market value method is applied based on the market price, etc. at
the fiscal year end. (Related valuation differences are directly included
under net assets and the cost of securities sold is determined by themoving average method.)
Available-for-sale securities without fair market values:
The moving average cost method is mainly applied.
For investments in limited liability investment partnerships andsimilar investments, however, the Company’s share of assets held bysuch partnerships is recorded.
II. Derivatives
The market value method is applied.

Section5

Financial Section andCorporate Data(c) Special purpose entities subject to disclosure
An overview of special purpose entities subject to disclosure, an overview
of transactions using special purpose entities subject to disclosure, and themonetary values and other details of transactions with special purpose entities subject to disclosure are presented in “ 20 SPECIAL PURPOSE ENTITIESSUBJECT TO DISCLOSURE.”③ Items related to fiscal year-ends, etc. for consolidated subsidiaries
The account closing date for Hankyu Hanshin Express (Netherlands) B.V.,
Hankyu Hanshin Express (Deutschland) GmbH and 22 other consolidated
subsidiaries is 31st December. The consolidated financial statements havebeen prepared using the financial statements based on the closing date ofeach company, and major transactions conducted between the individualclosing dates and the consolidated closing date have been adjusted for asnecessary for the consolidation.

III. Inventories
Land and buildings for sale:
The identified cost method is applied. (Balance sheet values are calculated by writing down book values based on decreased profitability.)
Finished products and merchandise, work in progress, and materials andsupplies:
The moving average cost method is mainly applied. (Balance sheet
values are calculated by writing down book values based on decreased
profitability.)

Hankyu Hanshin Holdings

Annual Report 201395

(b) Depreciation methods for major depreciable assets
I. Property and equipment (excluding leased assets)
While property and equipment (excluding leased assets) are depreciatedfor the most part using the declining balance method, there is also someuse of the straight-line method.
Depreciation of buildings acquired after 1st April 1998 (excluding
facilities attached to buildings) is calculated using the straight-line
method.
(Changes in accounting policies that are difficult to distinguish fromchanges in an accounting estimate)In accordance with a recent amendment to the Corporation Tax Law,
with effect from the fiscal year, the Company and certain of its consolidated subsidiaries have changed the depreciation method applied toproperty, plant and equipment acquired on or after 1st April 2012.
The effect of this change on operating income, ordinary income,and income before income taxes and minority interests is negligible.

Prior service costs are recorded in expenses in equal amounts using
the straight-line method over a certain number of years (3 to 15 years),
which is within the average remaining years of service of the employees
at the time when these costs are incurred, commencing, in general, in
the fiscal year in which they arise.
Actuarial differences are recorded in expenses using the straightline method over a certain number of years (5 to 15 years), which iswithin the average remaining years of service of the employees at thetime when these costs are incurred, commencing in the fiscal year following the year in which they arise.
IV. Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is provided in an amountbased on the internal rules of some of the consolidated subsidiaries forthe payment of retirement benefits to their directors.

II. Intangible assets (excluding leased assets)
Intangible assets (excluding leased assets) are amortised using thestraight-line method.
Software (used by the Company), however, is amortised by thestraight-line method over the internal available life (3 to 6 years).

(e) Basis for converting significant assets and liabilities in foreign currency
into Japanese yen
The assets, liabilities, income and expenses of overseas subsidiaries areconverted to yen based on the spot exchange rate on the balance sheet
date. Differences in conversion are included in foreign currency translation
adjustments and minority interests in the net assets section.

III. Lease assets related to finance leases other than those that transfer
ownership of the lease assets
Lease assets related to finance leases other than those that transfer ownership of the lease assets are depreciated using the straight-line methodwith the lease term as the useful life, and the residual value is zero.
Finance leases that commenced prior to 31st March 2008 are
accounted for similar method applied to operating lease transactions.

(f) Significant hedge accounting methods
I. Method of hedge accounting
Deferred hedge accounting is applied.
Exceptional accounting applies to interest rate swaps that satisfy
the requirements for exceptional accounting for interest rate swaps.
Designation accounting applies to foreign currency denominatedassets and liabilities with foreign exchange forward contracts.

(c) Accounting for contributions for construction
Some consolidated subsidiaries of the Company accept contributions forconstruction from local governments and other organisations as part of thecost of construction when carrying out railroad elevations such as continuous grade separations and crossing-widening work.
The assets acquired using the contributions are recorded in noncurrent
assets at the acquisition cost, after deducting the amounts corresponding
to the contributions.
The amounts received for construction including such contributions are recorded in extraordinary income as “gain on contributions forconstruction” in the consolidated statements of income, and the amountdirectly deducted from the acquisition cost is recorded in extraordinary loss
as “loss on reduction of noncurrent assets” in the consolidated statements
of income.
(d) Accounting standards for significant transactions
I. Allowance for doubtful receivables
Allowance for doubtful receivables is provided based on the ratio of pastloan loss experience for general accounts and individually estimateduncollectible amounts for certain individual accounts.
II. Provision for bonuses
Provision for bonuses is recorded in the amount expected to be paid bysome consolidated subsidiaries as bonuses during the fiscal year.
III. Provision for retirement benefits
Provision for retirement benefits is provided based on the estimatedamount of projected benefit obligation and the fair value of plan assets
in preparation for retirement benefits to be paid to employees at theend of the fiscal year.

96 Hankyu Hanshin Holdings

Annual Report 2013

II. Hedging instruments and hedged items
Hedging instruments

Hedged items

Foreign exchange contracts
Currency swap contracts
Currency option contracts

Foreign currency tradereceivables and trade payables
and future foreign currencytransactions

Interest rate swap contracts
Interest rate option contracts

Interest on bonds and loans
payableIII. Hedging policy
The Group is exposed to the risk of foreign exchange and interest rate
fluctuations and uses derivatives as a means of hedging these risks.
IV. Method for evaluating the effectiveness of hedges
Other than when the effectiveness of hedges is obvious, hedge effectiveness is evaluated semiannually using the comparison and analysis
method.
V. Other risk management methods concerning hedge accounting
Internal rules regarding the segregation of duties, maximum transaction
amounts, etc. have been established for the use of derivative transactions, based on which derivative transactions are used. The implementation and management of derivative transactions are carried out by theaccounting department with the approval of the decision makers ineach Group company. An internal control system has been developed
to ensure that the contract signing and termination comply with theinternal rules.
(g) Method and period of amortisation of goodwill
Goodwill is amortised, in general, in equal amounts over five years. The
goodwill resulting from the management integration with Hanshin ElectricNotes to the Consolidated Financial Statements

Railway Co., Ltd. in the fiscal year ended 31st March 2007 is being amortisedin equal amounts over 20 years.
(h) Scope of cash included in consolidated statements of cash flows
In preparing the consolidated statements of cash flows, cash on hand,readily available deposits and short-term highly liquid investments withoutmaterial risk of changing their value and with maturities not exceeding
three months at the time of purchase are considered to be cash and cash
equivalents.

(i) Other significant matters for preparing consolidated financial statements
I. Accounting for consumption tax
Accounting for consumption tax is based on the tax exclusion method.
The non-deductible amount of the consumption tax on assets thatare not tax deductible is included in “Other” in investments and otherassets on the consolidated balance sheets as long-term prepaid consumption tax and is amortised in equal amounts based on provisions ofCorporation Tax Law.
II. Adoption of consolidated tax payment system
A consolidated tax payment system has been adopted.

3 ACCOUNTING STANDARDS NOT APPLIED AS YET—Accounting Standard for Retirement Benefits (ASBJ Statement No. 26,
17th May 2012)—Guidance on Accounting Standard for Retirement Benefits (ASBJ
Guidance No. 25, 17th May 2012)① SummaryUnder the amended rule, actuarial gains and losses and past service costs
that are yet to be recognised in profit or loss would be recognised within
the net asset section, after adjusting for tax effects, and the deficit or surplus would be recognised as a liability or asset without any adjustments.
For determining method of attributing expected benefit to periods, theStandard now allows to choose benefit formula basis, as well as straight-line
basis. Method for determination of discount rate has also been amended.

② Effective dates
Effective for the end of annual periods ending on or after 31st March 2014.
Amendments relating to determining method of attributing expected
benefit to periods are effective from the beginning of annual periods
ending on or after 31st March 2015. As transitional methods of handlingthese accounting standards have been laid down, they shall not be applied
retroactively to financial statements for prior fiscal years.
③ Effect of application of the standard
The Company and its consolidated domestic subsidiaries are currently in theprocess of determining the effects of these new standards on the consolidated financial statements.

4 CONSOLIDATED BALANCE SHEETS① Accumulated depreciation of property and equipment
Millions of yen

Thousands of U.S. dollars② Accumulated contributions for construction directly deducted fromthe acquisition cost of noncurrent assets
Millions of yen

2012

2013

2013

¥994,173¥1,019,293$10,843,543

Thousands of U.S. dollars

2012

2013

2013

¥368,264¥370,073$3,936,947③ Pledged assets and secured liabilities
The following table shows the assets pledged as collateral.
Millions of yen

Thousands of U.S. dollars
2013

2012

2013

Section5¥219,391[¥215,405]¥219,000[¥214,464]$2,329,787[$2,281,532]

37,374
266,0112,997[37,374][255,486][2,997]34,509266,577
2,221[34,509][256,052][2,221]

367,117
2,835,926
23,628[367,117][2,723,957][23,628]

129

[129]

129

[129]

1,372

[1,372]

14,536
540,441[—][511,392]

14,036536,474[—][507,377]

149,319
5,707,170[—][5,397,628]

Financial Section andCorporate Data

Property and equipment:
Buildings and structures...................................
Machinery, equipment andvehicles......................................................................
Land...............................................................................
Other.............................................................................
Intangible assets:
Other.............................................................................
Investment and other assets:
Investment securities..........................................
Total........................................................................

The following table shows the secured liabilities.
Millions of yen

Current liabilities:
Short-term borrowings......................................
Other.............................................................................
Long-term liabilities:
Long-term debt......................................................
Total........................................................................

Thousands of U.S. dollars
2013

2012

2013

¥ 12,283
178[¥ 9,650][—]¥ 11,024109[¥  8,819][—]$  117,277
1,160[$   93,819][—]

101,182
113,644[88,244][97,895]

104,920
116,055[92,651][101,471]

1,116,170
1,234,628[985,649][1,079,479]

The amounts in brackets are the amounts for the Railway Foundation within the total of each category.

Hankyu Hanshin Holdings

Annual Report 201397

④ The following table shows the securities of nonconsolidated subsidiaries and affiliates.
Thousands of
U.S. dollars

Millions of yen
2013

2012

Investment securities(stocks)..................................................

¥163,970¥169,678

The difference between the market value of the land and the book value
after revaluation at the end of previous fiscal year and fiscal year underreview are as follows:2013$1,805,085⑤ Two consolidated subsidiaries and an equity-method affiliate revaluated land for business use based on the Law Concerning Revaluationsof Land (Law No. 34, promulgated on 31st March 1998) and the Law
to Partially Modify the Law Concerning Revaluations of Land (Law No.
19, promulgated on 31st March 2001). Of the valuation differences
identified as a result of this, the consolidated subsidiaries recorded theamount corresponding to the taxes on the valuation difference in theliability section as “Deferred tax liabilities related to land revaluation”
and the amount belonging to minority shareholders as “Minority interests.” The amount remaining after subtracting these was recorded in the
net assets section as “Revaluation reserve for land.” The equity-method
affiliates recorded the amount corresponding to its equity in thevaluation difference (after subtracting taxes) in the net assets section as“Revaluation reserve for land.”
Revaluation method
The revaluation amounts were determined based on the revaluated value of
noncurrent assets provided for in Article 2, Paragraph 3 of the Enforcement
Ordinance for the law Concerning Land Revaluation (Ordinance No. 119,
promulgated on 31st March 1998).
Date of revaluation: 31st March 2002.

Millions of yen

Thousands of U.S. dollars

2012

2013

2013

¥(5,857)¥(6,093)$(64,819)⑥ Contingent liabilities
The Company and its subsidiaries provide a liability guarantee for loans of
the companies (mainly the affiliated companies), etc. listed below.
Fiscal year ended 31st March 2012
Millions of yen

Nishi-Osaka Railway Co., Ltd. ..................................
Borrowers on loans for purchase ofland and buildings......................................................
Other (six companies)..................................................
Total.................................................................................

¥23,348
6,112
32
29,493Fiscal year ended 31st March 2013

Nishi-Osaka Railway Co., Ltd. ..................................
Borrowers on loans for purchase ofland and buildings......................................................
Other (one company)..................................................
Total.................................................................................

Millions of yen

Thousands of
U.S. dollars¥22,367$237,947

9,794
38
32,199104,191404
342,543

5 CONSOLIDATED STATEMENTS OF INCOME① Closing inventory is the amount after write-down of book value due
to a decline in profitability. As a result, valuation loss of inventory in theamount of ¥2,807 million is included in operating expenses and cost of
sales.
② The breakdown of selling, general and administrative expenses isshown below.
Thousands of
U.S. dollars

Millions of yen

Personnel expenses........................
Expenses................................................
Taxes.........................................................
Depreciation andamortisation......................................
Amortisation of goodwill.............
Total...................................................

Millions of yen

Land, etc. ............................................................................

¥58

Fiscal year ended 31st March 2013

2013

2013

¥16,344
12,065761¥16,372
13,454651$174,170
143,128
6,926

Land, etc. ............................................................................

1,262
2,806
33,2401,020
2,875
34,375

10,85130,585
365,691⑥ The breakdown of the loss on retirement of noncurrent assets isshown below.
Fiscal year ended 31st March 2012

Thousands of
U.S. dollars

Millions of yen

98 Hankyu Hanshin Holdings⑤ The breakdown of the loss on sales of noncurrent assets is shown
below.
Fiscal year ended 31st March 2012

2012

③ The amounts of allowance and provision included in the costs ofrevenues from operations are shown below.

Special allowance for
doubtful receivables ...................
Provision for bonuses....................
Retirement benefit
expenses..............................................
Provision for directors’
retirement benefits.......................

④ The gain on sales of noncurrent assets resulted from the transfer ofland and other property.

2012

2013

2013

¥  1013,750¥  1404,116$ 1,489
43,787

8,614

8,620

91,702

182

186

1,979

Annual Report 2013

Millions of yen

Thousands of
U.S. dollars¥211$2,245

Millions of yen

Book value upon removal(buildings and structures, etc.)............................
Cost of removal work...................................................

¥348
151

Fiscal year ended 31st March 2013

Book value upon removal(buildings and structures, etc.)............................
Cost of removal work...................................................

Millions of yen

Thousands of
U.S. dollars¥  417
1,313$ 4,436
13,968

Notes to the Consolidated Financial Statements⑦ Loss on impairment of fixed assets
Fiscal year ended 31st March 2012
The loss on impairment of fixed assets was calculated by grouping theassets based on the minimum unit that generates a cash flow that is generally independent of the cash flow of other assets or asset groups. As a result,the book values of a total of 45 fixed assets groups, the market values ofwhich have been declining sharply from their book values due to a continuous decrease in land value, and those that have continuously resulted inoperating losses and whose profitability is unlikely to recover in the future,
were reduced to the recoverable amount, and the amount of the reduction
has been recorded as “loss on impairment of fixed assets” (¥20,212 million)
under extraordinary loss.

Fiscal year ended 31st March 2013
The loss on impairment of fixed assets was calculated by grouping theassets based on the minimum unit that generates a cash flow that is generally independent of the cash flow of other assets or asset groups. As a result,the book values of a total of 25 fixed assets groups, the market values ofwhich have been declining sharply from their book values due to a continuous decrease in land value, and those that have continuously resulted inoperating losses and whose profitability is unlikely to recover in the future,
were reduced to the recoverable amount, and the amount of the reduction
has been recorded as “loss on impairment of fixed assets” (¥5,402 million($57,468 thousand)) under extraordinary loss.

RegionMillions of yen

RegionUse

Type of assets

Use

Type of assets

Millions of yen

Thousands of
U.S. dollars

OsakaLand for development, etc. Construction in
Total: 17
progress, etc.

¥17,860

Hyogo

Gardens, etc.
Total: 10

Buildings andstructures, etc.

¥1,829$19,457

Hyogo

Golf business facilities, etc. Buildings andTotal: 11
structures, etc.

1,257

Kyoto

Property for rent
Total: 1

Land

1,470

15,638

1,094

Tokyo, Working assets
etc.
Total: 14

Land, etc.

2,102

22,362

Kyoto, Idle assets, etc.
etc.
Total: 17

Land, etc.

The following table shows a breakdown of the loss on impairment of fixed
assets in each region.
RegionType of assets
Buildings and structures
Machinery, equipment and vehicles

Osaka

RegionConstruction in progress

16,413Other

3Intangible assets

2
731

Machinery, equipment and vehicles

40

Land

392

Construction in progress

78

Other

8

Intangible assets

0

Investment and other assets

5
291
10

Land

763

Other

28

Intangible assets

1

The recoverable value of this asset group has been calculated based on the
net sale value or value in use.
The net sale value is determined by rationally adjusting the expectedsale prices, appraised values based on the Japanese Real Estate Appraisal
Standards, and/or fixed asset tax assessment values. When the value in use
is used for the calculation, the future cash flow is discounted by 4.0%.

Hyogo

Kyoto

Thousands of
U.S. dollars¥  995$10,585

Machinery, equipment and vehicles

17

181

Land

807

8,585

Construction in progress

1

11

Other

4

43

Intangible assets

3

32

1,470

15,638

508

5,404

Land
Buildings and structures

1

11

1,029

10,947

Construction in progress

286

3,043

Other

139

1,479

Intangible assets

137

1,457

Machinery, equipment and vehicles
Tokyo, etc.

Millions of yen

Land

The recoverable value of this asset group has been calculated based on the
net sale value or value in use.
The net sale value is determined by rationally adjusting the expectedsale prices, appraised values based on the Japanese Real Estate Appraisal
Standards, and/or fixed asset tax assessment values. When the value in use
is used for the calculation, the future cash flow is discounted by 4.0%.

Hankyu Hanshin Holdings

Annual Report 2013

Section5

Financial Section andCorporate Data

Machinery, equipment and vehicles

Type of assets
Buildings and structures

2
1,116

Buildings and structures
Kyoto, etc.

¥   322Land

Buildings and structures

Hyogo

Millions of yen

The following table shows a breakdown of the loss on impairment of fixed
assets in each region.

99

6 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME①R
 eclassification adjustments and tax effects relating to other comprehensive income
Thousands of U.S.
dollars

Millions of yen

Valuation difference on available-for-sale securities:
Increase (decrease) during the year........................................................................................................................................................
Reclassification adjustments.......................................................................................................................................................
Subtotal, before tax...................................................................................................................................................................
Tax (expense) or benefit........................................................................................................................................................
Valuation difference on available-for-sale securities............................................................................................
Deferred gains or losses on hedges:
Increase (decrease) during the year........................................................................................................................................................
Reclassification adjustments.......................................................................................................................................................
Subtotal, before tax...................................................................................................................................................................
Tax (expense) or benefit........................................................................................................................................................
Deferred gains or losses on hedges...............................................................................................................................
Revaluation reserve for land:
Increase (decrease) during the year........................................................................................................................................................
Reclassification adjustments.......................................................................................................................................................
Subtotal, before tax...................................................................................................................................................................
Tax (expense) or benefit........................................................................................................................................................
Revaluation reserve for land................................................................................................................................................
Foreign currency translation adjustments:
Increase (decrease) during the year........................................................................................................................................................
Reclassification adjustments.......................................................................................................................................................
Subtotal, before tax...................................................................................................................................................................
Tax (expense) or benefit........................................................................................................................................................
Foreign currency translation adjustments.................................................................................................................
Share of other comprehensive income of associates accounted for using equity method:
Increase (decrease) during the year........................................................................................................................................................
Reclassification adjustments.......................................................................................................................................................
Share of other comprehensive income of associates accounted for using equity method......
Total other comprehensive income......................................................................................................................

2012

2013

2013

¥  326
892
1,218
1,538
2,756

¥  10,349
(959)
9,389
(2,654)
6,735$  110,096(10,202)
99,883(28,234)
71,649

(144)
326
181
(84)
96

1,165
311
1,476
(576)
900

12,394
3,309
15,702(6,128)
9,574

—
—
—
1,136
1,136

—
—
—
—
—

—
—
—
—
—

(504)
—
(504)
—
(504)

1,287
—
1,287
—
1,287

13,691—
13,691—
13,691

1,476
(169)
1,306
4,792

4,182
19
4,201
13,124

44,489202
44,691
139,617

7 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS① Items related to types and total number of shares issued and types and number of treasury stock sharesFiscal year ended 31st March 2012
No. of shares as of 1st April 2011

(Thousands of shares)

Increase in number of shares

Decrease in number of shares

No. of shares as of 31st March 2012

1,271,406——

1,271,406

1,271,406——

1,271,406

9,897

420

39

10,279

9,897

420

39

10,279No. of shares issued
Common stock
Total
Treasury stock, at cost
Common stock (Notes 1 and 2)
Total(Overview of reasons for fluctuations)
Notes:
1. The increase of 420 thousand shares of treasury stock includes an increase of 296 thousand shares due to the change of interest for equity-method affiliates, and an increase of
124 thousand shares due to the purchase of odd-lot shares.
2. The decrease of 39 thousand shares of treasury stock is due to the sale of odd-lot shares.

100 Hankyu Hanshin Holdings

Annual Report 2013

Notes to the Consolidated Financial Statements

Fiscal year ended 31st March 2013

(Thousands of shares)
No. of shares as of 1st April 2012

Increase in number of shares

Decrease in number of shares

No. of shares as of 31st March 2013

No. of shares issued
Common stockTotal

1,271,406——

1,271,406

1,271,406——

1,271,406

10,279186

24

10,441

10,279186

24

10,441

Treasury stock, at cost
Common stock (Notes 1 and 2)
Total(Overview of reasons for fluctuations)
Notes:
1. The increase of 186 thousand shares of treasury stock is due to the purchase of odd-lot shares.
2. The decrease of 24 thousand shares of treasury stock is due to the sale of odd-lot shares.

② Items related to subscription rights to sharesFiscal year ended 31st March 2012
Number of shares subject to share subscription rights
As of 1st April
As of 31st March
Increase
Decrease
2011
2012

Classification

Breakdown of new sharesubscription rights

Type of sharessubject to sharesubscription rights

The Company(Parent company)

Subscription rights as
stock options

—

—

—

—

—

¥32

—

—

—

—

—

32

Total

Balance as of 31st March 2012
(Millions of yen)

Fiscal year ended 31st March 2013
Number of shares subject to share subscription rights
Balance as of 31st March 2013
As of 1st April
As of 31st March(Thousands of
Increase
Decrease(Millions of yen)
2012
2013
U.S. dollars)

Classification

Breakdown of new sharesubscription rights

Type of sharessubject to sharesubscription rights

The Company(Parent company)

Subscription rights as
stock options

—

—

—

—

—

¥112

$1,191

—

—

—

—

—

112

1,191

Total

③ Items related to dividends
Fiscal year ended 31st March 2012(a) Dividends paid
(Resolution)

Type of shares

16th June 2011
General meeting ofshareholders

Common stock

Dividends paid
(Millions of yen)

Dividend per share(Yen)¥6,334¥5

Record date

Effective date

31st March 2011

17th June 2011
Section5(b) Dividends whose effective date falls in the fiscal year following the fiscal year of the record date
Type of shares

14th June 2012
General meeting ofshareholders

Common stock

Dividends paid
(Millions of yen)
¥6,334

Source of dividends

Dividend per share(Yen)

Retained earnings¥5

Record date

Effective date

31st March 2012

15th June 2012

Fiscal year ended 31st March 2013(a) Dividends paid
Dividends paid
(Resolution)

Type of shares

14th June 2012
General meeting ofshareholders

Common stock(Thousands(Millions ofof U.S.
yen)
dollars)¥6,334$67,383

Financial Section andCorporate Data

(Resolution)

Dividend per share(Yen)(U.S. dollars)

¥5

$0.05

Record date

Effective date

31st March 2012

15th June 2012(b) Dividends whose effective date falls in the fiscal year following the fiscal year of the record date
Dividends paid
(Resolution)

Type of shares

14th June 2013
General meeting ofshareholders

Common stock(Thousands(Millions ofof U.S.
yen)
dollars)¥6,333$67,372

Dividend per share
Source of dividends

Retained earnings(Yen)(U.S. dollars)

¥5

$0.05

Record date

Effective date

31st March 2013

17th June 2013

Hankyu Hanshin Holdings

Annual Report 2013101

8 CONSOLIDATED STATEMENTS OF CASH FLOWS① Relationship between cash and cash equivalents at fiscal year-end
and amounts shown on consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen
2013

2012

Cash and deposits in the
consolidated balance
sheets....................................................
Deposits with maturities
over 3 months..................................
Cash and cash equivalents inthe cash flow statements..........

Hotel New Hankyu Kochi Co., Ltd.
Millions of yen
Current assets...................................................................
¥  876
Noncurrent assets .........................................................
3,038
Current liabilities ............................................................
664
Long-term liabilities......................................................
5,385

2013

¥24,280¥26,602$283,000(707)(1,020)(10,851)

23,57225,581

272,138② Major items of assets and liabilities of a company that has been
excluded from the scope of consolidation due to the sale of its shares
during the fiscal year under review
Thousands of
U.S. dollars$ 9,319
32,3197,064
57,287

9 LEASE TRANSACTIONS<As lessee>① Finance lease transactions that do not transfer ownership of the lease asset, prior to the initial year for commencement of the accounting standards
for lease transactions(a) Amount equivalent to acquisition cost, accumulated depreciation and net leased property at fiscal year-end
Millions of yen

Machinery, equipment and vehicles...............
Other.................................................................................
Total............................................................................

Thousands of U.S. dollars

2012

2013

2013

Acquisition Accumulated Net leased
cost
depreciation property

Acquisition Accumulated Net leased
cost
depreciation property

Acquisition Accumulated Net leased
cost
depreciation property¥2,822
1,091
3,913¥1,840972
2,812¥  981119
1,100¥2,23538
2,274¥1,467
32
1,500

¥767
6
774

$23,777404
24,191$15,606340
15,957$8,16064
8,234

Note: Acquisition cost includes interest paid due to a low percentage of future lease payments in the year-end balance of property and equipment.

② Operating lease transactions(b) Amount equivalent to future lease payments
Thousands of
U.S. dollars

Millions of yen

Due within one year.......................
Due after one year...........................
Total...................................................

2012

2013

2013

¥  319
781
1,100

¥158
615
774

$1,681
6,543
8,234

Note: The future lease payments include interest paid due to a low percentage of
future lease payments in the year-end balance of property and equipment.

Millions of yen

Future lease payments
Due within one year..........
Due after one year..............
Total.............................................

2012

2013

2013

¥ 2,398
12,225
14,623¥ 2,363
11,335
13,699$ 25,138
120,585
145,734<As lessor>① Operating lease transactions(c) Lease payments and amount equivalent to depreciation expenses
Millions of yen

Lease payments.................................
Amount equivalent todepreciation expenses ..............

2013

2013

¥759

¥317

$3,372

759

317

3,372

(d) Method for calculating the amount equivalent to depreciation expense
The amount equivalent to depreciation expense is calculated using thestraight-line method with the lease term as the useful life, and the residual
value is zero.

102 Hankyu Hanshin Holdings

Millions of yen

Thousands of
U.S. dollars

2012

Annual Report 2013

Thousands of
U.S. dollars

Future lease payments
receivables
Due within one year................
Due after one year....................
Total...................................................

Thousands of
U.S. dollars

2012

2013

2013

¥  381
4,591
4,972¥  441
4,618
5,060$ 4,691
49,12853,830Notes to the Consolidated Financial Statements

10 FINANCIAL INSTRUMENTS① Matters regarding the conditions of financial instruments(a) Policy on financial instruments
It is the Group’s policy to limit the investment of its funds to short-term
deposits, which are highly secure, and the Group raises funds mainly
through loans from financial institutions, bonds and commercial paper.
Derivative transactions are used to avoid risk, as discussed later, and it is ourpolicy to refrain from speculative transactions.

rate fluctuation risk is limited by fixing interest rates through interest rate
swap transactions. In addition, there is liquidity risk that payment will not bemade by the due date. Liquidity risk is limited by the timely preparation offinancing plans and proper fund management. In addition, surplus funds ofthe Group companies are concentrated and used effectively through centralisation of Group funds by using the cash pool system, etc. Immediate
fund raising from financial institutions became possible through theestablishment of backup financing such as commitment lines. In addition,
the Company maintained a proper balance between direct financing andindirect financing, and advanced the diversification of raising funds means
by using many financial institutions, thus securing liquidity.
Regarding the use of derivative transactions, internal regulations prescribe the division of duties and transaction limits. With respect to derivative transactions, the main purpose of interest rate swap transactions is tohedge the interest rate fluctuation risk involved in certain loans and bonds.
Forward exchange contracts are used mainly to avoid exchange rate fluctuation risk involved in a portion of foreign currency denominated assets
and liabilities. These derivative transactions involve credit risk because, if
the other party to a transaction defaults on debts based on contracted conditions, or becomes bankrupt, the benefit that would have been obtainedin the future if the transaction had continued will not be enjoyed. However,credit risk is limited by carrying out transactions only with financial institutions with high ratings.
More information regarding the means and objectives of hedging,hedging policy, and the method of evaluating the effectiveness of hedges
related to hedge accounting for derivative transactions, is described in“④ Items related to accounting treatment and standards” “(f) Significant
hedge accounting methods” outlined in “ 2 BASIS OF PREPARATION OF
CONSOLIDATED FINANCIAL STATEMENTS.”(b) Details of the financial instruments used, the risk involved, and the risk
management system
Marketable and investment securities consist mainly of stocks and bonds,
and are exposed to market price fluctuation risk. However, fair values andthe financial condition of the issuers are checked periodically, and the risk
management system is confirmed.
Trade receivables, namely note receivables and trade accountreceivables, are exposed to the credit risk of customers. The Group limits
its exposure to this credit risk by controlling the due date and balance bycustomer, and by making periodical checks of the credit conditions ofmajor customers pursuant to the internal regulations of each company.
Almost all trade payables, namely note payables and trade accountpayables, have a payment date that falls within one year.
Some assets and liabilities denominated by foreign currency are
exposed to exchange rate fluctuation risk (market risk), which was hedged
through forward exchange contracts.
Long-term debt and bonds are used mainly to raise the long-term
funds necessary for capital investment plans, and short-term borrowings and commercial paper are used mainly to raise short-term funds
for working capital. Some floating-rate debt and floating-rate bonds are
exposed to interest rate fluctuation risk (market risk). Exposure to interest② Matters regarding fair values of financial instruments
Book value, fair value and the differences between them as of the end of the previous fiscal year and fiscal year under review are as shown below.
Millions of yen
Book value

Fair value

Difference¥   24,280
73,40438,997
136,682
43,410176,652
139,981873,8141,233,859(15,442)¥     —
—
0
0
—
—
2,981
13,13916,120—Book value

2013

Fair value

Difference¥   26,602 ¥   26,602
75,18175,181
48,46948,469150,253
150,253
44,11044,110167,778
167,778
122,000
126,564
824,205
840,350
1,158,094 1,178,803—(12,129)¥     —
—
0
0
—
—
4,564
16,14420,709—Book value

Fair value

Difference$   283,000 $   283,000 $      —799,798
799,798—
515,628
515,6280
1,598,436 1,598,436
0469,255
469,255—
1,784,872 1,784,872—
1,297,872 1,346,426
48,5538,768,138 8,939,894
171,745
12,320,149 12,540,457
220,309—(129,032)—

Section5

Financial Section andCorporate Data(a) Cash and deposits............................ ¥   24,280(b) Trade receivables..............................
73,404(c) Securities................................................
38,997
Total assets............................................
136,682(d) Trade payables....................................
43,410(e)	Short-term borrowings (*1)........
176,652(f) Bonds (*2)..............................................
137,000(g) Long-term debt (*1)........................
860,675
Total liabilities...................................... 1,217,738(h) Derivative transactions..................
—

Thousands of U.S. dollars
2013

2012

(*1) Current portion of long-term debt is included in (g) Long-term debt.
(*2) Current portion of bonds is included.
(Note 1) Method for calculating the fair values of financial instruments and matters regarding securities and derivative transactions(a) Cash and deposits, (b) Trade receivables
The fair values of these are almost equal to their book values because they will be settled within a short period of time. As a result, their fair values are based on their book values.
(c) Securities
The fair values of stocks are based on prices quoted by stock exchanges, and the fair values of bonds are based on prices quoted by stock exchanges or prices presented bytrading financial institutions. Securities categorised by the purpose for which they are held are described in “ 11 SECURITIES.”(d) Trade payables, (e) Short-term borrowings
The fair values of these are almost equal to their book values because they will be settled within a short period of time. As a result, their fair values are based on their book values.
(f) Bonds
The fair values of fixed-rate bonds issued by the Company and some of its consolidated subsidiaries are based on market prices. The fair values of floating-rate bonds are based on
their book values because the fair values of floating-rate bonds reflect market interest rates within a short period of time, and closely approximate their book values.
(g) Long-term debt
The fair values of fixed-rate long-term debts are based on a method of calculation whereby the total principal and interest is discounted at an interest rate that is assumed forthe introduction of similar new debt. The fair values of floating-rate long-term debt are based on their book values because the fair values of floating-rate long-term debts reflectmarket interest rates within a short period of time and closely approximate their book values.
(h) Derivative transactions
Described in “ 12 DERIVATIVES.”
Hankyu Hanshin Holdings

Annual Report 2013

103

(Note 2) The book value of financial instruments whose fair value is extremely difficult to ascertain
Thousands of
U.S. dollars

Millions of yen
Classification

2012

2013

2013

¥ 4,984¥ 4,868$ 51,787

Available-for-sale securities:
Non-listed equity securities........................................
Investments in limited liability
investment partnerships andsimilar investments......................................................

5,064

3,075

32,713

Negotiable certificates ofdeposit................................................................................

14,416

13,910147,979

Total................................................................................

24,46521,853

232,479

It is extremely difficult to ascertain the fair values of these because market prices are not available and future cash flows cannot be estimated. As a result, they are not included in(c) Securities.
(Note 3) The securities of nonconsolidated subsidiaries and affiliated companies are not included in (c) Securities.
(Note 4) Supplementary explanation regarding fair values of financial instruments
The fair values of financial instruments include values based on market prices. If market prices are not available, the fair values of financial instruments include values that have beenreasonably calculated. Certain assumptions are used to calculate the above values. As a result, if different assumptions are used, the values may differ. For derivative contracts, theamount of the contract which is indicated in “ 12 DERIVATIVES” does not indicate the market risk involved in derivative transactions themselves.
(Note 5) Redemption and repayment schedule of monetary claims and securities with maturities

Fiscal year ended 31st March 2012
Millions of yen
Due within
one year

Due after one Due after five
year through years throughfive years
ten years

Due after
ten years

Cash and deposits.............................................................

¥24,280

¥—

¥ —

¥—

Trade receivables................................................................

73,404———

Securities:
Held-to-maturity debt securities(government bonds, etc.)...................................

5

9

—

—

Available-for-sale securities withmaturities (government bonds).....................

10

18

305

—

Total...........................................................................

97,69928

305—

Fiscal year ended 31st March 2013
Millions of yen
Due within
one yearThousands of U.S. dollars

Due after one Due after five
year through years throughfive years
ten years

Due after
ten years

Due within
one year

Due after one Due after five
year through years throughfive years
ten years

Due after
ten years

Cash and deposits.............................................................

¥ 26,602

¥—

¥ —

¥—

$  283,000$ —$    —$—

Trade receivables................................................................

75,181———

799,798

—

—

—

53

96

—

—

Securities:
Held-to-maturity debt securities(government bonds, etc.)...................................

5

9

—

—

Available-for-sale securities withmaturities (government bonds).....................

—

46

352

—

—

489

3,745

—

Total...........................................................................

101,789

56

352

—

1,082,862

596

3,745

—

104 Hankyu Hanshin Holdings

Annual Report 2013

Notes to the Consolidated Financial Statements(Note 6) Amount of planned redemption and repayment of bonds and long-term debt after the consolidated closing dateFiscal year ended 31st March 2012
Millions of yen
Due after one Due after five
year through years throughfive years
ten years

Due within
one year

Due after
ten years

Bonds.........................................................................................

¥ 35,000¥ 60,000¥ 35,000¥ 7,000

Long-term debt...................................................................

139,893

486,438

154,969

79,374

Total....................................................................................

174,893546,438

189,969

86,374

Fiscal year ended 31st March 2013

Due within
one year

Millions of yen

Thousands of U.S. dollars

Due after one Due after five
year through years throughfive years
ten years

Due after
ten years

Due within
one year

Due after one Due after five
year through years throughfive years
ten years

Due after
ten years

Bonds.........................................................................................

¥ 10,000¥ 60,000¥ 52,000¥      —$  106,383$  638,298$  553,191$         —Long-term debt...................................................................

186,580

345,860

166,491

125,273

1,984,894

3,679,362

1,771,181

1,332,691

Total....................................................................................

196,580

405,860

218,491

125,273

2,091,277

4,317,660

2,324,372

1,332,691

11 SECURITIES① Held-to-maturity debt securities
Millions of yen
Classification

Securities with fair value
exceeding book value........................
Securities with fair value notexceeding book value........................
Total..........................................................

Thousands of U.S. dollars
2013

2012

2013

Book value

Fair value

DifferenceBook value

Fair value

DifferenceBook value

Fair value

Difference

¥ 9

¥ 9

¥ 0

¥ 9

¥ 9

¥ 0

$ 96

$ 96

$ 0

5
14

5
14

—
0

5
14

5
14

—
0

53
149

53
149

—
0

② Available-for-sale securities
Millions of yen
Classification

2013

2013

Book value Acquisition cost DifferenceBook value Acquisition cost DifferenceBook value Acquisition cost Difference¥12,330263
312,598¥ 6,461
253
3
6,718

¥ 5,86910
0
5,880¥26,178398
4
26,581¥15,121379
3
15,503¥11,056
19
1
11,077$278,489
4,234
43282,777$160,862
4,032
32
164,926$117,617202
11
117,840

26,31170
226,38338,982

46,51770
246,58953,307(20,206)(0)(0)(20,206)(14,325)

21,872——
21,87248,45436,783——36,78352,287(14,910)——(14,910)(3,833)

232,681——
232,681515,468

391,309——391,309556,245(158,617)——(158,617)(40,777)

Section5

Financial Section andCorporate Data

Securities with book value
exceeding acquisition cost:(a) Equity securities.................................
(b) Bonds.......................................................
(c) Other........................................................
Subtotal..................................................
Securities with book value notexceeding acquisition cost:(a) Equity securities.................................
(b) Bonds.......................................................
(c) Other........................................................
Subtotal..................................................
Total..................................................

Thousands of U.S. dollars

2012③ Available-for-sale securities sold during previous fiscal year and fiscal year under review
Millions of yen

Classification

Amount soldTotal gains
on saleEquity securities........................................

¥2,597¥306

Thousands of U.S. dollars
2013

2012
Total losses
on sale¥1,1162013

Amount soldTotal gains
on saleTotal losses
on sale¥4,411¥1,234¥42

Amount soldTotal gains
on saleTotal losses
on sale$46,926$13,128$447

Hankyu Hanshin Holdings

Annual Report 2013105

12 DERIVATIVES① Derivative transactions for which hedge accounting has not been applied
No items② Derivative transactions for which hedge accounting has been applied(a) Currency
Fiscal year ended 31st March 2012
Millions of yen

Classification

Type

Forward exchange contracts
Buy contract
Euro
U.S. dollar
Pound sterling
Designation
Swiss francof forward
Canadian dollar
exchange
New Zealand dollar
contracts, etc.
Australian dollar
Hong Kong dollar
Singapore dollar
Thai baht
Japanese yen
Total

Portion ofcontract amount
Main hedged
exceedingitems
Contract amount
one year

Fair value(Note)¥ 8,341
5,235
21
1,318
521
129
262
167
14
101
670
16,783

¥193
289
0
74
40
8
15
(1)
(0)
(1)
6
625

Trade
payables

¥—
—
—
—
—
—
—
—
—
—
—
—

Fiscal year ended 31st March 2013
Millions of yen

Classification

Portion ofcontract amount
Main hedged
exceedingitems
Contract amount
one yearType

Forward exchange contracts
Sell contract
U.S. dollar
Japanese yen
Buy contract
Euro
U.S. dollar
Designation
Pound sterlingof forward
exchange
Swiss franc
contracts, etc.
Canadian dollar
New Zealand dollar
Australian dollar
Hong Kong dollar
Singapore dollar
Thai baht
Japanese yen
Total

Trade
receivablesTradepayablesThousands of U.S. dollars

Fair value(Note)¥——¥    00$    18132$——$     0014,290
7,581
26
1,677
680
149
340
81
10
42
540
25,442

—
—
—
—
—
—
—
—
—
—
—
—

1,248
761
(0)
155
33
26
36
(1)
(0)
(0)
(29)
2,230

152,02180,649277
17,840
7,234
1,585
3,617
862
106
447
5,745
270,660

—
—
—
—
—
—
—
—
—
—
—
—

13,277
8,096
(1)
1,649
351
277
383
(11)
(1)
(6)
(309)
23,723(b) Interest rate
Fiscal year ended 31st March 2012
Millions of yen

Classification

Type

106 Hankyu Hanshin Holdings

Portion ofcontract amount
Main hedged
exceedingitems
Contract amount
one yearLong-term
debt

Annual Report 2013

Fair value(Note)¥    173

Note: Fair value calculation
Fair value is determined based mainly on prices quoted from counterparty financial institutions.

Interest rate swap
Deferral hedge
contracts
accounting andexceptional
Payable fixed rate/accounting ofReceivable floatinginterest rate swaps
rate
Total

Portion ofcontract amountexceedingContract amount
one year

Fair value¥524,964¥489,520¥(16,067)

524,964

489,520(16,067)

Notes to the Consolidated Financial Statements

Fiscal year ended 31st March 2013
Millions of yen

Classification

Portion ofcontract amount
Main hedged
exceedingitems
Contract amount
one year

TypeInterest rate swap
Deferral hedge
contracts
accounting andexceptional
Payable fixed rate/accounting ofReceivable floatinginterest rate swaps
rate
Total

Long-term
debt

Thousands of U.S. dollars

Fair value(Note)

Portion ofcontract amountexceedingContract amount
one year

Fair value(Note)¥462,618¥345,727¥(14,359)$4,921,468$3,677,947$(152,755)

462,618

345,727(14,359)

4,921,468

3,677,947(152,755)

Note: Fair value calculation
Fair value is determined based mainly on prices quoted from counterparty financial institutions.

13 RETIREMENT BENEFITS① Overview of retirement benefit plans
Some consolidated subsidiaries of the Company provide two types ofdefined benefit plans, defined benefit pension plans and unfunded lumpsum payment plans. Hankyu Corporation has also established a retirement
benefits trust.
② Items related to retirement benefit obligations
Millions of yen

1) Projected benefit obligation.....
2) Plan assets.......................................
 nfunded projected
3) U
benefit obligation (1+2).......
4) Unrecognised actuarial
differences...................................
5) Unrecognised priorservice costs................................
6) Book value (net) (3+4+5).........
7) Prepaid pension costs..............
8) Provision for retirement
benefits (6-7)..............................

Thousands of
U.S. dollars

2012

2013

2013

¥(125,333)
60,886¥(127,240)
64,541$(1,353,617)
686,606(64,447)(62,699)(667,011)

9,099

7,251

77,138(1,397)(56,745)2,448(1,120)(56,568)
2,871(11,915)(601,787)
30,543(59,194)(59,439)(632,330)④ Items related to basis for calculating retirement benefit obligations, etc.
(a) Periodic distribution method for estimated amount of retirement
benefits
Allocated equally to each service year using the estimated number of total
service years(b) Discount rate
Mainly 2.0%(c) Expected rate of return on plan assets
Mainly 2.0%(d) Number of years over which prior service costs are written off
3 to 15 years (amortised using the straight-line method over a period notexceeding the average remaining service period of active employees)(e) Number of years over which actuarial differences are written off
Fiscal year ended 31st March 2012
4 to 15 years (amortised using the straight-line method over a period notexceeding the average remaining service period of active employees andrecognised in expenses starting from the following fiscal year)
Fiscal year ended 31st March 2013
5 to 15 years (amortised using the straight-line method over a period notexceeding the average remaining service period of active employees andrecognised in expenses starting from the following fiscal year)

Note: Certain consolidated subsidiaries use simplified methods for calculating retirement benefit obligations.

Section5

Financial Section andCorporate Data

③ Items related to retirement benefit expenses
Millions of yen

1) Service cost (Note 1).................
2) Interest cost on projected
benefit obligation...................
3) Expected return on plan
assets...............................................
4) Amortisation of actuarial
differences...................................
5) Amortisation of priorservice costs................................
6) Retirement benefit
expenses (1+2+3+4+5)..........

Thousands of
U.S. dollars

2012

2013

2013

¥6,127¥6,323$67,266

2,284

2,260

24,043

(916)

(910)

(9,681)

1,431

1,453

15,457

(292)

(292)

(3,106)

8,635

8,834

93,979Notes:
1. Retirement benefit expenses of consolidated subsidiaries that use a simplified
method are recorded in 1) Service cost.
2. In addition to the retirement benefit expenses shown above, the Company madeextra retirement payments of ¥52 million mainly recorded as extraordinary loss inthe fiscal year ended 31st March 2012, and ¥139 million ($1,479 thousand) mainly
recorded as extraordinary loss in the fiscal year under review.

Hankyu Hanshin Holdings

Annual Report 2013107

14 STOCK OPTIONS, ETC.
① Cost amount and account associated with stock options
Millions of yen
2013

2012

Operating expenses and cost of
sales of transportation andcost of sales............................................

¥79

¥32

II. Unit price information
Thousands of
U.S. dollars
2013

$840

② Details and size of stock options and changes therein(a) Details of stock options
Classification and number of
eligible personnel
Class and number of shares(Note)
Grant date
Vesting conditions
Service period
Exercise period

Resolution date: 16th June 2011

10 directors of subsidiaries
104,000 shares of common stock
25th July 2011
Not definedNot defined
From 26th July 2011 to 25th July 2041

Classification and number of
eligible personnel
Class and number of shares(Note)
Grant date
Vesting conditions
Service period
Exercise period

Resolution date: 29th March 2012

11 directors of subsidiaries
112,000 shares of common stock
25th April 2012
Not definedNot defined
From 26th April 2012 to 25th April 2042

Classification and number of
eligible personnel
Class and number of shares(Note)
Grant date
Vesting conditions
Service period
Exercise period

Resolution date: 14th June 2012

8 directors of subsidiaries
102,000 shares of common stock
25th July 2012
Not definedNot defined
From 26th July 2012 to 25th July 2042(b) Size of stock options and changes therein
The covered stock options are those which existed during the consolidated
fiscal year under review and the number is indicated in the equivalent
number of shares.
I. Number of stock options
Before vested (shares)
At the end of the previous
fiscal year
GrantedExpired
VestedUnvested
After vested (shares)
At the end of the previous
fiscal year
VestedExercised
Expired
Unexercised

108 Hankyu Hanshin Holdings

16th June
2011

29th March2012

14th June
2012

—
—
—
—
—

—
112,000—
112,000——
102,000—
102,000—

104,000———
104,000—
112,000——
112,000—
102,000——
102,000

Annual Report 2013

16th June
2011

29th March2012

14th June
2012

Exercise price

¥  1

¥  1

Average stock price at exercise

¥ —

¥ —

Fair value unit price at the grant
date

¥311

¥361

¥  1
[US$0.01]¥ —[US$  —]
¥387
[US$4.12]③ Estimation method for fair value unit price of stock options
The following method was applied to fairly valuate the unit price of stock
options granted during the fiscal year under review.
(a) Valuation method used: Black–Scholes model(b) Major basic data and estimation methodVolatility of stock price (Note 1)
Expected life (Note 2)
Expected dividends (Note 3)
Risk-free interest rate (Note 4)

Resolution date: 29th March 201219.17%
2.254 years¥5 [US$0.05] / share
0.115%

Notes:
1. Volatility of stock price is calculated based on the closing prices in regular transactions for the Company’s common stock on individual transaction dates during theperiod of 2.254 years (23rd January 2010 through 25th April 2012).
2. Expected life is calculated based on the actual length of service of eligible directors of subsidiaries who had resigned in the past, as well as on the actual length ofservice of eligible personnel as of the grant date.
3. Expected dividends are based on the actual dividends paid for the fiscal year ended
31st March 2011.
4. Risk-free interest rate is the yield of government bonds for the period corresponding
to the expected life.


Note: Indicated in the equivalent number of shares.

Resolution date

Resolution date

Volatility of stock price (Note 1)
Expected life (Note 2)
Expected dividends (Note 3)
Risk-free interest rate (Note 4)

Resolution date: 14th June 201224.79%
4.656 years¥5 [US$0.05] / share
0.159%

Notes:
1. Volatility of stock price is calculated based on the closing prices in regular transactions for the Company’s common stock on individual transaction dates during theperiod of 4.656 years (28th November 2007 through 25th July 2012).
2. Expected life is calculated based on the actual length of service of eligible directors of subsidiaries who had resigned in the past, as well as on the actual length ofservice of eligible personnel as of the grant date.
3. Expected dividends are based on the actual dividends paid for the fiscal year ended
31st March 2012.
4. Risk-free interest rate is the yield of government bonds for the period corresponding
to the expected life.

④ Estimation method for the number of vested stock options
Since the stock options were vested on the grant date, vested and granted
stock options are the same in number.

Notes to the Consolidated Financial Statements

15 DEFERRED TAX① Significant components of the Company’s deferred tax assets andliabilities
Millions of yen

Deferred tax assets:
Loss on impairment of
fixed assets.........................................
Loss on revaluation ofreal estate for sale..........................
Provision for retirement
benefits.................................................
Tax loss carryforwards....................
Losses on revaluation of
investment securities..................
Loss on adjustment oftransferred profit and loss..........
Unrealised profit from assets..........
Provision for bonuses....................
Enterprise taxes andbusiness office taxes....................
Other........................................................
Subtotal of deferred tax
assets..............................................
Valuation allowance.......................
Less amounts offset against
deferred tax liabilities..................
Total deferred tax assets.........

2012

2013

2013

¥ 39,509¥ 38,766$  412,404

30,87930,055

319,734

21,075
19,13520,94914,881

222,862
158,309

7,589

7,549

80,309

8,022
5,683
1,708

6,490
6,005
1,910

69,04363,883
20,319775
20,6081,039
17,487

11,053
186,032

154,988(49,355)

145,135(46,361)

1,543,989(493,202)(94,005)
11,627(86,747)
12,026(922,840)
127,936(127,399)(128,476)(1,366,766)(95,135)(94,688)(1,007,319)(14,087)(17,840)(189,787)(2,496)(2,756)(2,299)(3,469)(24,457)(36,904)(241,874)(246,775)(2,625,266)

94,005(147,869)(136,241)86,747(160,028)(148,001)

922,840(1,702,426)(1,574,479)② A reconciliation of the significant differences between the normal
effective statutory tax rate and the effective tax rate reflected in theaccompanying consolidated statements of income
The normal effective statutory tax rate.................
(Adjustment)
Elimination of dividends fromconsolidated subsidiaries...........................................
Amortisation of goodwill...............................................
Nondeductible expenses..............................................
Per capita amount of inhabitants tax....................
Non taxable income.........................................................
Equity in (income) losses of affiliates.....................
Valuation allowance.........................................................
Downward adjustment of deferred tax
assets (liabilities) at the end of the year
due to change in tax rate............................................
Other..........................................................................................
The effective tax rate........................................................

2012

2013

40.6%

38.0%

11.4
2.6
0.8
1.1
(11.0)
(9.4)
22.4

9.7
1.7
1.5
0.7
(10.4)(2.6)(2.6)(53.3)
2.2
7.4

—
(1.9)
34.1

Section5

Financial Section andCorporate Data

Deferred tax liabilities:
Gain on reversal ofdifference from land
revaluation.........................................
Revaluation of assets on
consolidation....................................
Net unrealised holding gains
on securities......................................
Gain on valuation ofproperties of businessreorganisation..................................
Other........................................................
Subtotal of deferred tax
liabilities........................................
Less amounts offset against
deferred tax assets........................
Total deferred tax liabilities..........
Net deferred tax liabilities.........

Thousands of
U.S. dollars

Note: The Company reversed the “Surplus from land revaluation” when, as a result ofa (physical) absorption-type corporate split on 1st April 2005, it handed over
all of its land to Hankyu Corporation (which changed its name from Hankyu
Corporation Spin-Off Preparation Inc. to Hankyu Corporation on the sameday). As a result, “Deferred tax liabilities relating to land revaluation” have beenrecorded as deferred tax liabilities starting from the fiscal year ending 31st March
2006.

16 ASSET RETIREMENT OBLIGATIONS① Asset retirement obligations recorded in the consolidated balance
sheetsNone of the Group’s asset retirement obligations are recorded in the consolidated balance sheets.
For certain consolidated subsidiaries, instead of recording asset
retirement obligations as liability, a reasonable estimate of the amount ofdeposits from rental properties that cannot be finally recovered is made,and the portion for that fiscal year is recorded as expenses.
② Asset retirement obligations not recorded in the consolidated balance sheets(a) Asset retirement obligations related to the restoration of certain rental
assets to their original state
For certain consolidated subsidiaries, obligations arise in connection
with the restoration of offices, etc., to their original state at the end oftenancies based on the rental contract. However, the period of the rental
assets involved is not stated with certainty, and there is currently no plans
to transfer, etc. Accordingly, no reasonable estimate can be made of thecorresponding asset retirement obligations. As a result, asset retirement
obligations corresponding to these liabilities are not recorded.
(b) Retirement obligations related to structures containing asbestos
Certain consolidated subsidiaries own structures containing asbestos.
However, they have mechanisms in place to prevent airborne dispersal ofasbestos, and at this point in time, no definite dates have been set for the
demolition of the structures in question, and no decision has been maderegarding the method of demolition to be adopted. Consequently, it is
not possible to reasonably estimate such asset retirement obligations. As
a result, asset retirement obligations corresponding to these liabilities are
not recorded.
Hankyu Hanshin Holdings

Annual Report 2013109

17 RENTAL PROPERTY
Some consolidated subsidiaries own rental property such as office buildings for lease and commercial facilities for lease in the Kita Ward of Osakaand other areas. Rental income relating to such rental property in the fiscal
year ended 31st March 2012 is ¥25,674 million (significant rental revenues
are recorded in revenues from operations and significant rental expenditures are recorded in costs of revenues from operations). Impairment losses
totalling ¥1,280 million were recorded as extraordinary loss. Rental income
related to such rental properties in the consolidated fiscal year under review
is ¥30,536 million ($324,851 thousand) (significant rental revenues arerecorded in revenues from operations and significant rental expenditures
are recorded in costs of revenues from operations). Impairment losses totalling ¥1,499 million ($15,947 thousand) were recorded as an extraordinary
loss. “Provision for loss on removal of property and equipment” totaling¥4,391 million ($46,713 thousand) was recorded as extraordinary loss.
Book value, increase/decrease and fair value are as follows:
Millions of yen

Book value (Note 1):
Balance at the beginningof year............................................
Increase/decrease(Note 2).........................................
Balance at the end of year....
Fair value at the end of year
(Note 3).................................................

Thousands of
U.S. dollars

2012

2013

2013

¥566,424¥562,677$5,985,926(3,746)562,677

108,498
671,176

1,154,234
7,140,170

610,764

806,114

8,575,681

Notes:
1. Book value is acquisition cost less accumulated depreciation and loss on impairment of fixed assets.
2. The increase/decrease for the fiscal year ended 31st March 2012 mainly reflects anincrease due to acquisitions of real estate of ¥2,130 million, the turning of someproperties into external rentals due to change in the scope of consolidation of¥4,612 million, and completion of development properties of ¥1,786 million. The
main decreases were depreciation of ¥11,421 million and impairment losses of¥1,280 million. The main increases in the fiscal year ended 31st March 2013 areacquisitions of real estate of ¥4,808 million ($51,149 thousand), and completionof development properties of ¥121,860 million ($1,296,383 thousand). The maindecreases were depreciation of ¥13,398 million ($142,532 thousand) and impairment losses of ¥1,499 million ($15,947 thousand).
3. Fair value as of end of the fiscal year is the appraisal value according to an outside
real estate appraiser based on Japanese Real Estate Appraisal Standards in the caseof key properties and the fair value based on indicators such as the assessed value of
noncurrent assets and road tax rating in the case of other properties.
4. Property under development is not included in the above table, as it is still in thedevelopment stage, making it difficult to determine fair value. The amounts ofproperties under development indicated in the consolidated balance sheets for the
consolidated fiscal years ended 31st March 2012 and 2013 are ¥143,444 million and¥37,684 million ($400,894 thousand), respectively.

18 SEGMENT INFORMATION① Segment information(a) Summary of reportable segment
The Company’s reportable segments are regularly reviewed, using the segment specific financial information available to enable the Board of Directors todetermine the allocation of management resources and evaluate business results.
The Group comprises six core businesses: “Urban Transportation,” “Real Estate,” “Entertainment and Communications,” “Travel and International
Transportation,” “Hotels” and “Retailing.” The businesses are operated by four core companies: Hankyu Corporation, Hanshin Electric Railway Co., Ltd., Hankyu
Hanshin Express Holdings Corporation and Hankyu Hanshin Hotels Co., Ltd., under the leadership of the Company, which manages the Group.
The nature of business in each reportable segment is as follows:
Urban Transportation: railways, and automobile business
Real Estate: the renting of real estate, and sale of real estateEntertainment and Communications: sports related businesses, stages, communication and media and leisure and other businesses
Travel and International Transportation: travel and international cargo services
Hotels: hotel ownership and management businesses
Retailing: retail business(b) Method for calculating revenues from operations, income (loss), assets and other items for each reportable segment
The accounting treatment for each reportable business segment is based on the methods detailed in “ 2 Basis of preparation of consolidated
financial statements.” Internal transactions (land and structure lease and rental transactions, etc.) calculated by management accounting at companies
with businesses spanning multiple segments are also recorded.
Income (loss) for each reportable segment refers to operating income (loss).
Intersegment revenues from operations and transfers are based on similar arms length third-party transaction data. Where no such data exist, calculations
follow certain in-house rules.

110 Hankyu Hanshin Holdings

Annual Report 2013

Notes to the Consolidated Financial Statements(c) Information regarding totals for revenues from operations, income (loss), assets and other items by reportable segment
Fiscal year ended 31st March 2012
Millions of yen
Reportable segment

Revenues fromoperations:
I. Customers........................
II. Intersegment.................
Total...................................
Segment income(loss).......................................
Segment assets..................
Other items
Depreciation andamortisation...............
Increase in property
and equipment
and intangible
assets..................................

Amounts
appearing in the
consolidated
financial
Adjustment statements

Travel &Entertainment & International
Urban
Transportation Real Estate Communications Transportation

HotelsRetailing

Subtotal

Other(Note)

Total¥187,586
5,131
192,718¥  159,736
16,378176,114¥ 94,753
7,560
102,313¥ 67,541
29
67,571¥63,454635
64,090¥53,166687
53,853¥  626,239
30,423656,662¥22,889
8,444
31,334¥  649,128
38,868687,997¥      574
(38,868)(38,293)¥  649,703—
649,703

32,342738,681

29,133
1,008,850

10,141
140,578

3,171
100,497(269)
88,144

1,333
17,87075,852
2,094,623

761
37,866

76,613
2,132,489(2,804)
141,890

73,8092,274,380

28,018

16,768

7,524

1,477

2,526

821

57,137362

57,499(530)

56,96820,33327,363

4,434

995

1,305

724

55,156324

55,480(213)

55,267

Fiscal year ended 31st March 2013
Millions of yen
Reportable segment
Travel &Entertainment & International
Urban
Transportation Real Estate Communications Transportation

HotelsRetailing

Subtotal

Other(Note)

Total¥188,696
4,935
193,631¥  179,450
17,260196,711¥100,038
8,569
108,608¥ 70,835
5
70,840¥64,054643
64,697¥52,591661
53,253¥  655,666
32,076
687,743¥26,145
9,899
36,045¥  681,812
41,975
723,788¥    627(41,975)(41,348)¥  682,439—
682,439

34,711
741,225

36,994
1,016,188

12,584
143,933

4,441
112,136

525
87,232

1,387
17,47890,644
2,118,195

307
45,532

90,952
2,163,727(3,031)
117,280

87,921
2,281,007

26,167

16,406

7,685

1,506

2,194

765

54,726362

55,089(548)

54,540Section525,441

25,235

4,265

1,663

1,931

702

59,240401

59,642(129)

59,512Thousands of U.S. dollars
Reportable segment
Travel &Entertainment & International
Urban
Transportation Real Estate Communications Transportation

Revenues fromoperations:
I. Customers........................ $2,007,404 $ 1,909,043 $1,064,234 $  753,564
II. Intersegment.................
52,500183,617
91,16053
Total................................... 2,059,904
2,092,670 1,155,404
753,617
Segment income(loss).......................................
369,266
393,553
133,872
47,245
Segment assets.................. 7,885,372 10,810,511 1,531,202 1,192,936
Other items
Depreciation andamortisation...............
278,372
174,532
81,75516,021
Increase in property
and equipment
and intangible
assets..................................
270,649
268,457
45,372
17,691

Amounts
appearing in the
consolidated
financial
Adjustment statements

HotelsRetailing

Subtotal

Other(Note)$681,426
6,840
688,266$559,479
7,032
566,521$ 6,975,170
341,234
7,316,415$278,138
105,309383,457$ 7,253,319 $    6,670 $ 7,259,989
446,543(446,543)—
7,699,872(439,872) 7,259,989

5,585
928,000

14,755
185,936964,298
22,533,989

3,266
484,383

967,574
23,018,372

23,3408,138582,191

3,851

586,053(5,830)580,213

20,543

7,468

630,213

4,266

634,489(1,372)

633,106

Total

Financial Section andCorporate Data

Revenues fromoperations:
I. Customers........................
II. Intersegment.................
Total...................................
Segment income(loss).......................................
Segment assets..................
Other items
Depreciation andamortisation...............
Increase in property
and equipment
and intangible
assets..................................

Amounts
appearing in the
consolidated
financial
Adjustment statements(32,245)935,330
1,247,660 24,266,032

Note: The “Other” category comprises business such as construction service not included in reportable segments.

Hankyu Hanshin Holdings

Annual Report 2013111

(d) Reconciliation of differences between total amounts for reportable segments and amounts appearing in the consolidated financial statements(adjustment of difference)

Total reportable segment
revenues..............................................
Revenues from operationsclassified under “Other”..............
Revenues from operations
from external customers
classified as “Adjustment”..........
Revenues from operations
from intersegment
transactions and transfers..........
Revenues from operationsin the consolidated
financial statements.....................

2012

2013

2013

¥656,662¥687,743$7,316,415

31,33436,045

383,457

574

627

6,670

(38,868)(41,975)(446,543)

649,703

682,439

7,259,989

Income

2012

2013

2012

2013

2013

¥75,852¥90,644$964,298

761

307

3,266

(2,806)2(2,875)(155)(30,585)(1,649)73,80987,921

935,330

Thousands of
U.S. dollars
2013$22,533,989
484,383
382,830
864,819

24,266,032

Notes:
1. Refers mainly to the balance of unamortised goodwilll arising from the management integration with Hanshin Electric Railway Co., Ltd. in the fiscal year ended 31st
March 2007.
2. Consists mainly of surplus working capital (cash and deposits), unallocated assets
such as long-term investment funds (investment securities) and land, etc., andintersegment eliminations at the Company, Hankyu Corporation and Hanshin
Electric Railway Co., Ltd.

Thousands of
U.S. dollars

Millions of yen

Total reportable segment
income (loss).....................................
Income (loss) classified
under “Other”...................................
Amortisation of goodwill(Note).....................................................
Other........................................................
Operating income in the
consolidated financial
statements.........................................

AssetsTotal reportable segment
assets..................................................... ¥2,094,623 ¥2,118,195
Assets classified under“Other”..................................................
37,86645,532
Balance of unamortised
goodwill (Note 1)...........................
38,38835,986
Other (Note 2).....................................
103,502
81,293
Total assets in the
consolidated financial
statements......................................... 2,274,380 2,281,007

Thousands of
U.S. dollars

Millions of yen
Revenues from operations:

Millions of yen

Note: Refers mainly to the amortisation of goodwill arising from the management
integration with Hanshin Electric Railway Co., Ltd. in the fiscal year ended 31st
March 2007.

Fiscal year ended 31st March 2012
Millions of yen

Other items

Depreciation and amortisation.......................
Increase in property andequipment and in intangible assets........

Total
reportablesegment

Other

Adjustment

Amounts
appearing in
the consolidated financial
statements¥57,137¥362¥(530)¥56,968

55,156324(213)

55,267

Fiscal year ended 31st March 2013
Millions of yen

Other items

Depreciation and amortisation.......................
Increase in property andequipment and in intangible assets........

112 Hankyu Hanshin Holdings

Thousands of U.S. dollars

Total
reportablesegment

Other

Adjustment

Amounts
appearing in
the consolidated financial
statements

Other

Adjustment

Amounts
appearing in
the consolidated financial
statements¥54,726¥362¥(548)¥54,540$582,191$3,851$(5,830)$580,213

59,240401(129)59,512630,213

4,266(1,372)

633,106

Annual Report 2013

Total
reportablesegment

Notes to the Consolidated Financial Statements② Related information(a) Information about product and service categories
Information about product and service categories is the same as that described in “① Segment information” “(c) Information regarding totals for revenues
from operations, income (loss), assets and other items by reportable segment.”(b) Information by region
I. Revenues from operations
Since over 90% of revenues from operations in the consolidated statements of income are revenues from external customers in Japan, a description ofregional breakdown is omitted.
II. Property and equipment
Since over 90% of the total value of property and equipment in the consolidated balance sheets relates to property and equipment in Japan, a breakdown by
region is omitted.
III. Information about important customers
No single external customer accounts for more than 10% of the revenues from operations reported in the consolidated income statements.
③ Information regarding loss on impairment of fixed assets by reportable segment
Fiscal year ended 31st March 2012
Millions of yen
Reportable segment
Travel &Entertainment & International
Urban
Transportation Real Estate Communications Transportation

Loss on impairment of
fixed assets....................................

¥12¥17,139¥762

HotelsRetailing

Subtotal

Other

Total

¥349

¥84

¥18,402¥—¥18,402¥54

Amounts
appearing in the
consolidated
Adjustment
financial(Note)
statements¥1,810¥20,212

Fiscal year ended 31st March 2013
Millions of yen
Reportable segment
Travel &Entertainment & International
Urban
Transportation Real Estate Communications Transportation

Loss on impairment of
fixed assets....................................

¥686¥1,711¥1,135

HotelsRetailing

Subtotal

Other

Total

¥404

¥18

¥5,104¥11¥5,115¥1,147

Amounts
appearing in the
consolidated
Adjustment
financial(Note)
statements¥286¥5,402Thousands of U.S. dollars
Reportable segment
Travel &Entertainment & International
Urban
Transportation Real Estate Communications Transportation$7,298$18,202$12,074$12,202

Retailing

Subtotal

Other

Total

$4,298$191$54,298$117$54,415$3,043$57,468

Note: The amounts under “Adjustment” are the amounts for land etc. not allocated to business segments.

④ Information regarding amortisation of goodwill and the balance of unamortised goodwill by reportable segment
Omitted as the significance is negligible.

Section5

Financial Section andCorporate Data

Loss on impairment of
fixed assets....................................

HotelsAmounts
appearing in the
consolidated
Adjustment
financial(Note)
statements⑤ Information regarding gains from negative goodwill by reportable segment
Omitted as the significance is negligible.

Hankyu Hanshin Holdings

Annual Report 2013113

19 RELATED PARTY TRANSACTIONS① Related party transactions(a) Transactions between the company submitting the consolidated financial statements and related parties
No items(b) Transactions between consolidated subsidiaries of the company submitting the consolidated financial statements and related parties
Directors and principal shareholders (only individual shareholders) of the company submitting the consolidated financial statements
Fiscal year ended 31st March 2012Type

Name ofrelated party

Address

Director

Haruo
Sakaguchi—

Amount ofcapital(Millions of yen)

¥ —Company inwhich director
or close family Tateishi Sangyo Ikeda City,
thereof holds
Co., Ltd.
Osaka
majority ofvoting rights

100

Business

Voting interest

Relationshipwithrelated party

Details oftransaction

Transaction
amounts(Millions of yen)

Item

Balance as of
31st March 2012
(Millions of yen)

Auditor of theCompany

Directly
0.0%

Lease of realestateRent income¥42

Deposit¥33

None

Operation andmanagement Operation andof real estate management
fee for real
Concurrent
estatepost (director)

50

Accounts
receivable

2

Real estatebusiness

Notes:
1. The transaction amount and the balance at the end of the fiscal year do not include consumption tax, etc.
2. Transaction terms and conditions, and method of determining transaction terms and conditions, etc.
(1) The terms and conditions of the property lease are determined with reference to similar transactions in the neighbouring area.
(2) Director of the Company, Koichi Kobayashi, and his close family own 77% of the voting rights in Tateishi Sangyo Co., Ltd.
Any decisions on operation and management of real estate are made by reference to neighborhood transactions.

Fiscal year ended 31st March 2013
Amount of capital

Relationship
Voting interest
withrelated party

Balance as of 31st
March 2013

Type

Address

Director

Haruo
Sakaguchi—¥  —$    —

Auditor of theCompany

Directly
0.0%

Lease of realestateRent income¥46$489 Deposit

¥33

$351

Director

Junzo
Ishii

—

  —

    —

Auditor of theCompany

Directly
0.0%

Sale of
Sale ofcondominiums condominiums

27

287

—

—

  —

None

Operation andmanagement Operation andof real estate management
fee for real
Concurrent
estatepost (director)

35

372

Accounts
receivable

  3

  32

Company inwhich director
or close family Tateishi Sangyo Ikeda City,
thereof holds
Co., Ltd.
Osaka
majority ofvoting rights(Millions of (Thousands ofyen)
U.S. dollars)

100

1,064

Business

Real estatebusiness

Details oftransaction

Transaction
amounts

Name ofrelated party(Millions of (Thousands ofyen)
U.S. dollars)

Notes:
1. The transaction amount and the balance at the end of the fiscal year do not include consumption tax, etc.
2. Transaction terms and conditions, and method of determining transaction terms and conditions, etc.
(1) The terms and conditions of the property lease are determined with reference to similar transactions in the neighbouring area.
(2) The terms and conditions of sale of the condominiums were determined with reference to similar transactions in the local area.
(3) Director of the Company, Koichi Kobayashi, and his close family own 77% of the voting rights in Tateishi Sangyo Co., Ltd.
Any decisions on operation and management of real estate are made by reference to neighborhood transactions.

② Notes about parent company and major affiliated companies
No items

114 Hankyu Hanshin Holdings

Annual Report 2013

Item

(Millions of (Thousands ofyen)
U.S. dollars)Notes to the Consolidated Financial Statements

20 SPECIAL PURPOSE ENTITIES SUBJECT TO DISCLOSURE① Overview of special purpose entities subject to disclosure and overview of transactions using special purpose entities subject to disclosure
Some consolidated subsidiaries invested in special purpose entities (inthe form of limited liability companies, etc.) aimed at development andincrease in value of assets. The special purpose entities use nonrecourse
loans, etc. from financial institutions to acquire real estate (trust beneficiaryrights), which they plan to sell to investors upon development, management, operation, etc. The consolidated subsidiaries are expected to recover
their investments in an appropriate manner upon completion of the business, and even in cases in which losses arise, the cost to the consolidated
subsidiaries is limited to the amount invested. Moreover, the consolidated
subsidiaries do not own equity with voting rights in any of the special
purpose entities nor do they dispatch directors or employees to them.
Thousands of
U.S. dollars

Millions of yen
2013

2012

Number of special purpose
entities..................................................
Total assets as of the mostrecent closing date
(simple aggregate)........................
Total liabilities as of the mostrecent closing date
(simple aggregate)........................

2013

6

5

¥55,266¥50,926② Amount of transactions with special purpose entities subject todisclosures and others(a) Significant transaction amounts or balance

Investments in silent
partnerships (Note 1)...................
Receivable amount ofdividends (Note 2).........................

2012

2013

2013

¥5,043¥2,934$31,213

347

503

5,351

Notes:
1. Investments in silent partnerships are recorded as investment securities in the
consolidated balance sheets.
Accrued future loss from valuation of investments in the aggregate amount of¥1,293 million ($13,755 thousand) for the fiscal year ended 31st March 2013 wasrecorded.
2. 
The receivable amount of dividends is equal to the suspended payments ofdividends.

(b) Significant income and expenditure
Millions of yen$541,766

2012

35,11531,727

Thousands of
U.S. dollars

Millions of yen

337,521

Distributed income (Note 1).......
Distributed loss (Note 2)...............
Management fees (Note 3).........

¥689
42
416

Thousands of
U.S. dollars

2013

2013

¥1,188—301$12,638—
3,202

Notes:
1. Distributed income is recorded in revenues from operations in the consolidated
statements of income.
2. Distributed loss is presented in costs of revenues from operations in the consolidated statements of income.
3. Management fees are presented in revenues from operations in the consolidated
statements of income.

21 PER SHARE INFORMATION
The following tables show net assets per share, net income per share, diluted net income per share, and the basis for their respective calculations.

② Net income per share (Yen / U.S. dollars)(Basis for the calculation)
Net income (Millions of yen / Thousands of U.S. dollars)
Amount not belonging to common stockholders (Millions of yen / Thousands of U.S. dollars)
Net income related to common shares (Millions of yen / Thousands of U.S. dollars)
Average number of common shares during term (Thousands of shares)③ Net income per share—diluted (Yen / U.S. dollars)(Basis for the calculation)
Adjustment to net income (Millions of yen / Thousands of U.S. dollars)(Equity in income of affiliates)
Increase in number of common shares (Thousands of shares)(Of the amount, subscription rights to shares)
Summary of potential shares that were not included in the calculation of diluted income per sharebecause their effect was not dilutive

2012

2013

¥407.01¥443.63$4.72¥524,801¥11,508¥[32]¥[11,476]¥513,292
1,271,406
4,533
5,745
1,261,127¥573,154¥13,754¥[112]¥[13,642]¥559,399
1,271,406
4,696
5,745
1,260,965$6,097,383$146,319$[1,191]$[145,128]$5,951,053

2012

2013

2013

¥31.13¥31.48$0.33¥39,252¥—¥39,252
1,260,836¥31.13¥39,702¥—¥39,702
1,261,052¥31.47$422,362$—$422,362

¥—
¥[—]
70
[70]

¥(4)
¥[(4)]
277
[277]

$(43)
$[(43)]——

Hankyu Hanshin Holdings

2013

Section5

Financial Section andCorporate Data

① Net assets per share (Yen / U.S. dollars)(Basis for the calculation)
Total net assets (Millions of yen / Thousands of U.S. dollars)
Amount to be deducted from total net assets (Millions of yen / Thousands of U.S. dollars)(Of the amount, subscription rights to shares)(Of the amount, minority interests)
Net assets at the end of the fiscal year related to common shares (Millions of yen / Thousands of U.S. dollars)Common shares issued (Thousands of shares)
Treasury stock shares (Thousands of shares)
Common shares held by consolidated subsidiaries and equity-method affiliates (Thousands of shares)
Common shares used to calculate net assets per share (Thousands of shares)$0.33

Annual Report 2013115

22 CONSOLIDATED SUPPLEMENTARY STATEMENTS① Corporate Bond Statements
Thousands of
U.S. dollars

Millions of yen

Company

Name

Series 33 unsecured
corporate bonds
Series 35 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 37 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 38 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 39 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 40 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 41 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 42 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 43 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 44 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 45 unsecured
Hankyu Hanshin Holdings, Inc.
corporate bonds
Series 12 unsecured
Hanshin Electric Railway Co., Ltd.
corporate bonds
Series 14 unsecured
Hanshin Electric Railway Co., Ltd.
corporate bonds
Hankyu Hanshin Holdings, Inc.

Total

—

Issue date

18th July
2007
14th Nov.
2007
23rd Oct.
2009
23rd Oct.
2009
28th Jan.
2010
22nd Sept.
2010
22nd Sept.
2010
17th Mar.
2011
9th Sept.
2011
25th Oct.
2012
14th Mar.
2013
25th June
1997
23rd June
2004

Balance as of
1st April
2012

Balance as of
31st March2013

Balance as of
31st March
2013

Interest rate

Security¥ 20,000¥     —

$       —

1.85%

None

10,00010,000[10,000]

106,383[106,383]

1.66

None

10,00010,000106,383

1.10

None

10,00010,000106,383

1.87

None

20,00020,000212,766

1.25

None

15,00015,000159,574

1.43

None

7,000

7,000

74,4681.72

None

10,00010,000106,383

1.54

None

10,00010,000106,383

0.55

None

—

10,000106,383

0.406

None

—

10,000106,383

0.589

None

—

—

3.525

None

10,000106,383

2.22

None

122,000[10,000]

1,297,872[106,383]———

Notes:
1. The amount in parenthesis in the “Balance as of 31st March 2013” column is thecurrent portion of the total amount and is recorded in current liabilities on the
consolidated balance sheets.

116 Hankyu Hanshin Holdings

Annual Report 2013

15,00010,000137,000

Redemption
date

18th July
2012
14th Nov.
2013
23rd Oct.
2014
23rd Oct.
2019
27th Jan.
2017
18th Sept.
2020
22nd Sept.
2022
17th Mar.
2021
9th Sept.
2016
25th Oct.
2017
13th Mar.
2020
25th June
2012
23rd June2014—

2. Redemption schedule of bonds for five years subsequent to 31st March 2013
Millions of yen

Thousands of
U.S. dollars

Due within one year....................................................................

¥10,000$106,383

Due after one year through two years.............................

20,000212,766

Due after two years through three years.......................

——

Due after three years through four years.......................

30,000319,149

Due after four years through five years...........................

10,000106,383

Notes to the Consolidated Financial Statements② Statements of Loans Payable
Thousands of
U.S. dollars

Millions of yen
Item

Balance as of
1st April 2012

Balance as of
31st March 2013

Balance as of
31st March 2013

Average interest
rate

Repayment deadline

Short-term borrowings...........................................................................
Current portion of long-term debt.................................................
Current portion of lease obligations..............................................
Long-term debt (excluding current portion)............................
Lease obligations (excluding current portion).........................
Other interest-bearing debt................................................................
Total.............................................................................................................

¥  176,652
139,893
1,774
720,782
7,544—
1,046,647¥  167,778
186,580
2,134
637,624
10,515—
1,004,633$ 1,784,872
1,984,894
22,702
6,783,234
111,862—
10,687,585

0.755%
0.924
—
1.254
—
—
—

—
—
—
2014 – 2033
2014 – 2026——

Notes:
1. The balances are expressed after the elimination of transactions with companies in
the consolidation group.
2. The “Average interest rate” of loans payable is the weighted average interest rate foroutstanding loans payable as of end of the fiscal year under review.
3. The “Average Interest rate” is not shown for lease obligations because the Company
mainly adopts the method of including the amounts equal to interest in total capitallease obligations and the method of spreading the total amount equal to interest
equally over each fiscal year of the lease period.
4. Repayment schedule of long-term debt and lease obligations (excluding current
portion) for five years subsequent to 31st March 2013.

Long-term debt

Millions of yen

Thousands of
U.S. dollars

Due after one year through two years.............................

¥157,674$1,677,383

Due after two years through three years.......................

79,848849,447

Due after three years through four years.......................

67,499718,074

Due after four years through five years...........................

40,837434,436

Millions of yen

Thousands of
U.S. dollars

Due after one year through two years.............................

¥1,771$18,840

Due after two years through three years.......................

1,483

15,777

Due after three years through four years.......................

1,211

12,883Due after four years through five years...........................

1,047

11,138

Lease obligations③ Schedule of Asset Retirement Obligations
None

23 OTHERS
Quarterly financial information in fiscal year ended 31st March 2013
Cumulative period

Revenues from operations (Millions of yen)
Income before income taxes and minority interests(Millions of yen)
Net income (Millions of yen)
Net income per share (Yen)

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter¥170,740¥335,869¥498,050¥682,439

24,152
15,30512.14

45,33428,17322.34

60,772
38,86630.82

62,19239,702
31.48
SectionCumulative period

Accounting period

Net income per share (Yen)
Accounting period

Net income per share (U.S. dollars)

2nd Quarter

3rd Quarter

4th Quarter$1,816,383$3,573,074$5,298,404$7,259,989

256,936
162,8190.13

482,277
299,7130.24

646,511
413,4680.33

661,617422,362
0.33

1st Quarter¥12.14
1st Quarter$0.13

2nd Quarter¥10.20
2nd Quarter$0.11

3rd Quarter¥8.48
3rd Quarter$0.09

Hankyu Hanshin Holdings

5

Financial Section andCorporate Data

Revenues from operations (Thousands of U.S. dollars)
Income before income taxes and minority interests(Thousands of U.S. dollars)
Net income (Thousands of U.S. dollars)
Net income per share (U.S. dollars)

1st Quarter

4th Quarter¥0.66
4th Quarter$0.01

Annual Report 2013117

Major Group Companies(As of 31st March 2013)

Consolidated Subsidiaries■ Urban Transportation■ Entertainment and Communications

Name of Company

Hankyu Corporation
Hanshin Electric Railway Co., Ltd.
Nosé Electric Railway Co., Ltd.
Kita-Osaka Kyuko Railway Co., Ltd.
Hokushin Kyuko Railway Co., Ltd.
Kobe Rapid Transit Railway Co., Ltd.
Hankyu Hanshin Railway Technology Co., Ltd.
Hankyu Hanshin Electric System
Hankyu Bus Co., Ltd.
Hanshin Bus Co., Ltd.
Hankyu Kanko Bus Co., Ltd.
Osaka Airport Transport Co., Ltd.
Hankyu Denen Bus Co., Ltd.
Hankyu Taxi Inc.
Hanshin Taxi Co., Ltd.
Hankyu Hanshin Motor Technology Co., Ltd.
Nippon Rent-A-Car Hankyu Inc.
Alna Sharyo Co., Ltd.

Railway Operations

Automobile

Other■ Real Estate
Name of Company

Real Estate Leasing

Real Estate Sales

Other

Hankyu Corporation
Hanshin Electric Railway Co., Ltd.
Hankyu Realty Co., Ltd.
Osaka Diamond Chikagai 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 Techno Service Co., Ltd.
Hankyu Hanshin Clean Service Co., Ltd.
Hankyu REIT Asset Management, Inc.

Name of Company

SportsStage

Communication andMedia

Leisure, etc.

Hanshin Electric Railway Co., Ltd.
Hanshin Tigers Baseball Club, Ltd.
Wellness Hanshin Inc.
Hankyu Corporation
Takarazuka Creative Arts Co., Ltd.
Takarazuka Stage Co., Ltd.
Umeda Arts Theater Co., Ltd.
Hankyu Advertising Agency Inc.
Hanshin Contents Link Corporation
Itec Hankyu Hanshin Co., Ltd.
Hankyu Communications Co., Ltd.
Bay Communications Inc.
Himeji Cable Television Co., Ltd.
Hanshin Electric Railway Co., Ltd.

■ Travel and International Transportation
Name of Company

Travel Agency

Hankyu Travel International Co., Ltd.
Hankyu Hanshin Business Travel Co., Ltd.
Hankyu Travel Support Co., Ltd.

International
Transportation

Hankyu Hanshin Express Co., Ltd.

Other

Hankyu Hanshin Express Holdings Corporation** Hankyu Hanshin Express Holdings Corporation was dissolved following a merger with
Hankyu Hanshin Express Co., Ltd. on 1st April 2013.

■ HotelsName of Company

Hotel Management

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

■ Retailing
Name of Company

Retailing

Hankyu Corporation
Hankyu Retails Corporation
Iina Dining Co., Ltd.

■ OtherName of Company

Construction
Group FinanceOutsourcing Services
for Personnel andAccounting Services

Equity-method Affiliates
Main Business

Department Store

Name of Company

H2O Retailing Corporation[Securities code: 8242]
Nishi-Osaka Railway Co., Ltd.

Railway Operations
Motion Picture Business
Commercial Broadcasting

118 Hankyu Hanshin Holdings

Kobe Electric Railway Co., Ltd.
[Securities code: 9046]
Tokyo Rakutenchi Co., Ltd. [Securities code: 8842]
Toho Co., Ltd. [Securities code: 9602]
Kansai Telecasting Corporation

Annual Report 2013

Hanshin Construction Co., Ltd.
Chuo-Densetsu Co., Ltd.
Hankyu Hanshin Financial Support Co., Ltd.
Hankyu Hanshin Business Associate Co., Ltd.

Investor Information(As of 31st March 2013)

Hankyu Hanshin Holdings, Inc.
Head Office:1-16-1, Shibata, Kita-ku, Osaka 530-0012, Japan
Phone: +81-6-6373-5001(Group Planning Div., IR Office)Fax:+81-6-6373-5042

Paid-in Capital:¥99,474 million
31st MarchFiscal Year-End:
Number of Employees: 20,751 (consolidated basis)
Authorised Shares:
3,200,000,000
1,271,406,928
Issued Shares:
Number of Shareholders: 92,791
1,000 shares
Unit of Trading:
Stock Exchange Listing: Tokyo, Osaka
Transfer Agent:	Mitsubishi UFJ Trust and Banking
Corporation

Tokyo Office (Personnel and General Affairs Div.):
Toho Twin Tower Bldg.,
1-5-2, Yurakucho, Chiyoda-ku, Tokyo 100-0006, Japan
Phone: +81-3-3503-1568
Fax:+81-3-3508-0249

Principal Shareholders:Ownership Breakdown:
Number of shares Percentage(thousands)
(%)

Name

H2O Retailing Corporation

55,40437,18334,144
26,91020,418

4.35
2.92
2.68
2.11
1.60

Japan Trustee Services Bank, Ltd.
(The Sumitomo Trust & Banking Co., Ltd. Retirement Benefit Trust Account)

13,665

1.07

The Chase Manhattan Bank, N.A. London S.L. Omnibus Account12,223
12,138
11,567
11,190

0.96
0.95
0.90
0.88

Japan Trustee Services Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
Nippon Life Insurance Company
Sumitomo Mitsui Banking Corporation

SSBT OD05 OMNIBUS ACCOUNT-TREATY CLIENTSJapan Trustee Services Bank, Ltd. (Trust account 1)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

National government andlocal public organisations

Individuals
and others

0.00%

50.33%

Financial
institutions

25.70%
Securities
companies

0.81%
Other
corporations

9.60%
Foreign corporations
and individuals

13.57%

Stock Price Range and Trading Volume (Tokyo Stock Exchange):
Stock Price (¥)

Nikkei Average (¥)

650

Nikkei Average (right scale)

350

Section

10,0005,000

Stock Price (left scale)200
200,000

0

5

Financial Section andCorporate Data

500

15,000100,000
Trading Volume 0(thousand shares)

4

5

6

7

8

9 10 11 12

1

2

3

4

5

6

7

8

9 10 11 12

1

2

3

4

5

6

7

8

9 10 11 12

FY2011FY2012FY2013

High

452

385

588

Low

316

290

349

At year-end

384

361

569

Hankyu Hanshin Holdings

39627

8828.26

443

28

449

1

2

3

Annual Report 2013

12

119

Hankyu Hanshin Holdings, Inc.
1-16-1, Shibata, Kita-ku, Osaka 530-0012, Japan
Phone: +81-6-6373-5001 Fax: +81-6-6373-5042
http://www.hankyu-hanshin.co.jp/english/

Hankyu Hanshin Toho Group

Printed in Japan