To Our Stakeholders

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

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

Fiscal 2017 business results overview
(Billions of yen)

FY2017 results

FY2016 results

YoY
Increase / Decrease(%)

Revenues from operations

736.8

746.8

–10.0

–1.3

Operating income

104.1

110.3

–6.2

–5.7

Ordinary income

100.6

104.5

–3.9

–3.7

Net income attributable to owners of the parent

71.3

70.0

1.3

1.9

Interest-bearing debt

899.5

916.6

–17.0

–1.9

5.6

5.5

0.1 ptInterest-bearing debt/EBITDA ratio (Times)

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

Returns to shareholders(¥ billion)

(Yen)

21

14

7

45

40

35*

35

8.7

9.1

30

7.6

8.8

8.8

15

2015

2016

2017

30*

30*

7.6

2014

0

0

Total dividend

Acquisition of treasury stock

2018 (Est.)(FY)

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

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

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

Directors and Audit & Supervisory Board Members(As of 13th June 2017)

Directors

Kazuo Sumi

Takehiro Sugiyama

Masao Shin

Chairman and Representative Director,
Group Chief Executive Officer

President and Representative Director

Executive Vice President and Representative Director

1982
2005
2006
2006
2007
2016
2016
2016
2016
2016
2017
2017

1981 Joined Hanshin Electric Railway
2006 Director, Hanshin Electric Railway
2006 Director, Hankyu Hanshin Holdings
2008 Managing Director, Hanshin Electric Railway
2014 Senior Managing Director, Hanshin Electric Railway
2016 Director, Hankyu Corporation (Current position)2017 President, Hanshin Electric Railway (Current position)2017	Executive Vice President, Hankyu Hanshin Holdings (Current position)

1973
2000
2002
2003
2005
2006
2008
2014
2017

Joined Hankyu Corporation
Director, Hankyu Corporation
Managing Director, Hankyu Corporation
President, Hankyu Corporation
President, Hankyu Holdings
President, Hankyu Hanshin Holdings
Director, Hankyu Hanshin Hotels (Current position)
Chairman, Hankyu Corporation (Current position)
Chairman, Hankyu Hanshin Holdings (Current position)

Joined Hankyu Corporation
Director, Hankyu Corporation
Director, Hankyu Holdings
Director, Hankyu Hanshin Holdings
Managing Director, Hankyu Corporation
Executive Vice President, Hankyu Corporation
Executive Vice President, Hankyu Hanshin Holdings
Director, Hanshin Electric Railway (Current position)
Director, Hankyu Travel International (Current position)
Director, Hankyu Hanshin Express (Current position)
President, Hankyu Corporation (Current position)
President, Hankyu Hanshin Holdings (Current position)

Takaoki Fujiwara

Noriyuki Inoue

Shosuke Mori

Representative Director

Director (External*1)

Director (External*1)

1975
2005
2007
2011
2011
2015
2017
2017

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

1963
2005
2010
2010
2016

Yoshishige Shimatani

Naoya Araki

Yoshihiro Nakagawa

Director (Part-time)

Director (Part-time)

Director (Part-time)

1975
2011
2015

1981 Joined Hankyu Department Store
2012	President, Hankyu Hanshin Department Stores (Current position)2012 Representative Director, H2O Retailing (Current position)2017 Director, Hankyu Hanshin Holdings (Current position)

1976 Joined Hankyu Corporation2005 Director, Hankyu Corporation2007 Managing Director, Hankyu Corporation2013	Representative and Senior Managing Director, Hankyu Corporation2014 President, Hankyu Corporation (Current position)2014 Director, Hankyu Hanshin Holdings (Current position)2017 Chairman, Hankyu Hanshin Hotels (Current position)

Joined Hanshin Electric Railway
Director, Hanshin Electric Railway
Managing Director, Hanshin Electric Railway
President, Hanshin Electric Railway
Director, Hankyu Hanshin Holdings
Chairman, Hanshin Hotel Systems (Current position)
Chairman, Hanshin Electric Railway (Current position)
Director, Hankyu Hanshin Holdings (Current position)

Joined Toho
President, Toho (Current position)
Director, Hankyu Hanshin Holdings (Current position)

Joined Kansai Electric Power
President, Kansai Electric Power
Director, Hankyu Hanshin Holdings (Current position)
Chairman, Kansai Electric Power
Senior Advisor, Kansai Electric Power (Current position)

Directors and Audit & Supervisory Board Members

Audit & Supervisory Board Members

Masayoshi Ishibashi

Koichi Kobayashi

Standing Audit & Supervisory Board Member

Standing Audit & Supervisory Board Member

Haruo Sakaguchi
Audit & Supervisory Board Member (External*2)

1979 Joined Hanshin Electric Railway
2013	Standing Audit & Supervisory Board Member, Hanshin Electric Railway(Current position)2013	Standing Audit & Supervisory Board Member, Hankyu Hanshin Holdings(Current position)

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

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

Junzo Ishii

Michiari Komiyama

Audit & Supervisory Board Member (External*2)

Audit & Supervisory Board Member (External*2)

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

1971 Prosecutor
1999 Prosecutor, Supreme Public Prosecutor’s Office
1999 Chief Prosecutor, Saga District Public Prosecutor’s Office
2002 Chief Prosecutor, Kobe District Public Prosecutor’s Office
2003 Notary, Osaka Legal Affairs Bureau
2013 Lawyer (Current position)2017	Audit & Supervisory Board Member, Hankyu Hanshin Holdings(Current position)2017	Audit & Supervisory Board Member, Hankyu Corporation(Current position)*1	Mr. N oriyuki Inoue and Mr. Shosuke Mori satisfy the qualifications of 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. Inoue and Mr. Mori as external (independent) directors.
*2	Mr. Haruo Sakaguchi, Mr. Junzo Ishii, and Mr. Michiari Komiyama 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. Sakaguchi, Mr. Ishii, and Mr. Komiyama as external (independent) Audit &Supervisory Board members.

A Message from an External Director

From Management Integration to the Present Day
I think the Group has done well to overcome a range of difficulties and realise a highly successful management integration.
Since becoming an external director of the Hankyu Corporation instrengths while reinforcing areas of weaknesses. At the same time,

2003, I have seen many different phases of business management,

the Group steadily advanced large-scale projects, which haveincluding the management integration of Hankyu Holdings andbecome an important part of the Group’s earnings foundations.

Hanshin Electric Railway.

Thanks to the cumulative effect of the above efforts, businessAt the time of my appointment, Hankyu Corporation and the Group

results have seen a V-shaped turnaround over the past several years.

it subsequently became part of were in a phase of balanced contrac-

Moreover, the Group has paved the way for improvement of its finan-tion. Consequently, many of the agenda items submitted to meet-cial position, which was an issue. As a result, returns to shareholders

ings of the Board of Directors concerned business reorganisation or

have been rising steadily, and shareholders’ evaluation of the Group

disposal of the Group’s negative legacy. However, this process was

has become increasingly positive. Thinking back to the time of theessential to ensure the Group’s sustainability and growth potential.

Group’s inception, I believe the decision to pursue management

In my view, correct decisions that the management team made in thisintegration was bold and far-sighted.

period to dispose of nonperforming assets and withdraw from unprofitable businesses enabled the current recovery in performance.

Recently, agenda items related to business expansion in the Tokyo
metropolitan area and overseas forays are more prevalent at meet-

In addition, the 2006 management integration became a major driverings of the Board of Directors. This change in topics underscoresof the significant advances that the Group subsequently made. Sincebusiness management’s entry into a new phase and suggests fur-management integration, both companies have respected eachther growth going forward.

other’s values while increasing integration and heightening employees’ sense of belonging to the Group. Further, the management
team reorganised similar businesses to build a structure that shared

Current Corporate Governance
The Group is seeking approaches to corporate governance that will continuously enhance corporate value.
In 2016, the Group established the Corporate Governance Committee,

principle, Group companies under the management of the Company

which comprises the president and representative director, external

are responsible for operational implementation, while the Company

directors, standing Audit & Supervisory Board members, and exter-

monitors and supervises the Group as a whole. In this way, oversightnal Audit & Supervisory Board members. In addition to providing

and execution are separated. The above system enables prompt,

consultation in relation to the appointment and compensation of

appropriate operational implementation, and as such I think it isexecutives, the committee enables external directors to coordinate

effective for the Group, which encompasses a wide variety of busi-

and share information. Further, the Group’s steady bolstering ofnesses. Meanwhile, the Group’s Board of Directors receives the infor-­corporate governance to make it more visible to outsiders is com-mation about businesses that it needs, enabling it to reach importantmendable. As part of these efforts, in 2017 the Group reduced the

management decisions without impediment.

number of directors to increase the ratio of external directors to
directors and abolished its senior advisor system.

As an external director, naturally I perform monitoring and oversightfunctions. I think another important role entails using my expertise

However, companies cannot achieve truly effective corporate

to help raise the level of the Group’s business management. I intend

governance just by satisfying formal requirements. Therefore, I

to fulfill this role by encouraging decision making that enhances

believe that it is important for companies to establish their own

corporate value.

unique approaches to governance that will contribute to continuous enhancement of corporate value. For example, Hankyu Hanshin
Holdings, Inc., is a pure holding company, which means that, inA Message from an External Director

I will reflect the viewpoints of stakeholders,
particularly those of shareholders, in conducting
monitoring and supervising of business
management. At the same time, by making
proposals based on my corporate management
experience, I intend to support the Group
as it takes on challenges to sustain growth.
Noriyuki Inoue
External Director

Toward Realisation of the Long-Term Vision
I will support the Group as it takes on challenges to sustain growth.
Since its establishment, the Hankyu Hanshin Holdings Group has

If I may digress slightly, at Daikin Industries, Ltd., where I serve as

built a firm position based on the business model established bychairman, we believe that the potential of each person is limitlessHankyu Corporation’s founder, Ichizo Kobayashi. Specifically, theand that companies only prosper when individual employees grow.

Group is centred on the Urban Transportation Business, develops

Accordingly, we have pursued employee-oriented business man-real estate in Umeda and line-side areas, and heightens the value ofagement. Our overseas sales have grown significantly and now

line-side areas and brand power through the leisure business, theaccount for 75% of net sales. I think we have achieved this because

Hotels Business, and other operations. Looking ahead, however,in countries worldwide we have proactively developed and utilised

there is no doubt that society will become increasingly aged. This

personnel, and their realisation of diverse capabilities has benefitedmeans that the Group’s existing business model, premised on popu-

the company. At present, the Hankyu Hanshin Holdings Group haslation growth, is at a crossroads. Against this backdrop, I think thatmoved into a phase of actively pursuing overseas development.

the management team’s decisions based on the Long-Term

Therefore, its development and promotion of critical personnel has

Management Vision for 2025 are appropriate. In other words, I

just begun. With this in mind, I expect that there will be opportuni-

endorse the Group’s efforts to enhance the stability of earnings foun-ties for me to offer advice about personnel and other matters based

dations and heighten the value of line-side areas while developing

on my experience.

businesses in the Tokyo metropolitan area and overseas with a viewto the future.

The slogan of the recently announced long-term vision is “enhancing line-side areas and expanding fields,” which I think clearly states

The Group’s entry into new business fields is of course accompa-

the direction in which the Group is traveling. The Group will takenied by corresponding amounts of risk. Conversely, without risk

maximum advantage of the collective strength and brand power it

there are no opportunities. Also, risk has the added benefit of

has accumulated through diverse businesses to rigorously pursue its

increasing companies’ resilience. In addition, given the dizzying

eternal mission of enhancing the value of line-side areas. In addition,

speed of change in business conditions that technological innova-

the Group will discover new geographical areas and business fields

tion has spurred in recent years, there is no guarantee thatfor its activities. Each employee should be made fully aware thatapproaches that have succeeded in the past will continue to do so.

these are the two overriding strategies through which the Group

Companies whose decisions are not timely can lose growth oppor-

aims to sustain growth. I am confident that all employees will drive

tunities. Therefore, I feel that the ability to objectively weigh thethe Group toward realisation of the long-term vision by leveraging­significance and profit potential of projects against their attendant

their collective strength and demonstrating commitment to andrisks and arrive at bold decisions promptly will be more importantpride in the Group’s future.

than ever in business management going forward. As an external
director, I also want to incorporate this sense of urgency and support
the Group as it takes on challenges to sustain growth.

Management Organisation

Corporate Governance System
Principles 4-1

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

Governance Code.

Basic Approach to Corporate GovernancePrinciples 2-1

2-2

3-1

Based on the Group mission and values set out in its GroupManagement Philosophy, the Company aims to remain a company
that customers and other stakeholders trust. To this end, theCompany is strengthening and increasing corporate governance byheightening the transparency and soundness of business management and ensuring appropriate, timely disclosure.
Reflecting this basic approach, the Company has established thepolicies below with a view to sustaining growth and enhancing corporate value over the medium-to-long term.
We shall respect shareholders’ rights and ensure equality.
We shall take into consideration the interests of shareholders andother stakeholders and cooperate with stakeholders appropriately.
We shall disclose corporate information appropriately andensure transparency.
We shall ensure that the Board of Directors performs its rolesand duties appropriately and ensure advanced oversight anddecision making.
We shall have constructive dialogue with shareholders with aview to sustaining our growth and enhancing corporate value
over the medium-to-long term.

4-10

Hankyu Hanshin Holdings, Inc. (the Company), is a pure holding
company, and the conduct of operations is basically the respon­
sibility of Group member companies. Hankyu Hanshin Holdings’
principal role is supervision and oversight of the entire Group—
meaning that these functions are separate from the conduct ofGroup businesses.
Through this system, the Company realises supervision and oversight and enhances the overall governance of the Group by:
Making decisions regarding the Group’s management policies
and strategies,
Deciding on the approval of the medium-term or annual management plans of all core businesses,
Requiring timely submission of progress reports by operatingcompanies, andHaving Group companies obtain approval before taking actions
that affect the Group’s management significantly (for example,
investments above a certain threshold).
With regard to the above matters, the Board of Directors, which
includes external directors, makes approval decisions and receives
reports. Moreover, to undertake preliminary reviews the Company
has established a Group Management Committee, which includes
representatives of the Group’s core businesses.
Further, to ensure transparency in the appointment and compensation of the Company’s directors and to facilitate coordination
among external directors, the Group has established the Corporate
Governance Committee, which comprises external directors andexternal Audit & Supervisory Board members who are independentof the Company, the president and representative director, andstanding Audit & Supervisory Board members.
In addition, as part of efforts to strengthen its overall capabilities,
the Company is strengthening the governance of funding. Measures
include centralising funding under the Company and distributing
funds to operating companies within the limits set out in businessplans that the Company has approved.

Corporate Governance System
General Meeting of Shareholders
Appointment / Dismissal

Appointment / Dismissal

Accounting audit

Appointment / Dismissal

Board of Directors
Part-time: 5(including 2
External Directors)

Full-time: 4
Consultation(nomination,compensation)

Call / Report on
execution situation

Corporate GovernanceCommittee

Audit

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

Selection / Dismissal /Supervision

Chairman & President

ReportReportCall

Group Auditing Division
Participate (as observer)Group Management Committee
Participate

Cooperation

Group Companies
Directors (representative of each core business)

Audit

ReportCooperation

Staff of Audit &Supervisory Board
Members

Accounting Auditors(CPAs)

Management Organisation

System reflecting the business management viewpoints of operating companies in the holding Company’s governanceHankyu Hanshin Holdings

Board ofDirectors

Audit &
Supervisory
Board

Core companies

Name

Position

Name of company

Position

Kazuo Sumi

Chairman and Representative Director,
Group CEOHankyu Corporation
Hankyu Hanshin Hotels

Chairman
Director (Part-time)

Takehiro Sugiyama

President and Representative Director

Hankyu Corporation
Hanshin Electric Railway
Hankyu Travel International
Hankyu Hanshin Express

President
Director (Part-time)
Director (Part-time)
Director (Part-time)

Masao Shin

Executive Vice President andRepresentative Director

Hankyu Corporation
Hanshin Electric Railway

Director (Part-time)
President

Hanshin Electric Railway

ChairmanTakaoki Fujiwara

Representative Director

Noriyuki Inoue

Director (External)

Shosuke Mori

Director (External)

Yoshishige
Shimatani

Director (Part-time)

Naoya Araki

Director (Part-time)

Yoshihiro Nakagawa Director (Part-time)

Hankyu Hanshin Hotels

Chairman

Masayoshi Ishibashi Standing Audit & Supervisory Board
MemberHanshin Electric Railway

Standing Audit & Supervisory Board Member

Koichi Kobayashi

Standing Audit & Supervisory Board
MemberHankyu Corporation

Standing Audit & Supervisory Board Member

Haruo Sakaguchi

Audit & Supervisory Board Member(External)

Hankyu Corporation
Hankyu Hanshin Hotels

Audit & Supervisory Board Member
Audit & Supervisory Board Member

Junzo Ishii

Audit & Supervisory Board Member(External)

Hanshin Electric Railway

Audit & Supervisory Board Member

Michiari Komiyama

Audit & Supervisory Board Member(External)

Hankyu Corporation

Audit & Supervisory Board Member

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

Principles 4-1

Principle 4-4

4-2

4-6

4-11

The Board of Directors enhances governance of the entire Groupand oversight of respective companies by deciding on matters­pursuant to statutory laws and regulations and the articles of incorporation based on regulations and standards that the Board of
Directors has established, by deciding on the approval of management policies and strategies of the Company and the Group as wellas the management plans of core businesses, and by requiring
timely reporting from operating companies about Group companies’
significant investments.
Aiming to strengthen the management oversight of the Board of
Directors and ensure the transparency of business management by
increasing the proportion of external directors, the Company
reduced the number of directors from 14 to nine at the General
Meeting of Shareholders held in June 2017. Under the new system,
the Company is strengthening monitoring and oversight and raising
the standard of decision making by appointing five of its nine directors as part-time directors, including two external directors who are
independent of the Company and have abundant experience incorporate management.
Notes:
1. Number of members of the Board of Directors
	The articles of incorporation of the Company stipulate that the number of members of
the Company’s Board of Directors shall be three or more.
2. Requirements for the election of directors
	The articles of incorporation of the Company stipulate that the approval of resolutions
for the election of directors shall require the attendance of shareholders that have atleast one-third of the voting rights of shareholders for which voting rights can be exercised and shall require a majority of these voting rights. Further, the articles of incorporation stipulate that such resolutions shall not be approved through cumulative voting.

The Company has adopted the Audit & Supervisory Board system toensure adequate management oversight. We have five Audit &Supervisory Board members, who monitor the business operations
and financial position of the Company and its subsidiaries, and audit
the performance of duties by the directors. Three of the five Audit &Supervisory Board members are external, to provide an independent
viewpoint and ensure a high degree of professionalism in Groupauditing. In this way, we are working to further ensure sound decision making in the conduct of operations. We provide full backup to
Audit & Supervisory Board members, for example by involving themin the Group Management Committee and other meetings within
the Group. The Audit & Supervisory Board meets once a month, inprinciple, to discuss and pass resolutions on important matters.
In addition, as part of the auditing of the Group’s business operations, the Audit & Supervisory Board members peruse when appropriate auditing plans and results of audits of the Group Auditing
Division, composed of internal audit staff. The Audit & Supervisory
Board members also receive from the Group Auditing Division­regular reports (and ad hoc reports when required) on internal audits
at the Company and its subsidiaries, including on the state of operation of the whistle-blowing system.
At the same time, the Audit & Supervisory Board members receive
regular status reports from the accounting auditors (CPAs) and takepart in on-site audits by the accounting auditors including those ofGroup companies.

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

4-9

The Company appoints independent external directors and Audit &Supervisory Board members with the aim of further enhancing thegovernance of the Group through their contributions to meetings ofthe Board of Directors and the Audit & Supervisory Board, as well asother activities.
The external directors appointed to the Board are selected fromamongst persons with extensive experience in corporate management, with the aim of strengthening the management oversightfunction of the Board of Directors with respect to the Group as awhole, and also in the expectation that the external directors will
provide advice to the Company’s management from a broad perspective. Similarly, the external Audit & Supervisory Board members
whom we appoint are selected from amongst persons possessing
high-level specialist expertise in the fields of compliance and business administration.
Further, to ensure that it assesses the independence of external
directors and external Audit & Supervisory Board members objectively,in light of the Tokyo Stock Exchange’s independence requirements,
the Company has established the Independence Criteria below.
Independence Criteria
To be deemed independent, external directors and external Audit &Supervisory Board members must not belong to any of the following
categories.
1.	Executing persons*1 of the Company’s major shareholders (shareholders owning 10% or more of the Company’s total voting rights)
2.	Executing persons of entities for which the Company is a major
business partner*2 or executing persons of the Company’s major
business partners
3.	Consultants, accounting experts, or legal experts receiving significant amounts of money or property*3 from the Company that areother than executive compensation (or if a company, union, orother organisation receives the said property, this refers to persons belonging to the said organisation)
4.	Persons*4 who have recently belonged to any of the categories (a)through (d) below(a) Persons stated in 1, 2, or 3 above(b) Executing persons of the Company’s parent company or directors of the Company’s parent company who are not executing
persons(c) Audit & Supervisory Board members of the Company’s parent
company (This item applies when external Audit & Supervisory
Board members are to be appointed as independent external
Audit & Supervisory Board members.)(d) Executing persons of the Company’s fellow subsidiaries
5. 	Close relatives (within the second degree of kinship) of any of thepersons stated in (a) through (h) below (excluding persons who
are not significant)(a) Persons stated in 1, 2, 3, or 4 above(b) Accounting advisors of the Company (This includes employees conducting required duties if the said accounting advisor
is a company. Same hereinafter.) (This item applies when

external Audit & Supervisory Board members are to be appointed
as independent external Audit & Supervisory Board members.)(c) Executing persons of the Company’s subsidiaries(d) Accounting advisors of the Company’s subsidiaries or directorsof the Company’s subsidiaries who are not executing persons(This item applies when external Audit & Supervisory Board
members are to be appointed as independent external Audit& Supervisory Board members.)(e) Executing persons of the Company’s parent company or directors of the Company’s parent company who are not executing
persons(f ) Audit & Supervisory Board members of the Company’s parent
company (This item applies when external Audit & Supervisory
Board members are to be appointed as independent external
Audit & Supervisory Board members.)(g) Executing persons of the Company’s fellow subsidiaries(h) Persons who have recently belonged to the categories (b)through (d) above or who have been executing persons of theCompany (This includes directors who are not executing persons when external Audit & Supervisory Board members are tobe appointed as independent external Audit & Supervisory
Board members.)
6. Executing persons of the Hankyu Hanshin Toho Group*1. Executing persons refers to executive directors, executive officers, corporate officers,
managers, and other employees.
*2. 
Major business partners refers to entities belonging to any of the following
categories.
(1) Entities that in their most recent fiscal year have received payments equivalent to
2% or more of total annual consolidated sales from the Company or its core companies (Hankyu Corporation, Hanshin Electric Railway, Hankyu Travel International,
Hankyu Hanshin Express, and Hankyu Hanshin Hotels)(2) Entities that in the Company’s most recent fiscal year have made payments to theCompany or its core companies equivalent to 2% or more of total annual consolidated sales(3) Regardless of (1) and (2) above, entities that, in relation to financial institutions fromwhich the Company borrows funds, are indispensable in fund-raising of theCompany and upon which it is reliant to the extent that there are no substitutes forthe said entities*3. Significant amounts of money or property refers to money or property equivalent toan average of ¥10 million or more per year over the previous three fiscal years.
*4. “Persons who have recently belonged to any of the categories (a) through (d) below”
refers to persons who can be deemed equivalent to persons who at present materiallybelong to any of the categories (a) through (d). For example, this includes persons who
belong to any of the categories (a) through (d) when the General Meeting of
Shareholders approves resolutions appointing the said independent Board members
as external directors or external Audit & Supervisory Board members.

(4) Policies and Procedures for the Appointment of Directors
and Audit & Supervisory Board Members
Principle 3-1

Policy for the Appointment of Directors
The Company appoints personnel who are well acquainted with thebusinesses of the Hankyu Hanshin Holdings Group as directors aswell as appointing personnel from H2O Retailing Corporation andToho Co., Ltd., as directors to strengthen collaborative relationships
with the Hankyu Hanshin Toho Group.
In addition, to raise the standard of decision making andstrengthen oversight, the Company appoints independent external
directors who have abundant experience and expertise.

Management Organisation

Policy for the Appointment of Audit & Supervisory Board Members
To ensure Audit & Supervisory Board members conduct audits­effectively and efficiently, the Company has established the Audit& Supervisory Board and appoints internal standing Audit &Supervisory Board members and external Audit & Supervisory Board
members. The Company appoints internal Audit & Supervisory Board
members who have appropriate expertise in finance, accounting,or law and abundant experience in business fields. Also, theCompany appoints external Audit & Supervisory Board members
who are independent of the Company and have abundant experience and expertise.
Appointment Procedure
Following consultation with the Corporate Governance Committee,
the Board of Directors decides on the appointment of candidates forthe positions of Audit & Supervisory Board member and director
based on the abovementioned appointment policies.
Positions Held Concurrently by Audit & Supervisory Board Members
and Directors
Principle 4-11
Name

Kazuo Sumi
TakaokiFujiwara

Positions held concurrently at other listed companies

Director, H2O Retailing Corporation
External director (Audit & Supervisory Board
member, etc.), Toho Co., Ltd.
External director, Tokyo Rakutenchi Co., Ltd.
External director, Sanyo Electric Railway Co., Ltd.

Noriyuki
Inoue

Chairman and Chief Global Group Officer,Daikin Industries, Ltd.
External director, Kansai Electric Power Co., Inc.

Shosuke Mori

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

Yoshishige
Shimatani

President and representative director, Toho Co., Ltd.
External director, Tokyo Rakutenchi Co., Ltd.
External director, Fuji Media Holdings, Inc.

Naoya Araki

Representative Director, H2O Retailing Corporation

Junzo Ishii

External Audit & Supervisory Board member, 
Rengo Co., Ltd.

Relations with External Directors
Principle 3-1
Name

Noriyuki
Inoue(Independent
Director)

Shosuke Mori
(Independent
Director)

Reasons for appointment

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

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

Reasons for appointment

Haruo
Sakaguchi

Currently a lawyer. Appointed to advise on more
compliance-based management and for his ability
to provide independent input.

(Independent
Board Member)

Junzo Ishii(Independent
Board Member)Michiari
Komiyama(Independent
Board Member)

Former Professor of Faculty of Business Administration within the Graduate School of Kobe University
and former President of the University of Marketingand Distribution Sciences. Appointed for his ability
to express useful opinions based on his high-levelspecialist expertise in business administration andfor his ability to provide independent input.
A member of the legal profession who has servedin important positions, including chief prosecutorof the Kobe District Public Prosecutor’s Office, and
who is currently active as a lawyer. Appointed
because, given his experience, he is expected toprovide valuable opinions, particularly about ensuring compliance in business management.

Other Deliberative Bodies(1) Corporate Governance Committee
With a view to ensuring the transparency of executive appointments
and compensation and enabling coordination among external
directors and external Audit & Supervisory Board members, theCompany has established the Corporate Governance Committee,
which comprises four representative directors, two external directors,
two standing Audit & Supervisory Board members, and three external Audit & Supervisory Board members. The committee acts in an­advisory capacity with respect to the appointment of candidates tothe position of director and the details of the compensation systemfor directors. Also, the committee provides external directors withinformation in relation to the Group’s businesses, financial status,and organisation.
(2) Group Management Committee
The members of the Group Management Committee include fulltime directors, specifically the chairman and representative director,
the president and representative director, the executive vice president and representative director, and the representative director;
executive officers; and representatives of each of the Group’s corebusinesses. The committee convenes to deliberate and decide on
the approval of resolutions of the Board of Directors; the management strategies and business plans of Group companies; systems
and rules for maintenance of the holding company system; and significant Group management matters, such as investments above acertain threshold and reorganisation.

Management Organisation(3) Core Business Strategy Councils
Each core business has a Core Business Strategy Council, comprising
the Company’s chairman and representative director, president andrepresentative director, executive vice president and representative
director, representative director, the executive officer in chargeof the Group Planning Division, and representatives of each corebusiness. In relation to respective core businesses, the councils deliberate significant matters concerning future business development
as well as the preparation and progress management (performance
evaluation) of business plans.
(4) The Group Presidents’ Meeting—Initiatives to Foster Solidarity
within the GroupThe Hankyu Hanshin Holdings Group comprises over 150 Group
companies. The Group Presidents’ Meeting, held twice a year, brings
together presidents of those Group subsidiaries and affiliates. It is
designed to foster a deeper sense of solidarity within the Group andensure that the Group philosophy and management policies permeate the entire organisation. The Group Presidents’ Meeting aims
to encourage a joint sense of commitment to the Medium-Term
Management Plan. Awards are given to companies that boost earnings or individuals and groups that successfully launch initiatives ormake significant contributions at their units.

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

Further, stock-based compensation is paid through a trust to
directors who concurrently serve as directors of Hankyu Corporationand Hanshin Electric Railway as part of compensation from theCompany. Thus, as with other shareholders, directors who concurrently serve as directors of these two core companies of the Groupbenefit if share prices rise but incur losses if they decline. The intention of the system is to motivate directors to improve companies’
business performances and thereby enhance the enterprise value ofthe entire Group over the medium-to-long term.
(2) Procedure
Following consultation with the Corporate Governance Committeewith respect to the compensation system and content of compensation, the Board of Directors decides on compensation based on theabovementioned policy.

Shares Held for Strategic Reasons
Principle 1-4

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

Introduction of Measures to Prevent Takeovers
Principle 1-5

The Company aims to secure and further enhance its enterprisevalue and the common interests of its shareholders. To this end, conducting business operations from a medium-to-long-term perspective, building and maintaining a relationship of trust with local
government institutions and residents in the areas served by theCompany’s railway lines, and conducting business managementthat is focused on strengthening cohesion and collaboration within
the Group to enhance its collective strength are indispensable. For
this reason, we have introduced measures to prevent a takeover of
the Company. In the event of the appearance of a potential buyer of
the Company that wishes to raise their stake to 20% or more of theCompany’s outstanding shares, to confirm the potential buyer’s
intention, new share subscription rights will be granted to shareholders who are de facto shareholders other than the potential
buyer. The General Meeting of Shareholders held on 16th June 2015
approved this system, which will remain in effect for three years.
For more details about the Company’s basic policies regarding
governance of joint-stock companies, which include the abovementioned measures to prevent takeovers, please see: 
http://www.hankyu-hanshin.co.jp/ir/library/others/data/bouei.pdf(Available only in Japanese).

Abolition of Senior Advisors System
To strengthen corporate governance and heighten the transparencyof business management and given that it has not elected senioradvisors at present, the Company received approval from theGeneral Meeting of Shareholders held on 13th June 2017 to abolisha provision of the articles of incorporation concerning the election ofsenior advisors.

Management Organisation

Dialogue with Shareholders and Investors

Investor Relations (IR) Activities
Principle 5-1

Measures to Enhance the Effectiveness of the Company’s
General Meeting of Shareholders and Facilitate the Exercise of
Voting Rights
Principle 1-2
Remarks

Early dispatchof notices ofconvocation

To allow shareholders sufficient time to examine the items for resolution at the shareholders’ meeting before exercising their voting
rights, the Company sends out notices ofconvocation at the earliest possible date. For
the General Meeting of Shareholders heldin June 2017, the Company sent out noticesof convocation on 23rd May 2017, 21 days
before the meeting.

Avoidance of the“busiest day” forshareholder
meetings

To enable as many shareholders as possible
to attend its General Meeting of Shareholders,the Company held its 2016 General Meetingof Shareholders on 13th June 2017, 15 days
before the “busiest day” on which a large proportion of Japanese companies hold theirgeneral shareholders’ meetings.

Online andelectronic voting

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

Other

On its website, the Company posts noticesof convocation of the General Meeting of
Shareholders and notices of resolutions
passed at the meeting in Japanese andEnglish.

The executive officer in charge of the Group Planning Division is
responsible for and exercises overall control of general IR activities.
The Group Planning Division has an IR manager and promotes cohesive IR activities by sharing information regularly with divisions
responsible for finance and accounting, general and legal affairs, andpublic relations.
As a rule, twice a year in Japan the Company holds briefings on
earnings results for analysts and institutional investors, in which thepresident explains earnings results and business plans.
The Company is increasing and improving disclosure via its website (http://www.hankyu-hanshin.co.jp/en/ir/) by posting a range of
documents that aid investment decisions, such as earnings results,
securities reports, timely disclosure documents, and documentsfrom briefings on earnings results. (Most of these documents are in
Japanese.) Also, for individual investors the website includes an overview of the Group and its competitive advantages.
In addition, as required, the Company organises interviews withshareholders and institutional investors that are primarily themed on
the enhancement of corporate value over the medium-to-longterm. In principle, the IR manager participates in these interviews.
However, in light of the number of shares that shareholders own
or their areas of interest, executive officers responsible for otherareas of the Company participate as required. Further, the IR manager prepares reports, as required, that are based on feedback fromthe interviews, including opinions stated or summaries of questions
and answers, and submits them to the senior management team.
Number of interviews in fiscal 2017: 147

Activities in Fiscal 2017

13 directors, 5 Audit &Supervisory Board members

Fiscal year

April 2015

9 directors, 5 Audit &Supervisory Board members

14 directors, 5 Audit & Supervisory Board members

June 2017
General Meeting of
Shareholders

June 2016
General Meeting of
Shareholders

June 2015
General Meeting of
Shareholders

6 directors retired
1 director appointed
1 Audit & Supervisory Board
member retired
1 Audit & Supervisory Board
member appointed

1 director appointed
1 Audit & Supervisory Board
member retired
1 Audit & Supervisory
Board member appointed

Recent General Meetings of Shareholders and Fiscal Years

FY2016FY2017

April 2016

FY2018

April 2017

Management Organisation

Attendance at Meetings of the Board of Directors andthe Audit & Supervisory Board

offers directors and Audit & Supervisory Board members training
opportunities by introducing and paying for various types of training
and seminars. Also, such committees as the Corporate GovernanceCommittee give external directors and external Audit & Supervisory
Board members information about the Group’s businesses, financial
position, and organisation. Further, in fiscal 2017 the Company conducted briefings about the management tasks and initiatives ofeach core business at meetings of the Board of Directors held in
November and December.

External Directors
Attendance at meetings of the Board

Name

of Directors

Noriyuki Inoue

Attended 8 of 10 meetings

Shosuke Mori

Attended 9 of 10 meetings

External Audit & Supervisory Board Members
Attendance at meetings of the

Attendance at meetings of theBoard of Directors

Audit & Supervisory Board

Takaharu
Dohi

Attended all 10
meetings

Attended all 12
meetings

Haruo
Sakaguchi

Attended all 10
meetings

Attended all 12
meetings

Junzo Ishii

Attended all 10
meetings

Attended 11 of 12
meetings

Name

Compensation Paid to Directors and Audit & Supervisory Board
Members
Total paid out in fiscal 2017

Category

No. of recipients

Directors(External)

14
(2)

127
(19)

Audit & Supervisory
Board members

6
(3)

17
(6)

20
(5)

144
(25)

Total

A summary of the process, items, and results of an evaluation of theeffectiveness of the Board of Directors conducted in fiscal 2018 is asshown below.
1. Evaluation Process
At a meeting of the Board of Directors held on April 2017, all directors were interviewed with respect to the administration of theBoard of Directors in fiscal 2017.
2. Evaluation Items(Millions of yen)

(External)(External)

Evaluation of the Board of Directors’ Effectiveness

Notes
1.	Recipients of compensation in fiscal 2017 include one Audit & Supervisory Board
member who retired at the conclusion of the General Meeting of Shareholders held on
14th June 2016.
2.	In addition to the above, compensation received by external directors and external
Audit & Supervisory Board members from subsidiaries of the Company for their duties
as directors and Audit & Supervisory Board members amounted to ¥27 million for fiscal
2017.
3.	Of the Company’s full-time directors with terms of office lasting until the conclusion of
the General Meeting of Shareholders held on 13th June 2017, Kazuo Sumi, Takehiro
Sugiyama, Mitsuo Nozaki, Naohisa Nogami, and Masao Shin concurrently served as
directors of the Company and as senior officers of the Company’s subsidiary Hankyu
Corporation. Of the Company’s Audit & Supervisory Board members with terms ofoffice lasting until the conclusion of the General Meeting of Shareholders held on 13th
June 2017, Koichi Kobayashi concurrently served as a standing Audit & Supervisory
Board member of the Company and as a standing Audit & Supervisory Board memberof the Company’s subsidiary Hankyu Corporation. Further, Shinya Sakai, Takehiro
Sugiyama, and Masao Shin concurrently served as directors of the Company and assenior officers of the Company’s subsidiary Hanshin Electric Railway. Also, Masayoshi
Ishibashi concurrently served as an Audit & Supervisory Board member of the Company
and as a senior officer of Hanshin Electric Railway. The abovementioned persons
received additional compensation from the abovementioned companies.

Support for Directors and Audit & Supervisory Board Members

With the exception of external directors and external Audit &Supervisory Board members, the Company provides directors andAudit & Supervisory Board members with the training that theyrequire to fulfill their roles appropriately. In addition, the Company

Accountability
Appropriateness ofconduct ofmeetings
Other

Content of handouts, content and methodof explanations at meetings of the Board of
Directors, etc.
Duration, questions and answers, etc.

Other points about overall administration of
the Board of Directors

3. Evaluation Results
The results of investigative interviews indicated that conduct ofmeetings of the Board of Directors was adequate, explanations of
the status of business management were appropriate, and the Boardof Directors was effective and generally administered appropriately
in fiscal 2017.
Further, evaluation results for fiscal 2016 included requests formore information about the management tasks of each core business. In response, the Company conducted briefings about the
management tasks and initiatives of each core business at meetingsof the Board of Directors held in November and December 2016.
Number of Meetings of Deliberative Bodies Held
Corporate Governance Committee

1 meetingGroup Management Committee

15 meetings

Core Business Strategy Councils

2 meetings

The Group Presidents’ Meeting

2 meetings

Management Organisation

Internal Control System

Principles 2-1

2-2

4-3

Recognising the importance of ensuring that the business operations of the Company are conducted in an appropriate manner, wehave established an internal control system for the entire Group, andrevise it when deemed necessary. As things stand, our internal control system is characterised as follows:A Group Management Philosophy was compiled following themanagement integration of Hankyu Holdings and Hanshin Electric
Railway, along with a Group mission (what we try to achieve), a
statement of values (what is important to us), and a code of conduct (what actions to take to realise them). We ensure that all
employees from executive down understand them.
We ensure compliance-focused management by compilingand distributing a Compliance Manual, and have establisheda dedicated whistle-blowing system. (For further informationon the Company’s compliance activities, please refer to the following section.)We 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 the Hankyu Hanshin Holdings Groupand all its operating companies.
To create a structure for ensuring appropriate operations, theGroup vests 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 the creation of an internal control system.
Audit & 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.
With regard to systems for “Management Assessment and Audit
Concerning Internal Control Over Financial Reporting,” a section of
the Financial Instruments and Exchange Act, the Company
responds appropriately by carrying out management evaluations
on a consolidated basis, in line with in-house rules.

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
by means of the measures detailed below.

Compliance Manual and Training Programmes
The Company’s Compliance Manual and Compliance Card express
the determination of the Company not to tolerate violation of laws
or social norms or betrayal of customer trust by any of its Group
companies’ approximately 22,000 officers and employees. It also
aims to raise awareness by pointing out cases where complianceerrors can easily be made. The Company provides intensive compliance training on a Groupwide basis for new employees, midcareerhires, and newly appointed executives. In addition, all Group companies arrange their own training programmes tailored to job gradeand function, with the aim of further increasing complianceawareness.

Corporate Ethics Consultation Desk (Internal Whistle-Blower Procedures)
Principle 2-5

We have set up a dedicated whistle-blower hotline enabling all
employees to discuss or quickly bring to management’s attention
suspected or known legal violations and unethical conduct. Business
partners are also welcome to use this consultation and notification
facility, and when necessary we will use lawyers and other outside
specialists to improve its effectiveness.
Corporate Ethics Consultation Desk

Reports

Consultation
Desk

Audit &
Supervisory
Board
memberReports

Reports

Directs
President

Consultation
Desk

Audit &
Supervisory
Board
memberReports
President

Approves /Directs
Reporting of investigation progress and findings
Consultation
DeskManagement Organisation

Establishment of Risk Management Committees
In the case of identification of a major compliance issue during thecourse of an Ethics Consultation, a risk management committee isconvened as soon as possible to discuss and decide on appropriate
responses.
In addition, we are setting up compliance promotion offices atmajor Group companies such as Hankyu Corporation, Hanshin
Electric Railway, Hankyu Travel International, Hankyu Hanshin
Express, and Hankyu Hanshin Hotels. At other companies we areappointing “compliance leaders,” to ensure our response is on aGroupwide basis.

Overview of Group Compliance[Symbols]

Information to Group companies
 uidance and training for GroupG
companies

Compliance promotion officeRisk management
Risk Management Committee secretariat
 orporate Ethics Consultation DeskC(­internal whistle-blower procedures)

Internal whistle-blowing, responsible for planning and organisingseminars and other awarenessraising activities

Internal auditing

Hankyu Hanshin Holdings

Hankyu Corporation

Hanshin Electric Railway

Hankyu Travel
International

Hankyu Hanshin Express

Hankyu Hanshin Hotels

Compliance leaders
Liaise with compliance departmentsof higher-level companies

Group Company

orGroup Company

orGroup Company

orGroup Company

orGroup Company
Group Company
Group Company
Group Company
Group Company
Group Company
Cross-Organisational Companies

or

Risk Management

Principle 4-3

At the Company, risks to which many different divisions are exposed
are managed by the Risk Management Office, while risks arising in
the business operations of individual divisions are managed by risk
management units within the divisions themselves. In both cases,
risks are identified and analysed, and risk management systems areoverhauled from time to time. We evaluate the likelihood of materialisation of each risk and its frequency, as well as the extent of impact inthe event of materialisation and its importance. On that basis, wedraw up measures to prevent the materialisation of risk or to mitigate
its impact (“risk mitigation measures”). These measures are documented in the form of risk management manuals, and the results ofrisk 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
transmission of information in the event of unforeseen circumstances.
Under this system, in the event of materialisation of a risk, executives
and employees immediately take risk mitigation measures as specified in the abovementioned documentation and other measures toprevent the further spread of the impact. They also submit reports topre-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 up asystem enabling transmission to the Company of accurate information in the event of an unforeseen development.
A particular area of importance in this regard is the Company’s
core railway business, which entails direct risk to people’s lives
through accidents. Even in the event of minor mistakes and problems
where no individual responsibility arises, it is important to make every
effort to bring the number of problems and mistakes that could
cause an accident as close to zero as possible, by continuing to
meticulously train railway business staff, and share and analyse data.
Such painstaking efforts to forestall even one human error are one of
the building blocks on which the Company ensures safety of operations and meets public expectations.
Pages 64–67 explain measures to ensure the safety of the railway business ofHankyu Corporation and Hanshin Electric Railway.

Management Organisation

Initiatives Aimed at Reducing
the Group’s Risk
Mitsuo Nozaki

Our Current Risk Management Framework
Based on six core businesses, the Hankyu Hanshin Holdings Group
conducts diverse business activities. Consequently, in a wide range

Executive Officer,
In charge of Personnel andGeneral Affairs Div.,
Hankyu Hanshin Holdingsof areas the Group incurs risks meriting attention. Therefore, eachfiscal year the Company and its operating subsidiaries coordinate to
identify and assess business risks. Specifically, from among generalrisk items, which the Company prepares in advance based on aGroupwide management viewpoint, operating subsidiaries selectrisks that should be addressed as a priority. In selecting these priority
risks, the operating subsidiaries use as criteria the likelihood of risk
manifestation and the effect this would have on operations. Next,
the operating subsidiaries establish risk reduction measures targetingthe selected priority risks, discuss the countermeasures at meetingsof their boards of directors and other meetings, and then report conclusions to Hankyu Hanshin Holdings as the holding company. The
Company regularly collates and reports information about the progress of operating subsidiaries’ risk management measures to theBoard of Directors.
As for the monitoring of risk management measures, operating
subsidiaries must submit progress reports to the Company periodically. In addition, as the officer responsible for risk management, I andother risk managers conduct face-to-face interviews with membersof subsidiaries’ senior management teams at least once a year,
checking the progress of their measures for priority risks through aplan–do–check–act (PDCA) cycle. Interviews at operating subsidiaries
not only help me understand changes in the status of risks but also
give me an opportunity to share management know-how aboutsuch issues as best practices within the Group.

Initiatives Going Forward
Looking to the future, a pressing task is to strengthen the management of risk associated with overseas businesses, which aim to
expand in accordance with the Long-Term Management Vision for2025. While leveraging the expertise and information of theInternational Transportation Business—which has a strong trackrecord in overseas business development—we will address this task
by establishing a management system aimed at selecting andreducing priority risks. Further, I believe we need to heighten oursensitivity to risk related to the environment, society, and governance (ESG). In particular, four years ago we began a Groupwide initiative to rigorously introduce appropriate management of working
hours. As part of this ongoing initiative, we are advancing efforts to
identify and address issues arising from characteristics of each operating subsidiary’s business.
The Hankyu Hanshin Holdings Group’s risk management haschanged significantly since the Company stepped up its involvement with operating subsidiaries following a compliance incident
several years ago. The Company will continue to increase risk management awareness across the Group, prevent the occurrence ofrisk-related events, and heighten its ability to respond to risks.

Risk Management Framework
The Board of Directors of Hankyu Hanshin Holdings
Collating and reporting

Hankyu Hanshin Holdings
Providing risk items from a Groupwide
management viewpoint

ReportingInterviewing and advising

ReportingOperatingsubsidiaries
Assessing and identifying
Effect level
Manifestation likelihood

Selecting priority risks

Establishing countermeasures
Risk reduction measures
Schedules

Implementing
countermeasures

ReportingBoards of Directors’ and other meetings

Assessing

Reporting