To Our Stakeholders

Policy on Returns to Shareholders
Regarding returns to shareholders, given the achievement of aninterest-bearing debt/EBITDA ratio of around seven times, which
was our most important management target, we changed ourdividend policy by increasing the annual dividend by ¥1 pershare for fiscal 2014 and endeavouring to pay stable annual dividends going forward with ¥6 per share as a lower limit. Since
then, our financial position has improved further, and we have
deemed that we can maintain net income at the ¥40 billion level.
Therefore, we have introduced a new approach to returns toshareholders by setting a total return ratio* of 25% as an indicator. Aiming for returns to shareholders based on this indicator, forfiscal 2016’s profit distribution, we plan to increase the annual
dividend by ¥1 per share to ¥7 per share and acquire treasury
stock so that we realise a total return ratio of 25%.
While strengthening returns to shareholders, I believe that
we should also meet the expectations of shareholders and investors by sustaining growth. As we advance into a new management phase, we are committed to taking maximum advantage
of our inherent progressiveness to enhance corporate value.
* The aggregate of the total annual dividend and purchases of treasury stock as apercentage of consolidated net income

Returns to shareholders(¥ billion)

(Yen)

Targeted Management Indicators(for the period through to fiscal 2019)
In light of the aforementioned, for the period from fiscal 2016
through to fiscal 2019, we have established three management
indicators that measure profitability, capital efficiency, and financial soundness.
Firstly, in relation to profitability, earnings levels are expected
to decrease due to higher depreciation and amortisation associated with the advancement of the Umeda 1-1 Project and themanufacture of rolling stock. However, by focusing efforts ondeveloping foundations with a view to medium-to-long-term
growth, we will maintain operating income at the ¥80 billion level.
Further, we will realise stable net income at the ¥40 billion level.
Secondly, with regard to capital efficiency, while strengthening our financial position, we will achieve stable net income andacquire treasury stock to maintain ROE at around 6%.
Lastly, to reinforce financial soundness, we will mitigate therisk of interest rate increases and ensure fund-raising capabilities
through the steady reduction of interest-bearing debt and thelowering of it to less than ¥900 billion by the end of fiscal 2019.
Further, we will manage businesses mindful of the medium-tolong-term targets for financial soundness—keeping the interestbearing debt/EBITDA ratio between five and six times and theD/E ratio around one time—although we have not specified
fiscal years for reaching these targets.

1515

13.0
4.1
10106.36.3

552012

2013

57.6

7.6

6620142015

8.9
752016(Est.)(FY)

00

Total dividend

Acquisition of treasury stock

Dividend per share (right axis)

Numerical targets (for the period through to fiscal 2019)
Profitability

Keep operating income at ¥80 billion level and keep net income at ¥40 billion level

Capital efficiency

Keep ROE at 6% level while strengthening financial standing

Financial soundness

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

Financial soundness targeted overmedium-to-long term

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

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

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

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

1Implementing two business strategies with a view to medium-to-long-term growth

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

Developline-side areas

Enhancingline-side area value

Combine businessstrategies

1 and 2Financial strategy

Develop additional
value inline-side areas

Businessstrategy

2

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

Overseas

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

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

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

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

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

Numerical targets

Profitability

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

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

Capital efficiency

Keep ROE at 6% level

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

Financial soundness

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

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

Financial soundness targetedover medium-to-long term

Keep interest-bearing debt/EBITDA ratio between 5 and 6 times and D/E ratio around 1 time