Performance Highlights (Consolidated)
Key Financial Indicators(¥ million)

2009

FY

2010

2011

($ thousand)

2012

2013

2014

2014

¥ 679,157
91,828149,200$ 6,593,757
891,534
1,448,544

Result of Operations:
Revenues from operations
Operating income
EBITDA
Income before income taxes andminority interests
Net income
Comprehensive income
Capital expenditure
Depreciation and amortisation¥ 683,715 ¥ 653,287 ¥ 638,770 ¥ 649,703 ¥ 682,439
77,82370,12664,74373,80987,921
135,300
133,200
127,100
133,500
145,100
34,06433,89932,76043,41962,192

83,542811,087

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
59,51254,54046,352
55,94180,72254,474450,019
543,117783,709528,874¥ 146,955 ¥ 103,252 ¥ 124,525 ¥ 127,655(132,737)(62,516)(44,295)(58,923)
14,21740,73580,23068,732(24,200)(39,544)(78,978)(69,195)¥ 146,991(45,517)
101,474(105,079)$ 1,427,097(441,913)
985,184(1,020,184)¥2,307,332 ¥2,337,331 ¥2,314,669 ¥2,274,380 ¥2,281,007
473,878
480,633
486,947
524,801
573,154
1,275,620
1,282,583
1,251,665
1,183,647
1,126,633¥2,286,928
617,598
1,032,307$22,203,184
5,996,097
10,022,398¥    16.28 ¥     8.55 ¥   14.32 ¥    31.13 ¥   31.48
16.18
8.51
14.27
31.13
31.47
366.96371.70377.17407.01443.63
5.00
5.00
5.00
5.00
5.00

¥   36.76
36.75
477.696.00$      0.36
0.36
4.64
0.06

12.9
3.3
7.4
7.8
24.5
2.0

13.5
3.6
8.0
6.9
26.3
1.7

—
—
—
—
—
—

¥      433 ¥      384 ¥      361 ¥      569¥     562$      5.46

Cash Flows:
Cash flows from operating activities ¥ 108,597
Cash flows from investing activities
Free cash flow
Cash flows from financing activities(115,047)(6,449)
7,014

Financial Position:
Total assets
Total net assets
Interest-bearing debt
Per Share Data (yen and U.S. dollars):
Net income

Basic
DilutedNet assets
Dividend
Ratios:Operating income margin (%)
ROA (%)ROE (%)
Interest-bearing debt/EBITDA (times)
Equity ratio (%)
Debt/equity (D/E) ratio (times)

11.4
2.5
4.4
9.4
20.1
2.8

Stock Price Index:
Stock price at the end of fiscal year¥      447
(yen and U.S. dollars)Market capitalisation (¥ billion, $ million)
568.3
PER (times)
27.5
PBR (times)

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

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

714.5
15.3
1.2

69,369——618,585
182,997

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

615,324
221,133

629,125
226,004

—
—

5.88

8.90

11.22

7.29

11.50

9.22

—

Revenues from operations:¥679.2 billion(down ¥3.3 billion or 0.5% from the previous fiscal year)
Operating income: ¥91.8 billion(up ¥3.9 billion or 4.4% from the previous fiscal year)
Despite the impact of the sale of the bookstore business toan outside company in the Urban Transportation Business,
the full-year operation of the Umeda Flagship Store of the
Hankyu Department Store in the Umeda Hankyu Building,favourable sales in the sports business of the Entertainment
and Communications Business, and other factors resulted in a
decline in revenues from operations of 0.5%, or ¥3,281 million,
year on year to ¥679,157 million. Operating income increased
4.4%, or ¥3,907 million to ¥91,828 million due to aforementioned positive earnings factors in the Entertainment andCommunications Business and so on.

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 ¥103 = $1, the prevailing exchange rate on the Tokyo Foreign Exchange Market at 31st March 2014.
EBITDA = operating income + depreciation expenses + amortisation of goodwill. 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 of atleast 3,300m2. Based on Latest trends in the office-building market in Osaka, Miki Shoji.
Annual number of passengers carried

87,921

FY 2 0 1 3(¥ million)

Entertainment andCommunications

FY 2 0 1 4+2,933
Urban Transportation+1,285
Real Estate+729
Hotels +284
International Transportation +241
Travel
-1,227
Other
542
Adjustments-883
91,828Net income: ¥46.4 billion (up ¥6.6 billion or 16.7% from the previous fiscal year)
Net non-operating loss improved 18.2%, or ¥2,370 million year
on year, for a non-operating loss of ¥10,636 million due to adecrease in interest expenses.
Net extraordinary gain of ¥2,350 million was recorded, an
improvement of ¥15,072 million, year on year. This was mainly■ ‌Net income:

Factor analysis(YoY change)

attributable to a gain on sales of noncurrent assets owing to thepartial sale of equity in Hankyu Nishinomiya Gardens.
In addition to the increase in operating income, net income
climbed 16.7%, or ¥6,649 million, to ¥46,352 million due to theabove-mentioned factors.

Decrease in operating expenses and cost of sales of transportation
Decrease in selling, general and administrative expenses
Decrease in non-operating expenses (primarily a decrease in interest expenses)
Increase in extraordinary income (primarily due to an increase in gain on sales of noncurrent assets)
Decrease in extraordinary loss (primarily a decrease in loss on impairment of fixed assets)
Decrease in revenues from operations
Decrease in non-operating income (primarily a decrease of equity in income of affiliates)
Increase in income taxes (including income taxes-deferred)
Increase in minority interests in income

Business Data:
Hankyu Railway (thousand)■ Operating income: Factor analysis (YoY change)+¥3.8 billion+¥3.4 billion+¥2.4 billion+¥3.5 billion+¥11.5 billion-¥3.3 billion-¥0.1 billion-¥14.4 billion-¥0.3 billion

Interest-bearing debt: ¥1,032.3 billion (down 8.4% or ¥94.3 billion from the previous fiscal year)
Despite capital investments in the partial acquisition ofequity in HEP FIVE and the acquisition of NU chayamachi, as
well as building new rolling stock, the outstanding balance ofinterest-bearing debt came to ¥1,032,307 million, a substantial
decrease of 8.4%, or ¥94,325 million, year on year.

Key Financial Indicators (Graphs)

Operating and Business Environmental Data

Revenues from Operations(¥ billion)
800

683.7
600

653.3 638.8 649.7(%)(Thousand)(Thousand)

100

20

800,000

300,000

91.8

87.9

682.4 679.2

80

400

77.8
11.4

70.1

700,000

73.8

15

64.7

10.7
10.1

40
200

12.9

11.4

13.5

2010

2011

2012

2013

2014 (FY)

5

46.4
39.3

40

39.7

2011

2012

2014

2013

30

20.6

4

1,275.6 1,282.6 1,251.7
2.8

2.7

1,183.6

1,032.3

2010

2011

2012

2013

2014 (FY)

2

1.7

2011

2012

2014

2013

4

2,307.3 2,337.3 2,314.7 2,274.4 2,281.0 2,286.9

2,000

5

4

3.3

1,500

2.5
1,000

3

2.8

2.2

2

2.0

1

0

0
2009

2010

2011

600

2012

2013

2014 (FY)* ROA = ordinary income/total assets (average of period-start and period-end totals)

473.9 480.6 486.9

524.8

573.2

617.6

7.4

10

8.0

8
6

300
4

3.8

0

0
2009

2010

11

12

13

14

04

(FY)

05

06

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

07

08

09

10

11

12

13

14

(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)

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)
2008

2009

2010

2011

2012

2013

2014

* 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, 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);
and Muko and Nagaokakyo cities and Oyamazaki town

2011

105
104

102

The Great Hanshin (Kobe) Earthquake

Kansai area

101
100
99

2

2.3

100

10

103

7.9

400

200

500

09

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

2007

(%)
12

4.4

08

Population Trends in Areas Served by Hankyu and Hanshin Lines (1991=100)(¥ billion)
700

500

3.6

07

(As of 31st March of each year)

Total Net Assets/ROE
(%)

06

0

(FY)

* D/E ratio = interest-bearing debt/equity(¥ billion)
2,500

0
05

10

2

1
2010

(%)
14

6

2.3

2009

Total Assets/ROA

Commuter pass
Other tickets

0

8

0
2009

3

2.6

300

0

100,000

Other tickets

12

1,126.6

2.0

10.8

10

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

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

600

18.1

Total

Commuter pass

04

1,500

900

200,000(FY)(¥ billion)

1,200

400,000

0
2010

Interest-Bearing Debt and D/E Ratio(¥ billion)
50

Opening of Hanshin Namba Line
(20th March 2009)

100,0002009

Net Income

200,000

300,000

0
2009

Total

600,000
500,000

10

20

0Annual Number of Passengers Carried/Hanshin Electric Railway(¥ billion)

60

20

Annual Number of Passengers Carried/Hankyu Railway

Operating Income/Operating Income Margin

2012

2013

2014

(FY)

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

98

Areas served by Hankyu and Hanshin lines

97
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

(FY)

Message from the President

Fiscal 2014 Performance
Railway operation revenue increased and the sports business was strong.
Operating income, ordinary income, and net income reached new record highs, andwe achieved our most important management target — an interest-bearing debt/EBITDA ratio of around seven times.
In fiscal 2014, despite concerns of an overseas economic recession following the economic slowdown in China and otheremerging countries, the Japanese economy staged a modest
recovery on improved corporate earnings as the high yen depreciated and stock prices rose, and consumer spending increased.
As a result, earnings at all Group businesses were solid.
Under these circumstances, in the Real Estate Business, theUmeda Flagship Store of the Hankyu Department Store in the
Umeda Hankyu Building was in full operation throughout theyear, while in the Railway Business, the Hankyu and Hanshinlines both performed steadily thanks to higher revenue due tothe grand opening of the Umeda Flagship Store of the Hankyu
Department Store and the GRAND FRONT OSAKA, as well as theimpact of last-minute demand for commuter passes prior to theconsumption tax increase. Moreover, despite higher revenue due
to favourable sales in the Sports Business of the Entertainment
and Communications Business, the bookstore business was
sold to an outside company and travellers to China and South
Korea decreased in the Travel Business. As a result, revenues fromoperations on a consolidated basis declined ¥3.3 billion (down
0.5%) to ¥679.2 billion. However, if we exclude the effects (abouta ¥19.0 billion decline) of the sale of the bookstore business to an
outside company, revenues increased in real terms.

In contrast, in terms of income, negative factors such as therising power costs due to hikes in electricity fees were morethan offset by positive factors for increased income mentioned
above and efforts to reduce costs. As a result, operating income
climbed 4.4%, or ¥3.9 billion, year on year to ¥91.8 billion,
ordinary income rose 8.4%, or ¥6.3 billion to ¥81.2 billion, andnet income increased 16.7%, or ¥6.6 billion, to ¥46.4 billion, allof which hit record highs. Accordingly, the Group’s operating
income and operating income margin remained the highest fora major private railway operator group for the second consecutive year.
As for the improvement of our financial position, a management issue that we have been addressing, our investments ingrowth have paid off, with EBITDA steadily increasing ¥4.1 billion
year on year to ¥149.2 billion, and interest-bearing debt shrinking significantly from ¥1,126.6 billion in the end of fiscal 2013 to¥1,032.3 billion in the end of fiscal 2014, mainly due to a detailed
review of capital investments. As a result, the consolidated
interest-bearing debt/EBITDA ratio was 6.9 times, achieving
management’s target of an interest-bearing debt/EBITDA ratio ofaround seven times, the Group’s top priority.
This target was initially contained in the Hankyu Hanshin
Holdings Group 2007 Medium-Term Management Plan, withfiscal 2013 as the target year for achievement. However, theplan’s duration was extended to fiscal 2016 because the fiscal
2013 target was viewed as unattainable as a result of the sudden
deterioration of economic conditions triggered by Lehman
Brothers’ collapse in the autumn of 2008. Therefore, we set out
anew to achieve this target. We wanted to achieve the target as

Improve cash flow generation through earnings
from major projects such as Hankyu Nishinomiya
Gardens, Hanshin Namba Line, and the Hanshin
Koshien Stadium refurbishment, and the reconstruction of the Umeda Hankyu Building.

(¥ billion)

Operating income

New record
Ordinary income

60

77.8

70.1

57.4

50.4

40
20

20.6

73.8
65.4

64.7
46.5

39.3

87.9
74.9

1,800
1,700
1,600
1,500
1,400

9.6 times

9.4 times

1,100

170

2011

160

8.9 times

8.8 times

7.8 times

EBITDA (¥ billion) (right scale)

145.2

135.3

1,271.1

1,275.6

133.2

1,300
1,200

9.8 times

1,282.6

133.5

1,183.6

1,126.6150130

6.7 times
120

1,032.3(1,100.0)

1,000
900

144.0

140

6.9 times(7.7 times)

1,251.7

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

149.2(142.0)

145.1

127.1

970.0

110
100

Investment in developments for growth

Payback from major projects

Reconciling growth and financial soundness

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014*1

2008/3

2009/3

2010/3

2011/3

2012/3

2013/3

2014/3

FY2015(Estimate)

90

Renovation of Hanshin Koshien Stadium*2 (October 2007 – March 2010)
Rebuilding of Umeda Hankyu Building (May 2005 – November 2012)39.7

September 2009:
Opening of Department Store Building (Phase I)

46.4

April 2010: Completion of Office Tower

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

18.1

10.8
2010

180

Interest-bearing debt/EBITDA ratio

Hanshin Namba Line (Opening of new extension) (October 2003 – March 2009)

91.8
81.2

0

2009

(¥ billion)

1,900

Hankyu Nishinomiya Gardens Development (September 2004 – November 2008)

Net income

100
80

Leveraging cash flow generation boosted through completion of largescale projects, reduce total interest-bearing debt and steadily improve
our financial position by maintaining a certain level of strategic capitaloutlays but at the same time keeping total capital investment to roughly
the equivalent to depreciation and amortisation costs.

(¥ billion)

800■ Past Six Years’ Performanceearly as possible prior to fiscal 2016, but achieving it at the end of
fiscal 2014 fulfils our promise to the stakeholders and has laid asteady foundation for future growth.

2012

2013

2014

(FY)

Note: 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 Project).
*1 Figures shown in parentheses are for the previous plan announced in May 2013.
*2 Renovation work conducted during three off-seasons.

Osaka Station North District (Umekita) Phase I Development Area Project(GRAND FRONT OSAKA) (March 2010 – March 2013)

Consolidated Six-Year Summary
FY2009FY2010Result of Operations (millions of yen and thousands of U.S. dollars): *Consolidated Financial Review

FY2011FY2012FY2013

FY2014FY2014

Analysis of Operating Results for fiscal 2014 (fiscal year ended March 2014)

1¥683,715¥653,287¥638,770¥649,703¥682,439¥679,157$6,593,757

Operating income

77,82370,12664,74373,80987,921

91,828891,534

EBITDA*

135,300

133,200

127,100

133,500

145,100

149,200

1,448,544

Revenues from operations

2

Income before income taxes and minority interests

34,06433,89932,76043,41962,192

83,542811,087

Net income

20,55010,79318,06839,25239,702

46,352450,019

14,72844,99254,081

55,941

543,117—

12,541

Capital expenditure

109,688

132,386

68,431

55,26759,51280,722

783,709

Depreciation and amortisation

54,79860,41859,66956,96854,54054,474

528,874

Comprehensive income

Cash Flows (millions of yen and thousands of U.S. dollars):

Revenues from operations for the year under review decreased by¥3,281 million (0.5%) year on year, to ¥679,157 million. This was primarily because the effects of the sale of the bookstore business to an
outside company were offset by demand for commuter passes andother items generated in advance of the hike in the consumption tax
rate in the Urban Transportation Business. Furthermore, in addition
to the full-year operations of the Umeda Flagship Store of Hankyu
Department Store in the Umeda Hankyu Building in the Real EstateBusiness, the sports business and stage business performed well in
the Entertainment and Communications Business.
Operating income rose ¥3,907 million (4.4%) year on year, to¥91,828 million, mainly as a result of efforts to keep down costs ineach segment.

Cash flows from operating activities¥108,597¥146,955¥103,252¥124,525¥127,655¥146,991$1,427,097

Cash flows from investing activities(115,047)(132,737)(62,516)(44,295)(58,923)(45,517)(441,913)

Cash flows from financing activities

7,014(24,200)(39,544)(78,978)(69,195)(105,079)(1,020,184)

Increase (decrease) in cash and cash equivalents(2,174)(9,680)

474

767

817

(1,840)(17,864)

Analysis of Operating Income

Cash and cash equivalents at end of year

30,69021,44022,592

23,57225,581

24,497

237,835

FY2013¥2,307,332 ¥2,337,331 ¥2,314,669 ¥2,274,380 ¥2,281,007 ¥2,286,928$22,203,184

Total net assets
Interest-bearing debt

Summary of consolidated business results: please also see Message
from the President (Fiscal 2014 performance) on pages 16 and 17.

(¥ million)

87,921

Financial Position (millions of yen and thousands of U.S. dollars):
Total assets

In addition, ordinary income increased ¥6,277 million (8.4%)
year on year, to ¥81,191 million. This was because although equity inincome of affiliates declined, interest expenses decreased in line withthe lower interest-bearing debt (consolidated basis).
Net income increased ¥6,649 million (16.7%) year on year to¥46,352 million. This was mainly due to an improvement in the netof extraordinary income and loss, resulting from a gain on sales of
noncurrent assets following the sale of part of the equity held inHankyu Nishinomiya Gardens.

-3,282

Decrease revenues from operations

473,878

480,633

486,947

524,801

573,154

617,598

5,996,097

1,275,620

1,282,583

1,251,665

1,183,647

1,126,633

1,032,307

10,022,398+3,796

Decrease in operating expenses and cost of sales*+1,075Decrease in personnel expenses
Decrease in expense

Per Share Data (yen and U.S. dollars):+2,230

Increase in taxes -63

Net income—Basic¥ 16.28¥  8.55¥ 14.32¥ 31.13¥ 31.48¥ 36.76$0.36

Net income—Diluted

16.18

8.51

14.27

31.13

31.47

36.75

0.36

Net assets

366.96371.70377.17407.01443.63477.69

4.64

Dividend

5.00

5.00

5.00

5.00

5.00

6.00

0.06

Decrease in selling, general andadministrative expenses*+3,392

Decrease in depreciation and amortisation +191
Increase in amortisation of goodwill -41

91,828FY2014

YoY difference +3,907*Retirement benefit expenses are included in each cost of revenues from operations, with the change being +1,553.

Ratios:Operating income margin (%)

11.4

10.7

10.1

11.4

12.9

13.5

—

3

ROA (%)*

2.5

2.2

2.0

2.8

3.3

3.6

—

ROE (%)*4

4.4

2.3

3.8

7.9

7.4

8.0

—

Interest-bearing debt/EBITDA (times)

9.4

9.6

9.8

8.9

7.8

6.9

—

Equity ratio (%)

20.1

20.1

20.6

22.6

24.5

26.3

—

Debt/equity (D/E) ratio (times)*5

2.8

2.7

2.6

2.3

2.0

1.7

—

Interest coverage ratio (times)*6

4.7

6.3

4.6

6.0

6.7

8.8

—

Segment Information
The following table shows business performance for each core segment. For a review of these results, please refer to the page indicatedat the foot of the table.
From the fiscal year under review, the previous six reportablesegments of “Urban Transportation,” “Real Estate,” “Entertainment andCommunications,” “Travel and International Transportation,” “Hotels”

and “Retailing” have been changed to the six segments of “Urban
Transportation,” “Real Estate,” “Entertainment and Communications,”“Travel,” “International Transportation,” and “Hotels.” In order to compare fiscal periods, the fiscal 2013 segment information has been
prepared based on the segments after the change.

Others:Number of outstanding shares (thousands)
Number of employees(¥ million)

1,271,406

1,271,406

1,271,406

1,271,406

1,271,406

1,271,406—

20,80520,93821,302

20,811

20,751

20,913—*1. The U.S. dollar amounts have been translated, for convenience only, at ¥103 = $1, the prevailing exchange rate on the Tokyo Foreign Exchange Market as of 31st March 2014.
*2. EBITDA = operating income + depreciation expenses + amortisation of goodwill
EBITDA figures are rounded to the nearest ¥100 million.
*3. ROA = ordinary income/total assets (average of period-start and period-end totals)*4. ROE = net income/equity (average of period-start and period-end totals)*5. D/E ratio = interest-bearing debt/equity*6. Interest coverage ratio = cash flows from operating income / interest expense

Urban Transportation

Real EstateEntertainment andCommunications

FY2014

234,555

208,610

110,350

33,006FY2013249,342

198,343

102,695

34,086

Difference-14,787+10,267+7,654

YoY (%)

-5.9%

5.2%

38,49438,008FY201337,20837,278Difference+1,285+729

YoY (%)

3.5%

2.0%

P.40–41

P.46

TravelInternational
Transportation

HotelsOther

Adjustments

Consolidated

37,696

63,69534,713-43,469

679,157

36,74564,69736,045-39,516

682,439-1,079950-1,002-1,332-3,953-3,282

7.5%

-3.2%

2.6%

-1.5%

-3.7%

10.0%

-0.5%

14,172

1,224

2,051

809

849

-3,781

91,828

11,238

2,451

1,809

525

307

-2,89887,921+2,933-1,227

+241

+284

+542

-883

3,907

26.1%

-50.1%

13.4%

54.2%

176.5%

30.5%

4.4%

P.50

P.53

P.56

P.59

—

—

—

Revenues from operations

Operating income/loss
FY2014

Reference page

Review of Financial Position

Consolidated Capital Expenditure and Depreciation and Amortisation

1. Assets, Liabilities and Net Assets

2. Cash Flows

Total assets at the end of the fiscal year under review increased by¥5,920 million from the previous term-end, to ¥2,286,928 million. Thiswas mainly as the result of an increase in property and equipment
following the acquisition of real estate leasing properties.
Total liabilities decreased by ¥38,523 million from the previous
term-end to ¥1,669,330 million, due partly to the reduction in interestbearing debt.
Net assets increased ¥44,443 million from the previous term-end
to ¥617,598 million due to an increase in retained earnings.
Equity came to ¥602,050 million, an increase of ¥42,651 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, as well
as a rise in valuation difference on available-for-sale securities thatprimarily reflected higher stock prices.
As a result, the equity ratio stood at 26.3% and ROE was 8.0%.

Cash and cash equivalents decreased by ¥1,840 million from theprevious term-end to ¥24,497 million.

Capital expenditure in the fiscal year under review (consolidated basis; including intangible assets) increased by ¥21,209 million (35.6%) year on yearto ¥80,722 million.
The following is a breakdown for each business segment.

(1) Cash Flows from Operating Activities
Net cash provided by operating activities was ¥146,991 (up 15.1%
year on year). The main factors were income before income taxes andminority interests of ¥83,542 million, depreciation and amortisation of¥54,474 million, and income taxes paid of ¥14,013 million.

FY2014YoY

Urban Transportation

27,522 (Millions of yen)

5.0 %Real Estate

43,451

71.6

Entertainment and Communications

5,561

34.8

Travel

1,178

9.5

578

8.3

1,817

-5.9

Other

510

27.1

Total

80,61935.3(2) Cash Flows from Investing Activities

International Transportation

Net cash used in investing activities was ¥45,517 million (down 22.8%
year on year). This was chiefly because expenditures for the purchasesof noncurrent assets of ¥89,845 million exceeded proceeds fromthe sale of noncurrent assets of ¥21,619 million, and proceeds fromreceipt of contributions for construction of ¥14,115 million.

HotelsAdjustments

103—

Consolidated

80,722

35.6(3) Cash Flows from Financing Activities
Net cash used in financing activities was ¥105,079 million (up 51.9%
year on year). This was due partly to a net decrease in borrowings of¥92,578 million and dividends paid of ¥9,500 million.

Urban Transportation

TravelThe railway business carried out capital investment with a focus onsafety and service improvement, as well as implemented rebuilding
and improving of the existing rolling stock.

In the Travel Business, systems investment was carried out tostrengthen Internet sales.

Real Estate
Trends in Cash Flow Indicators

The real estate leasing business acquired part of the equity of “HEPFIVE” and “NU chayamachi” both owned by Hankyu REIT Inc.

FY2010FY2011FY2012FY2013

FY2014Equity ratio (%)

20.1

20.6

22.6

24.5

26.3

Entertainment and Communications

Equity ratio (%) (market value basis)

23.4

20.9

20.0

31.5

31.0

Cash flows/interest-bearing debt ratio (times)

8.7

12.1

9.5

8.8

7.0

Interest coverage ratio (times)

6.3

4.6

6.0

6.7

8.8

In the Entertainment and Communications Business, the Takarazuka
Grand Theatre was repaired and refurbished and terminal equipment
for cable television were purchased.

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).

3. Fund Procurement
During the fiscal year under review, the outstanding balance ofinterest-bearing debt (consolidated basis) declined by ¥94,325 million
to ¥1,032,307 million at the end of the fiscal period. This was mainly
because the acquisition of part of the equity in “HEP FIVE” and theacquisition of “NU chayamachi,” that were as results of property swaps
between the Group and Hankyu REIT Inc., and also capital investment

to construct new rolling stock, was exceeded by the cash flows fromoperating activities.
The ratio of consolidated interest-bearing debt/EBITDA (operating income before amortisation), the benchmark we use for assessing
the soundness of our financial position, stood at 6.9 times (7.8 times in
the previous fiscal year).

International Transportation
In the International Transportation Business, system investment was
conducted to further global IT cooperation.

HotelsIn the Hotels Business, refurbishments of the guest rooms were carried out at each hotel.
Depreciation and amortisation decreased by ¥66 million (0.1%) fromthe previous year (consolidated basis) to ¥54,474 million.