Interview with the President

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

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

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

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

13.7

12

6

4.5

7.7

7.8

8.1

8.1

8.5

8.7

8.9

9.9

11.1

5.7

0
Nishi-Nippon
Railroad

Keio
Corporation

Tobu
Railway

Tokyu
Hankyu Hanshin
Corporation
Holdings

NagoyaRailroad

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

Sotetsu
Holdings

KeikyuCorporation

Nankai Electric
Railway

Kintetsu
Corporation

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

(¥ billion)

2008
Results*1

2009
Results

2010
Results

2011
Results

2012
Results

2013
Results*4

2014
Estimate

2016
Plan*4

90.7

77.8

70.1

64.7

73.8

87.9
[78.0]

84.0

85.0[83.0]

145.2<143.2>*2

135.3

133.2

127.1

133.5

145.1
[137.0]

142.0

143.0
[142.0]Effects ofintegration*3

2.2

4.6

7.1

7.9

8.8

9.7
[9.7]

—

—

Interest-bearing
debt/EBITDA

8.8 times

9.4 times

9.6 times

9.8 times

8.9 times

7.8 times[8.5 times]

7.7 times

6.8 times[7.0 times]

Interest-bearing
debt

1,271.1

1,275.6

1,282.6

1,251.7

1,183.6

1,126.6[1,160.0]

1,100.0

980.0[1,000.0]

Debt/equity ratio

2.7 times

2.8 times

2.7 times

2.6 times

2.3 times

2.0 times[2.2 times]

1.9 times

1.5 times[1.6 times]

0.1%

4.4%

2.3%

3.8%

7.9%

7.4%
[6.0%]

7.5%

7.2%[6.5%]

(FY)

ROE

3

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

Consolidated Performance and Key Performance Indicators during the Medium-Term Management Plan Period

EBITDA(Times)15

7.6

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

Operating income

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

9

Estimates adjusted from the Medium-Term
Management Plan: fiscal 2016 forecast*1 The department store business (The Hanshin Department Store, Ltd. (currently Hankyu Hanshin Department Stores, Inc.) and its four subsidiaries (“Hanshin Department Store
Group”)) was treated as a consolidated subsidiary up to the first half of fiscal 2008.
*2 Figures in < > exclude those of the department store business (the former Hanshin Department Store Group)*3 Calculations based on EBITDA. As some time has passed since the management integration between the former Hankyu Holdings Group and Hanshin Electric Railway Group,
the integration boost effect is factored in only up to fiscal 2013.
*4 Figures in [ ] are those announced in May 2012 for the previous plan.

Interview with the President

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

[Until 31st March 2013]

Six core businesses managed by four core companies

Hankyu Hanshin Holdings
UrbanTransportation

Real EstateEntertainment
andCommunications

Retailing

Hankyu Corporation

Travel andInternational
Transportation
Hankyu Hanshin
Express Holdings

Hanshin Electric Railway

Hotels

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

Six core businesses managed by five core companies

Hankyu Hanshin Holdings
UrbanTransportation

Real Estate

Hankyu Corporation
Hanshin Electric Railway

Entertainment
andCommunications

TravelHankyu Travel
International

International
Transportation
Hankyu Hanshin
Express

Hotels

Hankyu Hanshin
HotelsThe Group’s direction and medium- tolong-term management strategies
In light of forecasts that Japan will enter a period of population decline, we are working to maintainfuture growth by formulating management strategies for the next stage that factor in the following
10 to 20 years.
As mentioned previously, the current Medium-Term Management
Plan (until fiscal 2016) has established a vision for the Group
that we are steadily progressing toward in an effort to achieve
the management goal of improving interesting-bearing debt/
EBITDA ratio at around seven times by fiscal 2016. Fiscal 2014
has therefore been positioned as a year for making a vigorous
push to realise this management goal and marks the beginningof an investigation into the formulation of a new medium-term
management plan set to be implemented in fiscal 2017.
To date, a pillar of the Group’s management strategy has
been: “build good rail lines, build good communities.” Since ourfoundation, we have been operating real estate and leisureoriented businesses along our railway lines. Having received highratings for increases in value along our railway lines as a resultof these synergies, the population living along these lines is
steadily growing. Accordingly, the Group is working to maintaincontinuous growth by first improving value along its railway
line—the Group’s most important operating fundamental—and
then by enhancing the attractiveness of the Umeda area, a vital
initiative for this growth-driving area that I will discuss later.
In light of Japan’s lower birth-rate and aging population,
however, we are fully aware that the number of people living
along our rail lines is likely to decrease and the Kansai economy
is expected to contract over the medium- to long-term. Given
these severe operating forecasts, we will work to maintain steady
growth well into the future by increasing value along our railways as well as expanding businesses in areas beyond thoseserved by our lines. For example, one of the options available
to us is expanding businesses in the Tokyo metropolitan area, alarge market, as well as Asia and other overseas regions that are
growing at a significant rate. Based on this perspective, we will
fully examine new management directions for the next 10 to 20
years. A summary of this investigation will form the basis of thenext medium-term management plan and, in turn, our policy forcontinuous growth in the years ahead.

Medium-Term Management Plan

The Group’s Medium-Term Vision
Improve cash flow generation
through earnings from major projects such as Hankyu Nishinomiya
Gardens, Hanshin Namba Line,the Hanshin Koshien Stadium
refurbishment and Umeda Hankyu
Building (Office Tower)

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

Leveraging cash flow generation through largescale projects, reduce total interest-bearing debt
and steadily improve our financial position so that
total capital investment is roughly equivalent todepreciation and amortisation costs, excluding
special factors, even while maintaining a certain
level of strategic capital outlays(¥ billion)(¥ billion)
1,900
1,900

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

1,800
1,800

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

9.49.4
times
times

1,700
1,700

times
times
1,600
1,600 8.38.3
1,500
1,500

1,400
1,400

1,300
1,300

9.69.6times
times

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

9.89.8times
times
8.98.9times
times

8.88.8times
times

7.87.8
times
times
(8.5
(8.5
times)
times)
7.77.7
times
times

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

146.5
146.5

145.2
145.2

135.3
135.3

133.2
133.2

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

1,271.1
1,271.1

1,200
1,200

1,275.6
1,275.6

145.1
145.1
(137.0)(137.0)1,282.6
1,282.6

1,209.4
1,209.4

127.1
127.1

133.5
133.5

6.86.8
times
times
(7.0
(7.0
times)
times)

160 160

150 150130 130

120 120

1,183.6
1,183.6

1,126.6
1,126.6(1,160.0)(1,160.0)

1,100.0
1,100.0

1,000
1,000

900 900

170 170

140 140

142.0
142.0

1,251.7
1,251.7

1,100
1,100

143.0
143.0
(142.0)(142.0)(¥ billion)(¥ billion)
180 180

980.0
980.0
(1,000.0)(1,000.0)

110 110100 100

Investment
Investment
in indevelopments
developments
forfor
growth
growthPayback
Payback
from
from
major
major
projects
projects

Reconciling
Reconciling
growth
growthandandfinancialfinancialsoundnesssoundness
90 90

800 800
FY2007
FY2007

FY2008FY2008FY 2
FY
0 0290 0 9

FY 2
FY
0 1200 1 0

FY 2FY
0 1210 1 1

FY 2
FY
0 1220 1 2

FY 2
FY
0 1230*11 3 *1

FY 2
FY
0 1240 1 4(Estimate)(Estimate)

FY2
F0
Y1260*11 6 *1
(Plan)(Plan)

2007/3
2007/3

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

2 0 1200/130 / 3

2 0 1210/131 / 3

2 0 1220/132 / 3

2 0 1230/133 / 3

2 0 1240/134 / 3

2 0 1260/136 / 3

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

Hanshin Namba Line (opening of new extension) (October 2003 – March 2009)
Renovation of Hanshin Koshien Stadium*2 (October 2007 – March 2010)
September 2009: Opening of
Department Store Building (Phase I)

April 2010: Completion of Office Tower*2 Renovation work conducted during three off-seasons.

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

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

Shin-Osaka Hankyu Building Development (May 2010 – July 2012)* 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).

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

Key Points of the Current Plan’s Estmates

Operating income

Improve our financial position

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

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

Fiscal 20132014

2016 Operating Income

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

Capital Investment and Depreciation and Amortisation(¥ billion)

Capital investment

FY2008-2010
Results

FY2011-2013
Results

FY2014-2016
Plan

Annual average

380.0
127.0

183.0
61.0

196.0
65.0

Depreciation andamortisation

FY2008-2010
Results

FY2011-2013
Results

FY2014-2016
Plan

167.0
55.7

171.0
57.0

166.0
55.3

Three-year total

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

Outstanding Balance of Interest-Bearing Debt (Until Fiscal 2016)

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

87.9
-3.9

Impact of intensifying competition on existing rental facilities

84.0
+1.0

85.0

(¥ billion)
1,400

1,356.0

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

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

Fiscal 2014 (Estimate)

Fiscal 2016 (Plan)[Major factors for changes in operating income]+¥1.0 billionC onsolidate and improve earnings capability by strengthening real estate leasing
management models and promoting cost efficiency

1,300

1,200

Expand the cable television business and information technology services

2016 (FY)(Plan)F all in rental income (reduced leasable area) accompanying the commencementof the Umeda 1-1 Project

1,209.4

••
•

1,000

1,251.7

Repurchase of liquidated properties
Hankyu Grand Bldg.

900

889.6

•

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

Steady contraction ofoperating cash flows

1,183.6

Dai-ichi Hotel Tokyo

1,126.6

New consolidated subsidiary

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

Increase in depreciation and amortisation costs in the railway businessD ecrease in earnings in the condominium subdivision business (although highincome levels are forecast for fiscal 2014, profitability is expected to decline infiscal 2016 due largely to a rise in the consumption tax rate)

1,271.1 1,275.6 1,282.6
Takeoverbid financing+250.01,100

Boost the occupancy rate of office buildings including Umeda Hankyu Building

2 013
2014
(Result) (Estimate)[FY2007 takeover bid enacted — compared with FY2007 results] -¥146.6 billion
Asset sales, contractions in cash and deposits, conversion of convertible bonds,
increase in EBITDA, etc.

Kobe Rapid Transit Railway

1,100.0

Repurchase of liquidated properties•••

Kita Hankyu Bldg.

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

980.0

Repurchase of liquidated properties

Hotel new Hankyu
Shin Hankyu Bldg.

New consolidated subsidiary

800(During the enactment of the takeover bid)

2006
(Results)

2007(Est.)

Hokushin Kyuko Railway

2007(Results)

2008(Results)

2009(Results)

2010(Results)

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

2011(Results)

2012(Results)

2013(Results)

2 0 14(Est.)

2 0 1 6 (FY)(Plan)

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

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

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

Snapshot
Performancein FY2013

Revenues from Operations¥193.6 billion (+0.5%)

Operating Income¥34.7 billion (+7.3%)

Key Facts and Business Environment

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

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

Priority Issues
1 	Provide high-value customer services (increase value along Group railway lines)	  Improve the appeal of our transportation services and products
  Expand our networks and catchment areas	  Offer convenience and comfort through services at stations and stores as well as improve customer communication
	

Figure 1: Population by Age Group, along Hankyu and Hanshin Lines (Population Census of Japan)(Million)652 	Ensure low-cost operations (pool and improve technology and know-how)

4

3 	Provide safe, high-quality transportation services that fully justify public trust3	 With ongoing major projects and grade separation (track elevation) works underway, as well as barrier removal at stations,this segment is committed to providing safe transportation services

25,315,694

5,406,883

423,032
3,652,948

1

5,426,516

486,155
3,802,239

1,230,823

5,229,907

564,789
3,924,390

1,113,080

654,455
3,805,897

910,891

758,909

0
1980

1985

1990

5,371,402

1995

5,498,123■ Old■ Working age■ Young

5,557,782

829,343

1,014,126

1,200,690

3,807,524

3,715,180

3,636,224

718,503

720,424
2000

2005

720,868
2010 (CY)

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

* Tallies do not add up to the total
at the top for each year as age
group is not known in manycases. Unknowns account for thedifference.
* A reas served by Hankyu andHanshin lines are as defined in
Figure 2.

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

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

Great Hanshin (Kobe) Earthquake

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

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

Urban Transportation

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

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

Upper right: Artist’s impression of “Gate”
Lower left: Artist’s impression of “Stage”

Performance for the Fiscal 2013

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

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

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

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

HankyuHanshin

FY2013

FY2012

Change%FY2013

FY2012

Change%Other tickets

60,74960,268481

0.8%

308,716

306,349

2,366

0.8%

Commuter pass

30,391

29,922469

1.6%

306,607302,282

4,324

1.4%

Total

91,141

90,191950

1.1%

615,324

608,632

6,691

1.1%

Other tickets

19,66919,422247

1.3%

110,385

109,284

1,100

1.0%

Commuter pass

10,74010,623

117

1.1%

110,748

109,275

1,472

1.3%

Total

30,41030,045364

1.2%

221,133

218,560

2,573

1.2%

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

The western wickets of Hanshin Sannomiya Station

Passenger volumes (thousands)*

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

Snapshot
Performancein FY2013

Revenues from Operations

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

Key Facts and Business Environment

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

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

Priority Issues

Figure 1: Average Vacancy Rates at Office Buildings (Osaka and Tokyo business areas)1 	Enhance the appeal of and revitalise Umeda and other areas served by our lines(%) S teadily promote the Umeda 1-1 Project (Dai Hanshin Building and Shin Hankyu Building
rebuilding projects) F ormulate and advance new development projects and systematically implement facility
reconstruction along rail lines to enhance the value of Hankyu and Hanshin lines
2 U
 ndertake measures to strengthen organisations and

14
12
10

6

 Improve the profitability of the Umeda Hankyu Building
and GRAND FRONT OSAKA

4 Consolidate and improve profitability by strengthening
management models while optimising costs

0
2006.
04

vision business environment Business promotion and sales focusing on the impact ofraising consumption tax rates D evelop communities of detached single-family
town houses and steadily market residential land-lots(Yamatedai, Nakajima and Saito) Maintain supply network and aggressively obtain business opportunities in the Tokyo area while increasing
recognition of Geo brand condominiums and Hapia
single family housing
4 	Further expand the Group’s Real Estate Business

2007.
04

2008.
04

2009.
04

2010.
04

2011.
04

2012.
04

2013.
04

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

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

25,000

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

21,00019,000through the stable operation of real estate funding and REIT businesses

17,000 Pursue external growth of the Real Estate Businessthrough linkage with Hankyu REIT

13,000 Expand fee-based revenues that include asset and property management

2012.09 6.07%

2

3 	Agile responses attuned to changes in the subdi- Planning and development of condominiums tailored tocustomer needs

2013.03 11.50%

2007.10 2.55%

8expand operations in the real estate leasing business2010.10 11.94%

Osaka business areas (all)UmedaTokyo business areas (all)2008.04 ¥15,965

15,00011,000
9,000
2006.
04

2007.
04

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

2008.
04

2009.
04

2010.
04

2011.
04

2012.
04

2013.
04

Real Estate

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

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

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

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

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

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

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

80,00088,516 85,429
84,14874,463

83,18361,02160,00040,00020,000Kansai area
Tokyo area

43,733 44,535 45,602
39,08744,49931,857 33,064 30,219
36,376
21,716 23,266
31,25830,146
22,744 19,784 20,219

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (CY)
(Est.)

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

614

50
40
30

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

545

550

545

555

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

46.44

650
47.75

642

664

700

650

645
600

470

476

45.35
471

34.78

35.13

34.11

47.16
488

45.78
499

34.52

34.90

45.40
491

500

34.38 400
300

20

200

10

100

GRAND FRONT OSAKA
0
Umeda Hankyu Building

0

2002

2003

2004

2005

2006

2007

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

25,0180

Condominium Prices (Tokyo and Kansai areas)60

50,000

2008

2009

2010

2011

2012

(CY)

Real Estate

Major Rental Properties

Performance for the Fiscal 2013

Property Name

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

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

Use

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

2012

213,147

Dai Hanshin Bldg.

Kita-ku, Osaka

1963

98,578

Umeda Hanshin Daiichi Bldg. (HERBIS OSAKA)

Kita-ku, Osaka

1997

81,634

Umeda Hanshin Daini Bldg. (HERBIS ENT)

Kita-ku, Osaka2004

54,787

Hankyu Chayamachi Bldg. (Applause Tower)

Kita-ku, Osaka

1992

52,074

Hankyu Sanban Gai Shopping Centre

Kita-ku, Osaka

1969

40,982

Commercial facilities

Hankyu Grand Bldg.

Kita-ku, Osaka

1977

36,023

Offices, Commercial facilities

Shin Hankyu Bldg.

Kita-ku, Osaka

1962

32,962

Offices, Commercial facilities

Hankyu Terminal Bldg.

Kita-ku, Osaka1972

26,615

Offices, Commercial facilities

Navio Hankyu (HEP NAVIO)

Kita-ku, Osaka1980

15,711

Commercial facilities

Kita Hankyu Bldg.

Kita-ku, Osaka1971

13,356

Offices, Commercial facilities

Hankyu Five Bldg. (HEP FIVE)

Kita-ku, Osaka1998

12,613

Commercial facilities

Umeda Centre Bldg.

Kita-ku, Osaka1987

10,191

Offices, Commercial facilities

NU chayamachi PLUS

Kita-ku, Osaka

2011

3,021

Commercial facilities

1992

31,630Commercial facilities, Offices

1987

21,764

Offices

2012

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

Noda Hanshin Bldg. (WISTE)

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

Chuo-ku, Kobe

1933

13,672

Department stores (SOGO)

Motomachi Hanshin Bldg.

Chuo-ku, Kobe

1987

7,865

Outside horse-racing ticket booth

Kobe Hankyu Bldg.

Chuo-ku, Kobe

1936

7,658

Commercial facilities

Hankyu Nishinomiya Gardens

Nishino miya,
Hyogo

2008

108,215

Department stores (Hankyu Department
Store), Commercial facilities

EBISTA Nishinomiya(Commercial facility under elevated railway tracks)

Nishinomiya,
Hyogo

2003

10,359Commercial facilities

Itami Hankyu Station Bldg. (Itami Reita)

Itami, Hyogo

1998

11,800Commercial facilities

1974

38,237

Department stores (Takashimaya)

2007

2,979

Commercial facilities

Hankyu Kawaramachi Bldg.
Kotocross Hankyu Kawaramachi

Geo Tower Takatsuki Muse Front

Leasable Area*(m2)

Kita-ku, Osaka

Shin-Osaka Hankyu Bldg.

Shin-Osaka Hankyu Building

Completed

Umeda Hankyu Bldg.

Fukushima Hanshin Bldg.

HAPIA Garden Itayado/Kobe Yamanote

Location

Shimogyo-ku,
Kyoto
Shimogyo-ku,
Kyoto

Katsura Higashi Hankyu Bldg.
(MEW Hankyu Katsura)

Nishigyo-ku,
Kyoto

1993

2,915

Commercial facilities

TX Akihabara Hankyu Bldg. (AKIBA TOLIM)

Chiyoda-ku,
Tokyo

2008

10,297

Hotel (REMM Akihabara), Commercial
facilities* Leasable area does not include areas for public use.

Entertainment and Communications
Major
Businesses◻ Sports business:

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

Takarazuka Revue and related businesses, operation of Umeda Arts Theatre and promotion of stage productions

Key Facts and Business Environment

Two attractions enhancing Group brand value◻ Communication and media businesses:

Cable television business, information technology services, etc.

◻ Leisure businesses:

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

Snapshot
Performancein FY2013

Revenues from Operations¥108.6 billion (+6.2%)

Operating Income¥12.6 billion (+24.1%)

According to the Ministry of Internal Affairs and Communications
Statistics Bureau’s Family Income and Expenditure Survey, recreational service expenditure of total household in 2012 (real terms)
rose 2.7% year on year, the first increase in three years.
Despite being seen as recession proof given its relatively
weak correlation with economic trends, it is more apparent thanever that the live entertainment industry has become polarised
due to a greater interest in only a few attractions and fierce competition in other areas.
Despite these headwinds, our unique Hanshin Tigers and theHanshin Koshien Stadium, and Takarazuka Revue brands retain
their popularity and passionate fan bases all over Japan, and thegames and shows continue to draw crowds. These two powerfulbrands are assets that none of our rivals can match and form a
proprietary core strength of the Group, contributing significantly
to Group brand value.
We will work to maximise the Group’s brand value by pursuing high-quality performances that deliver inspiration anddreams to our customers.

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

Hanshin Tigers and the Hanshin Koshien Stadium
Total Attendances at Hanshin Tigers Home GamesOf the professional baseball leagues in Japan, the Hanshin Tigers
has both one of the longest histories and a bedrock of fans not(Thousand)
4,000
only in their home area, Kansai, but also across Japan. Attendances
at home games in the Pennant Race have been the largest in
3,007
3,006
2,977
3,000
2,898
2,728
Japan for seven consecutive years until 2011. The Hanshin Tigers
were the only one of the 12 professional baseball teams in Japan
2,000
to register total attendances of over 3 million people in the 20052007, 2009 and 2010 seasons.
1,000
Opened in 1924, the Hanshin Koshien Stadium is a sports(Central League rankings)
venue of considerable historical value. Known as the home
2nd
4th
2nd
4th
5th
0
ground of the Hanshin Tigers and also the home of the spring and
2008
2009
2010
2011
2012 (CY)summer high school baseball championships, it now also hosts
major events such as the Koshien Bowl (annual American college football final) and open-air concerts.
In the spring of 2010 we completed a renovation of the Stadium, which had been undertaken in three phases starting
in autumn 2007. The works included seismic reinforcement, replacement of the “silver umbrella” roof cover and floodlighting,installation of new seating and refurbishment of food and drink outlets, resulting in a more safe and comfortable spectator spacethat generates improved earnings.

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

Entertainment and Communications

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

Major
Businesses

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

◻ International Transportation Business:

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

Snapshot
Performancein FY2013

Revenues from Operations

Operating Income¥70.8 billion (+4.8%) ¥4.4 billion (+40.0%)©Takarazuka Revue Company

Priority Issues

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

TravelBusiness

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

Performance for the Fiscal 2013

Revenues and earnings increased mainly due to steady performance in the
sports and stage businesses as well as the contribution from consolidation of
Himeji Cable Television Co., Ltd.
In the sports business, decreases in Hanshin Tigers regular season
home games (from 74 in fiscal 2012 to 70 in fiscal 2013), lower
attendance figures and other factors caused revenues fromoperations to fall 4.6%, or ¥1,076 million, year on year to ¥22,374
million. This result occurred, despite the Tigers’ fan base and ourmeasures to make the most of the Hanshin Koshien Stadiumby leveraging food, drink and merchandising outlets and fanoriented services through special event programmes as well as
the favourable ratings we have received for our newly developed
food and drink menu.
In the stage business, the stage revue business had notablesuccesses with productions at the Takarazuka Grand Theatre
and Tokyo Takarazuka Theatre of Versailles no Bara — Oscar to
Andre (La Rose de Versailles — Oscar and Andre), performed by
the Tsuki (Moon) troupe, and the Yuki (Snow) troupe’s farewell
performance of JIN and GOLD SPARK!. These productions commemorate the Takarazuka Revue’s centennial year, which extends
throughout 2013 and 2014. In the theatre business, we put ona variety of highly topical productions that received favourable reviews, including Elizabeth Special Gala Concert at Osaka’s
Umeda Arts Theatre and Tokyo’s Tokyu Theatre Orb, and features
the previous cast of the Takarazuka Revue’s Elizabeth. As a result,◻ Travel Business:revenues from operations in the stage business increased 9.5%,
or ¥2,442 million, year on year to ¥28,235 million.
The communication and media and other businesses in thissegment began offering as part of their information technology services high-speed public wireless LAN services at retailfacilities located along rail lines, including Hankyu Sanban Gai
and HEP FIVE, as well as all stations at Hanshin Electric Railway,
Nosé Electric Railway and Kita-Osaka Kyuko Railway. This service has also been gradually expanded to stations operated
by the Hankyu Corporation. In the cable television business,
subscriber numbers steadily grew mainly thanks to expanding
mobile phone set menus and introducing discount plans forlong-term contracts. In addition, Himeji Cable Television Co., Ltd.
and YMIRLINK Inc. were added to the scope of consolidation.
Consequently, revenues from operations in these businesses
increased 8.7%, or ¥5,068 million, year on year to ¥63,407 million.
As a result, revenues from operations in the Entertainment
and Communications Business overall improved 6.2%, or ¥6,294
million, year on year to ¥108,608 million, and operating income
increased 24.1%, or ¥2,442 million, to ¥12,584 million.

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

International
Transportation
Business

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

Travel and International Transportationof globalisation and emerging markets. At the same time, we areentering a new phase in which we must answer the key questions:
how do we prevail over global competition and what can be done
to maintain continuous growth while contributing to society?
Under these circumstances, we will build a system for

Key Facts and Business Environment

Travel

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

Total Travel Billings (FY2013)
Rank

Company name¥ billion

Rank

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

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

Overseas Travel Billings (FY2013)
Company name

Rank

Company name¥ billion

1JTB

1,446.7

1

JTB

507.4

1

JTB

907.4

2

Hankyu Travel International

387.5

2

HIS

348.6

2

Rakuten Travel

309.3

3

Nippon Travel Agency

387.0

3

Hankyu Travel International

257.6

3

Nippon Travel Agency

237.2

4

HIS

378.4

4

JTB World Vacations

247.8

4

Kinki Nippon Tourist

201.1

5

Kinki Nippon Tourist

327.8

5

Nippon Travel Agency

138.6

5

ANA Sales

179.4

6

Rakuten Travel

327.5

6

Kinki Nippon Tourist

117.3

6

Hankyu Travel International

129.5

7

JTB World Vacations

247.8

7

JALPAK68.7

7Club Tourism International

100.5

8

ANA Sales

203.5

8

Club Tourism International

52.4

8

JALPAK

100.4

9

JALPAK

169.0

9

NIPPON EXPRESS TRAVEL

49.1

9

JR TOKAI TOURS

81.5

10

Club Tourism International

153.0

10

Travel Plaza International

45.3

10

Top Tour78.3

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

International Transportation

Aim to be an innovative logistics provider by consistently offering original value
worldwide
Even compared with other Japanese freight forwarding companies,
which are strong players in the global distribution sector, the Hankyu
Hanshin Group’s international transportation business has led rivals
in marine transportation and logistics to create a framework that
optimises our customers’ supply chain management. We are a total
provider of logistics management systems, capable of handlingNORTH
AMERICACHICAGOATLANTACINCINNATIDALLASDETROIT
HOUSTONLOS ANGELES
McALLEN
MEXICO CITY
NASHVILLENEW YORKSAN DIEGOSAN FRANCISCO
SAO PAULOSEATTLETORONTOEUROPE &MIDDLE EAST

Domestic Travel Billings (FY2013)¥ billion

consistently providing total solutions. To this end, we are positioning
fiscal 2014 as the first year of our innovation initiatives, promoting
global management, optimising our business portfolios, strengthening our business foundation and meeting the diverse needs ofcustomers.

multiple transportation modes from bases all over the world. By
using advanced information technologies, we have built up an
infrastructure capable of meeting the increasingly sophisticatedlogistics needs of our customers.
We are currently confronted by strong demands to rapidly adapt
to changing and diversifying business conditions, including the rise

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Performance for the Fiscal 2013

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

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

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

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

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

Snapshot
Performancein FY2013

Revenues from Operations¥64.7 billion (+0.9%)

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

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

Priority Issues
1 	Improve profitability of established hotels
	  Improve appropriateness of management resource allotment and established growth strategies	  Invest appropriately in product value improvement   Improve sales and productivity
2 	Expand chain by opening new directly managed hotels	  Further develop the REMM brand	  Increase profit margins by focusing more on hotels specialising in lodging services
3 	Expand businesses operated under franchise/management contracts	 Grow earnings at established hotels run under franchise, with chain headquarters providing operational services  Run more hotels through franchises, leveraging chain operational know-how and brand image
	)Conditions in the hotel market and our response
According to estimates by Japan Productivity Center*, Japan’s
hotel market continued to expand from 2003 through 2007
(based on sales). However, in 2009 and 2010, room demand
slumped and the scale of the hotel market fell back to ¥976
billion, 10% below its peak in 2007. This was due to a decline
in numbers of business-people visiting Japan after the global
economic crisis following the collapse of Lehman Brothers in
the autumn of 2008 and to weak leisure spending owing to the
H1N1 flu scare in 2009. In 2011, the size of the market contracted
further to ¥949 billion due to sluggish demand in the aftermathof the Great East Japan Earthquake and subsequent nuclear
accident.
To respond to this challenging environment, we undertook renovation focusing on Hotel Hankyu International andKichijoji Dai-Ichi Hotel to meet customer needs. In addition, we

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

Size of the Hotel Market in Japan(¥billion)

1,200
1,000

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

976

976

949

2009

2010

2011 (CY)

800
600
400
200
0
2005

2006

2007

2008

Performance for the Fiscal 2013

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

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

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

Key Facts and Business Environment* S eijo Ishii is operated under a franchise
agreement with Seijo Ishii Co., Ltd.

Snapshot
Performancein FY2013

Revenues from Operations¥53.3 billion (-1.1%)

Operating Income¥1.4 billion (+4.1%)

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

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

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

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

Performance for the Fiscal 2013

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

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