FY2010
Financial Results Presentation

May 20, 2010
Keihan Electric Railway Co., Ltd.
(Tokyo Stock Exchange 1st/Osaka Securities Exchange 1st
Securities Code: 9045

http://www.keihan.co.jp/)[Notes on forecasts]
Descriptions of business forecasts and future prospects are based on current information and certain
assumptions about factors that may affect future business. The actual results of operating
performance may differ from these forecasts.

Overview of FY2010
Financial Results

Consolidated Statements of Income(Millions of yen)

2009/3

2010/3Operating revenue

260,766

254,761

Operating income

14,687

13,766

Ordinary income

10,967

9,200

ChangeMain factors of changes(6,005) Transportation -2,821, Real estate +10,992, Retail -9,256,
Leisure and service -1,134, Others -3,984(-2.3%)(921) Transportation -624, Real estate +211, Retail +35,

2009/11
Estimate

253,100

Leisure and service -799, Others +146

11,800income -560
(1,767) Non-operating(Interest income -47, Dividends income -186)

7,100(-6.3%)(-16.1%)Non-operating expenses +284 (Interest expenses +117)
Extraordinary income -9,373(Contribution for construction -9,029)
Extraordinary loss -8,108(Loss on reduction of fixed assets -7,493)(2,903)4,500

Net income

7,401

4,498

ROA

1.3%

0.8%

(0.5) ROA: Net income to total assets

ROE

5.7%

3.5%

(2.2) ROE: Net income to shareholders’ equity––

EBITDA

31,87031,186(683) EBITDA: Operating income + depreciation(-2.1%)

29,000Depreciation

17,182

17,420238

17,200Capital expenditures

39,41943,853(-39.2%)

estate +5,116, Leisure and service +4,281,
4,434 RealTransportation -5,130[Changes in scope of consolidation and application of the equity method (year-on-year)]
Consolidated subsidiaries: 41 companies (-4 companies): Keihan Fukui International Country Co., Ltd. (transfer of shares),
Soil Engineering Co., Ltd. (liquidation),
Keihan Building Co., Ltd., Keihan Bus Systems Co., Ltd.
(merged into Keihan Electric Railway Co., Ltd.)
Equity method affiliates: 2 companies (No changes)

237,800Consolidated Balance Sheets(Millions of yen)

2009/3Current assets
Fixed assets
Total assets
Current liabilities

2010/3138,034

Change131,166

Main factors of changes

and accounts receivable(6,868) Notes
Land and buildings for sale
Property, plant and equipment(newly-purchased buildings, etc.)
Intangible fixed assets
Investments and other assets+23,834

Current portion of bonds-10,883-4,000+5,238434,064

458,463

24,399572,098

589,629

17,530178,020

166,510(11,509) Short-term bonds
Short-term loans
Bonds

Long-term liabilities

262,749

290,066

27,317 Long-term loans
Long-term accounts payable

Total liabilities

440,769

456,577

15,807

Net assets

131,329

133,052

earnings
1,723 Retained*Equity capital ratio

Liabilities and net assets

572,098

589,629

17,530Interest-bearing debt at end of
fiscal period
Interest-bearing debt/
EBITDA multiple (Times)

292,808

310,289

17,481

9.2

9.9

0.7

Loans payable
Bonds
Short-term bonds
Long-term accounts payable*Interest-bearing debt: Loans + bonds + accounts payable for Japan Railway Construction, Transport and Technology Agency (JRTT)

3-3,595-2,318+967-403+19,729+9,853-3,249+1,602
22.2% (-0.4 pt)+15,092+8,845-4,000-2,456

Consolidated Statements of Cash Flows(Millions of yen)

2009/3Operating cash flows
Investing cash flows

24,167(31,926)

2010/3

Change20,525(34,660)(3,642)

Income before income taxes
Changes in notes and accounts receivable
Changes in inventories-3,032-5,086+2,313(2,734)

Proceeds from sales of fixed assets
Proceeds from contribution for construction
Purchase of fixed assets-6,836+1,747+1,336

Issuance and redemption of bonds
Net decrease in short-term bonds
Decrease in loans payable+9,163-8,000-4,006

Financing cash flows

17,342

14,113(3,229)Net increase (decrease) in cash
and cash equivalents

9,584

(22)

(9,606)

Cash and cash equivalents
at end of fiscal period

29,01828,996(22)

4Main factors of changes

Segment Information(Millions of yen)

2009/3

2010/3

ChangeChange (%)

2009/11 Estimate

Operating revenue

260,766

254,761(6,005)(2.3)

253,100

Transportation

86,66583,843(2,821)(3.3)

84,100Real estate

33,41644,408

10,99232.9

41,000Retail

103,921

94,665(9,256)(8.9)

96,000

Leisure and service

37,67336,538(1,134)(3.0)

37,200

Others15,017

11,033(3,984)(26.5)

10,700Elimination(15,927)(15,727)

199–(15,900)

Operating income

14,687

13,766

(921)

(6.3)

11,800Transportation

6,751

6,127

(624)

(9.3)

5,300

Real estate

7,346

7,557

211

2.9

7,000

Retail

947

982

35

3.7

500

Leisure and service

(58)

(857)

(799)

–

(600)

Others

(178)

(31)

146

–

(400)

Elimination

(120)

(11)

108

–

0

5

Results of Transportation(Millions of yen)

2009/3

2010/3

ChangeChange (%)

2009/11
Estimate

Remarks

Operating revenue

86,66583,843(2,821)(3.3)

Railway operation
Bus
Taxi

56,448 (-1,075)
23,889 (-1,007)
4,244 (-745)

84,100Operating income

6,751

6,127

(624)

(9.3)

Railway operation
Bus
Taxi

6,250
-247
-19

5,300

Depreciation

11,126

10,990

(136)

(1.2)

Capital expenditures

15,286

10,156(5,130)(33.6)(-351)(-191)(+36)––

2009/3: New train model of 3000 Series• Due to the outbreak of H1N1 Flu:decreased revenue in Railway operation: more than approx. 400 million yen
decreased revenue in Bus: approx. 180 million yen• Due to the reduced expressway tolls:
decreased revenue in Bus: approx. 130 million yen• Railway usage charge of Nakanoshima line +1,300 million yen• Due to the lower unit cost of fuel:fuel charge in Bus and Taxi -510 million yen<< Operating results for transportation (Keihan Electric Railway) >>Number of passengers

Passenger transportation revenue(Thousands of people)(Millions of yen)

2009/3

2010/3

Commuter passes

145,709140,435(5,274)(3.6)

17,233

16,565

(667)

(3.9)

Non-commuter passes

144,183

143,316

(866)

(0.6)

34,16133,937

(223)

(0.7)

–

–

–

–

1

1

(0)

(2.9)

289,893283,751(6,141)(2.1)

51,39550,504

(891)

(1.7)

Carriage on parcels
Total

Change*Nakanoshima line (Passengers only using Nakanoshima line):

Change (%)

2009/3

2010/3

ChangeChange (%)

Number of passengers 8,607 thousand people (+4,585 thousand people)
Passenger transportation revenue 778 million yen (+403 million yen)6

Results of Real Estate(Millions of yen)

2009/3

2010/3

ChangeChange (%)

2009/11
Estimate

Remarks

Operating revenue

33,41644,408

10,99232.9 Real estate leasing service

Real estate sales

28,685 (+9,954)
16,623 (+875)

41,000Operating income

7,346

7,557

211

2.9 Real estate leasing service

Real estate sales

667 (-831)
6,849 (+1,006)

7,000

Depreciation

3,560

3,808

248

7.0

Capital expenditures

21,332

26,448

5,116–
2010/3: INTAGE Akihabara Building

24.0 2009/3: Keihan Dojima Building,
Keihan Otemachi Building• Valuation loss of land and buildings for sale: 1,186 million yen (+1,073 million yen) (Recorded as cost of sales)<< Main condominium buildings for sale >>
Name

Sales
amountNumber ofunits sold

Location

N4. TOWER

6,700

331

Nakanoshima 4-chome, Kita ward, Osaka city

REFFINEZ NISHINOMIYAKITAGUCHI

3,035

111

Nishinomiya city, Hyogo

Fine Residence Yokohama
Katakura Park Premier

2,766

72

Kanagawa ward, Yokohama city

Keihan East Rose Town Fine
Garden Square

1,199

81

Kyotanabe city and Yawata city, Kyoto<< New leasing properties >>NameAcquired date

Location

INTAGE Akihabara Building

September 2009

Chiyoda ward, Tokyo

Keihan Otemachi Building

March 2009

Chiyoda ward, Tokyo

Keihan Dojima Building

September 2008

Kita ward, Osaka city

7–

Results of Retail(Millions of yen)

2009/3Operating revenue

Operating income
Depreciation
Capital expenditures

103,9212010/3

Change94,665(9,256)

Remarks(8.9)

Department store
Store
Shopping mall management
Construction material sales
Department store
Store
Shopping mall management
Construction material sales

50,253 (-3,140)
29,646 (-561)
10,518(-3)
6,857 (-5,762)
61
291
631
-27

96,000

(-58)
(-46)
(+99)
(+41)

982

35

3.7

1,048

1,029

(18)

(1.8)

–

683

685

2

0.3

–

<< Sales of Department Store >>NameOpening date

Location

UNIQLO Nankai Namba Station
Store

October 16, 2009

Chuo ward, Osaka city

October 15, 2009500<< Sales of Store >>(Millions of yen)
Store

Sales
amountChangeMoriguchi Store

25,500(1,889)Chuo ward, Osaka city

Kuzuha Store

9,890

(297)

7,821

(310)

UNIQLO Namba Walk Store

August 28, 2009

Chuo ward, Osaka city

Kyobashi StoreUNIQLO Keihan Hirakata Store

July 24, 2009

Hirakata city, Osaka

Hirakata Store

6,440

(189)

An3 Gotenyama Store

July 13, 2009

Hirakata city, Osaka

Miscellaneous
revenue

599

(452)

SWEETS BOX JR Kyoto Station
Store

April 23, 2009

Shimogyo ward, Kyoto
city

Total

50,253(3,140)KiKi Kyobashi

November 28,
2008

Miyakojima ward, Osaka
city

October 9, 2008

Shimogyo ward, Kyoto
city

UNIQLO Kyoto Station HachijyoGuchi Store

2009/11
Estimate

947<< New Properties >>SWEETS BOX Nankai Namba
Station Store

Change (%)(Millions of yen)SalesamountChangeStore

13,111(725)

Convenience
store

5,840

(209)

Kiosk

1,070

(143)

Station business

8,654

482

Miscellaneous
revenue

970

34

Total

29,646(561)

Division* Station Business
UNIQLO retail stores

8

1,705 (+711)

Results of Leisure and Service(Millions of yen)

2009/3Operating revenue

2010/337,673Operating income

Change36,538(58)

Change (%)(1,134)

(857)

(3.0)

–

(799)

Depreciation

1,298

1,505

207

Capital expenditures

2,080

6,361

4,281

2009/11
Estimate

Remarks
Hotel
17,693 (+118)
Restaurant
7,663 (-215)
Sightseeing ship
2,583 (-270)
Automobile maintenance service 1,969 (-393)
Welfare for elderly and nursing care
1,362 (+211)

37,200

Hotel-477
Restaurant-154
Sightseeing ship
146
Automobile maintenance service 107
Welfare for elderly and nursing care
-178

(600)

(-377)(-194)(-6)(-48)(-214)

16.0–

Hotel Keihan Asakusa
205.8 2010/3: Rose
Life Takanohara–<< Room availability >>HotelKeihan2009/3

2010/3

ChangeKyobashi

86.2%

84.6%

(1.6)

Temmabashi

79.9%

72.6%

(7.3)

Kyoto

92.2%

86.6%

(5.6)

Universal City

66.1%

66.6%

0.5

77.1%

71.6%

(5.5)

Biwako Hotel

2009/3

2010/3

Change

48.8%

61.2%

12.4

Sapporo

–

76.7%

76.7

Opened on June 6, 2009

Asakusa

–

79.8%

79.8

Opened on November 21, 2009

83.3%

88.1%

4.8

Universal Tower
Hotel
KeihanKyoto Tower Hotel<< Welfare for elderly and nursing care >>NameOpening date

Rose Life Takanohara

November 1, 2009

Kizugawa city, Kyoto

Moriguchi Day Service CenterMay 1, 2009

Moriguchi city, Osaka

Location

9

Results of Others(Millions of yen)

2009/3Operating revenue

2010/315,017

Change11,033

Change (%)(3,984)

2009/11
Estimate

Remarks(26.5)

Utility work
Landscaping
Survey and design
Utility work
Landscaping
Survey and design

7,215 (-3,022)
2,475 (+214)
2,647(-573)
116
86
78(-185)(+53)(+53)

10,700Operating income

(178)

(31)

146

–

Depreciation

149

86

(62)

(42.0)–

Capital expenditures

76

217

141

185.3

–

10

(400)

Non-consolidated Statements of Income(Millions of yen)

2010/3

Change76,92673,400(3,525)

Railway operation

54,88653,909(976)

Subsidiary business

22,04019,491(2,548)(11.6)

20,070Real estate sales

7,826

4,111

(3,715)(47.5)

4,570

Real estateleasing service

11,925

13,133

1,208

10.1

13,130

Leisure

2,288

2,246

(42)

(1.8) Number of visitors in Hirakata Park

Operating income

12,241

11,922

(318)

(2.6)

10,760Railway operation

6,390

6,101

(288)

(4.5)

5,310

Subsidiary business

5,851

5,821

(30)

(0.5)

5,450

Real estate sales

738

(341)

(1,080)–(270)

Real estateleasing service

5,544

6,526

981

17.7

6,160

Leisure

(432)

(363)

68

–

(440)

Operating revenue

Ordinary income

Net income

9,562

5,089

6,857

5,176

(2,705)

Change (%)

2009/11
Estimate

2009/3Main factors of changes(4.6)
of passengers(1.8) Number
Passenger transportation revenue

Non-operating income(Dividend income(28.3) Non-operating
expenses(Provision for loss on guarantees
Extraordinary income(Contribution for construction
1.7 Extraordinaryloss(Reduction entry of land contribution for construction

86

11

74,200
-2.1%
-1.7%

-5.7%

54,130

2,370

-838
-474)
+1,547+1,289)6,980-9,120-8,858)-11,321-7,419)6,030

Business Results Forecast of FY2011

Forecast of Consolidated Business Results (1)(Millions of yen)

Operating revenue

FY2010 Results

FY2011 Forecast

254,761

252,200

Change(2,561)Main factors of changes

Change (%)

Real estate-4,835
1,809

Transportation
Real estate
Leisure and service

-580
-458
1,059

Non-operating income

-263
+371

Extraordinary income-935-2,154(1.0) Retail

Operating income

13,766

13,500

(266)

(1.9)

Ordinary income

9,200

8,300

(900)

(9.8) Non-operating expenses

Net income

4,498

4,900

401

8.9 Extraordinary loss

Capital expenditures

43,85336,100(7,753)

Depreciation

17,42017,700279

1.6

EBITDA

31,186

31,20013

0.0Interest-bearing debt

310,289

317,400

7,110

2.3

9.9

10.2

0.3

–

Interest-bearing debt /EBITDA multiple (Times)(17.7) [Breakdown of capital expenditures]Transportation
Real estate
RetailLeisure and service
Corporate, etc.

16,700 (+3,791)
13,900 (-12,652)
4,500 (+3,646)
500 (-3,361)
500(+823)<< Main capital expenditures for FY2011 >>(Transportation)
Investment on our railway
10,733(Real estate)
Investment on our real estate
13,900(Retail)
Keihan Department Suminodo Store
1,629* Since new accounting standards for disclosing segment information will be applied from FY2011, both the results for FY2010 and the forecast for FY2011 have been revised
according to the new segment classification.

13

Forecast of Consolidated Business Results (2)<< By segment >>(Millions of yen)

FY2010 Results

FY2011 Forecast

Operating revenue

254,761

252,200(2,561)

Transportation

96,54396,500(43)(0.0) Station service management

Real estate

53,33548,500(4,835)(9.1) Real estate leasing service

Retail93,29095,100

1,809

Leisure and service

22,485

23,100

Others1,249

Elimination

ChangeMain factors of changes

Change (%)(1.0)

Railway operation

-549
+261

Real estate sales-4,998+127

1.9 Store

Department store+1,403+134614

2.7 Hotel

+698

1,200

(49)

(3.9)

(12,143)(12,200)(56)–

Operating income

13,766

13,500

(266)

(1.9)

Transportation

5,980

5,400

(580)

(9.7) Station service management

Real estate

7,458

7,000

(458)

(6.1) Real estate leasing service

Retail

1,057

800

(257)

Leisure and service

(359)

700

Others(359)

Elimination(11)

Railway operation

-797
+165

Real estate sales

-335
+11

(24.3) Store

Department store

+132
-195

1,059

– Hotel

+871

(400)

(40)

–

0

11

–

14

Forecast of Non-Consolidated Business Results(Millions of yen)

Main factors of changes

Change (%)

FY2010 Results

FY2011 Forecast

73,40074,300899

1.2

Railway operation

53,90953,240(669)(1.2) Passenger transportation revenue

Subsidiary business

19,49121,0601,568

8.0Real estate sales

4,111

5,100

988

24.1

Real estate leasing service

13,133

13,600466

3.6

Leisure

2,246

2,360

113

5.0

Operating income

11,922

10,980

(942)

(7.9)

Railway operation

6,101

5,210

(891)

(14.6)

Subsidiary business

5,821

5,770

(51)

(0.9)

Real estate sales

(341)

(470)

(128)

–

Real estate leasing service

6,526

6,580

53

0.8

Leisure

(363)

(340)

23

–

Ordinary income

6,857

7,040

182

Net income

5,176

4,400

(776)

Operating revenue

ChangeNumber of passengers

-0.9%
-1.0%

Non-operating income-172-1,298Extraordinary income-1,449-839

2.7 Non-operating expenses(15.0) Extraordinary loss<< Forecast of operating results for transportation (Keihan Electric Railway) >>Number of passengers (Thousands of people)
FY2010 Results

FY2011 Forecast

Commuter passes

140,435

138,025

Non-commuter passes

143,316

Carriage on parcels
Total

ChangePassenger transportation revenue (Millions of yen)

Change (%)

FY2010 Results

FY2011 Forecast(2,410)(1.7)

16,565

16,174

(391)

(2.4)

143,237

(80)

(0.1)

33,937

33,843

(94)

(0.3)

–

–

–

–

1

1

(0)

(1.2)

283,751

281,262(2,490)(0.9)

50,50450,018

(486)

(1.0)

15

ChangeChange (%)

TOPICS

Towards the Next 100 Years with a“Progressive Spirit”

Towards the Next 100 Years~ Learn the Spirit of Business Creation and Starting Period¤ Addressing the efforts toward Environmental Conservation, Social Contribution, andCoexistence with Communities.
< Kyoto Area >[Efforts with local governments in our area]
Uzumasatenjingawa< Hirakata Area >< Osaka Area >In cooperation with Neyagawa
city, Neyagawa High School(the 100th anniversary of its
founding), Hirakata city, andothers.

Kyoto
Shiyakusho-maeSakamoto

Demachiyanagi

Keishin Line

Ishiyama
Sakamoto Line

Keihan Yamashina

Hirakata-koen< Fushimi Area >Uji Line

Katano Line

KisaichiIn cooperation with Seibo Gakuin
Elementary School, and others.
Uji[Kohri Hyakunen-Zakura (Kohri Centennial Cherry Blossoms)]
We have planted 100 cherry trees for our 100th railway-opening anniversary within
the Naritasan Osaka Betsuin site. We will work to realize the dream of our
founders to make this area famous as a cherry blossom viewing spot, and also
improve the attractiveness of the Keihan domain area.

17

Misasagi

Chushojima

KuzuhaHirakatashi

Neyagawashi

Kitahama

Shichijo

Keihan MainLine

Sembayashi

Yodoyabashi

Temmabashi

Naniwabashi

Kiyomizu-gojo

Hamaotsu
Sanjo Keihan

Sanjo
Gion-shijo

KyobashiOebashiWatanabebashi

Nakanoshima

In cooperation with
Asahi ward of Osaka
Nakanoshima Linecity, Asahi ward
Shopping Streets
Association, Sembayashi
shopping street, Josho
Gakuen, Osaka Instituteof Technology, andothers.

In cooperation with Higashiyama
ward of Kyoto city, Kyoto Joshi
Gakuen (the 100th anniversary of
its founding), and others.

Ishiyamadera

Current Challenges and Policies
Current state
Severe year-on-year losses in transportation revenue and retail and hotel sales are continuing, but in early2010 signs of business recovery were visible along with the Kansai economic recovery.
Transportation revenue (year-on-year)

Sales for retail business (year-on-year)

3.0%

10.0%
8.0%

2.0%

6.0%

1.0%

4.0%

0.0%

2.0%
0.0%

(1.0)%(2.0)%(2.0)%(4.0)%(3.0)%(6.0)%(4.0)%(8.0)%

Department Store(10.0)%Store
Convenience Store(5.0)%(12.0)%All line

Apr-09 May-09 Jun-09

Existing line(6.0)%
Apr-09

May-09Jun-09Jul-09Aug-09Sep-09Oct-09

Nov-09Dec-09Jan-10Feb-10Jul-09Aug-09 Sep-09

Oct-09 Nov-09 Dec-09

Jan-10Feb-10 Mar-10

Mar-10

Sales for Hotel Keihan (year-on-year)(Reference) Trade statistics in Osaka Customs (year-on-year)

20.0%

60.0%

10.0%
40.0%

0.0%
(10.0)%

20.0%(20.0)%
0.0%(30.0)%(40.0)%(20.0)%(50.0)%
Kyobashi(40.0)%

Kyoto(60.0)%

Export

Universal City

(70.0)%

Import(60.0)%
Apr-09 May-09

Jun-09Jul-09Aug-09Sep-09Oct-09 Nov-09 Dec-09

Jan-10Feb-10

Apr-09 May-09 Jun-09

Mar-10Jul-09Aug-09Sep-09Oct-09(Source: Trade statistics (Osaka Customs) )18

Nov-09 Dec-09

Jan-10Feb-10Mar-10Current Challenges and Policies
Our business is on track for recovery,
but the impact of the economic recession will continue.

To adequately correspond to our business changes,
we will focus on establishing a robust business base.
First, we will prioritize the system so as to better endure the severe businessenvironment (i.e. fortify our core business).

We will put our business back on the path of realizing the growth for
our vision as early as possible.
19Positioning of Our Business and Prioritized Measures in
FY2011
Positioning of Our Business in FY2011
Placing more emphasis on establishing a robust business base.
We will invest in future growth by paying attention to the recovery of earning
ability for existing businesses (operating cash flow) and changes in financial health.
Prioritized Measures in FY2011◆ Distinction and concentration of

Enforcementof BusinessBasebusiness and assets◆ Reorganization and integration for
management efficiency◆ Reinforcement of profitability◆ Promotion of efficiency measures◆Establishment of future revenue baseRealizationof Growth-- Efforts to acquire new real estate forleasing◆ Promotion of the area strategy(Nakanoshima, Kyoto, Kuzuha)

20

We are promoting our corebusinesses, especiallyrailways, department stores,
and hotels.

We will invest in future
growth by paying attention
to changes in financial
health.

Measures in FY2010 and FY2011

Enforcement of Business Base (Railway operation)
Security Measures◆ Establishing the overhead crossing near Yodo Station◆ Adequate operation of our security management system
Reinforcement of check functions and implementation of training
Adequate facility investment plan (Renewal, new construction, etc.)

Improvement of Profitability
and Efficiency

Service Improvement◆ Promoting short-term efficiency
Reducing labor and repair costs◆ Reviewing the cost structure from both mid- and◆ Implementation of IC card cooperative service

with JR WEST
JR WEST began sales of ICOCA passes for transfer
between JR WEST and Keihan Lines in May 2010.
Keihan Railways will start selling these passes by theend of 2011.

long-term viewpoints
To establish an efficient operation system, we are reviewing
the personnel arrangement and formulating zero-based
business improvement measures.

◆ Barrier-free implementation◆ Renewal of 8000 series express trains
Provision of barrier-free access, smoothboarding/deboarding, and superior comfort inside thetrains◆ Expanding the inner station business◆ Aggressive promotion of passenger invitation

measures• Sales of special tickets in cooperation with other companies• Promotion of park & ride and cycle & ride systems◆ Accepted and started the Kyoto-City Transportation

Bureau station businessAccepted seven station businesses in total: 3 in FY2011, 2 in
FY2012, and 2 in FY2013

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Measures in FY2010 and FY2011

Enforcement of Business Base (Department store)
Management Environment

57,000(Millions of yen)

56,21256,000

Steep decline in operating revenue

55,000• Operating revenue in FY2010: 10.6% decrease from FY2008• In the FY2010 account settlement, we posted on impairment
loss on Moriguchi Store assets.
Extraordinary losses: 740 million yen

366

54,000Operating revenue

450

Operating income

400
350

53,39353,000300
51,65752,00051,00050,253156

50,00083

48,00050

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0FY2008

Improvement of break-even point by reducing
operating expenses

200

100

47,000◆Response to declining operating revenue

250

150

49,000Business challenges and correspondence

500

FY2009FY2010FY2011(Forecast)* Suminodo Store (tentative name) is included for the calculationof FY2011 (Forecast).

• Large reduction of labor costs (reduction of bonuses, efficient personnel arrangement, etc.)• Absorption of labor costs through opening the Suminodo Store with existing personnel (Autumn 2010)• Improvement of gross profit margin of the directly-managed fresh food sales space (Loss reduction, review of purchasing method, etc.)◆Response to greatly expanding the sales space in urban department stores (Problem for 2011)

MD reconstruction taking advantage of the store nearest the location• Large-scale renewal of sales space
Moriguchi Store: Reconstructing the ladies fashion section, centered on a large cosmetics zone with 12 brands newly introduced⇒ Targeting ladies in their 30s and 40s in the Keihan domain area
Kyobashi Store: Six new brands to be targeted at female office workers ⇒ Strengthening fashion sensitivity and priceresponsiveness22

Measures in FY2010 and FY2011

Enforcement of Business Base (Hotel)
Changes in External Environment• Declining business and leisure demands due to the economic recession• Decreasing inbound traffic due to the global recession and yen appreciation• Falling room charge due to fierce competition⇒ Although there have been slight signs of recovery in room availability, the room charge
recovery is expected to take time.
Income and expenditure improvement measures◆ Fortification of sales activities• Fortification of attracting more visitors via the Web site
• Fortification of inbound sales, agent sales, and group lodging sales• Promotion of loyal customer membership measures
Private: Member’s club (Started member recruitment in June 2009)
Corporate: Special corporate membership (Started member recruitment in
September 2009)◆Cost reduction and improving business efficiency
Promotion of standardization and business efficiency improvement for the hotelmanagement system (Chain operation)
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Measures in FY2010 and FY2011

Enforcement of Business Base◆Distinction and concentration of business and assets• Dissolution: Soil Engineering Co., Ltd. (April 2009)• Transfer of shares: Keihan Fukui International Country Co., Ltd. (August 2009)• Transfer of Business: Daisen Lake Hotel (March 2010)◆Reorganization and integration for management efficiency• Merger by absorption of Keihan Building Co., Ltd. and Keihan Bus Systems
Co., Ltd. (October 2009)• Reorganization of three restaurant business companies (April 2010)
Merger by absorption of Keihan Ever Nice Co., Ltd. into Keihan Restaurant Co., Ltd.
Division by absorption of stores directly managed by Juicer Bar Corporation Co., Ltd. into
Keihan Restaurant Co., Ltd.
⇒ Juicer Bar Corporation Co., Ltd. has concentrated on the franchiser.

Considering
competitivenessand future
potential, we
will continue toaggressively
promote suchactivities.

◆Reinforcement of profitability• Expansion of existing station stores and opening new stores
Expansion of store space in the Tambabashi Station area
New stores opened: 3 UNIQLO stores and 3 SWEETS BOX stores (Results in FY2010: 3 stores for UNIQLO
and 2 stores for SWEETS BOX)• Cooperation with events and promotion of town-development in Nakanoshima area
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Realization of Growth
Real estate◆Acquisition of new lease properties
We plan to acquire new leasing properties in order toforge a management base for future growth andstability while closely examining such properties.

Keihan Dojima
Building◆Promotion of new condominium sales

INTAGE Akihabara
Building• Participation in building reconstruction for the Senri Momoyamadai 2nd housing complex
We will learn various skills through participation in the reconstruction project.
[Property summary]
Number of units for sale:Completion and delivery:798
in 2011/2012 (planned)• Condominium sales in Morinomiyachuo,
Chuo ward, Osaka city
[Property summary]
Number of units for sale:Completion and delivery:

to be determined
after 2012 (planned)

25Realization of Growth
Retail◆Expansion of commercial property management businessWe have accepted on trust the operation and property
management for “Hawks Town Mall” and will work on thisproject with an eye to renewal.
We will continue to acquire property management business for
10 domestic facilities of the same class.
[Summary of accepted facility]
Location:
2-2-1 Jigyohama, Chuo ward, Fukuoka city
Store area:
Approx. 45,000m2
Number of tenants: Approx. 100 stores
Opening date:
April 2000

[Acceptance summary]
Acceptance starting date: April 19, 2010
Business entruster:Hawks Town Corporation
Business content:
Facility management and operation,
tenant leasing, reporting, etc.

◆Keihan Department Suminodo Store (tentative name) is to be opened inAutumn 2010.
As a core tenant department store within a shopping center, we will aim
for it to become a community-based store with emphasis on supplying
daily needs in a friendly and festive atmosphere, while maintaining highquality standards.
=>We will develop a highly profitable model that can also be applied toother existing stores.
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