Hankyu Hanshin Holdings Annual Report 2007 Creating New Ways to Inspire and Satisfy
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Hankyu Hanshin Holdings Annual Report 2007 Creating New Ways to Inspire and Satisfy Group Management Philosophy Mission: What we are trying to achieve Serenity and well-being, inspiration and dreams — by delivering these to our customers, we will create satisfaction and make a positive contribution to society. Values: What is important to us ◎Customers Come First Everything we do is for the customer. That’s where it all starts. ◎Integrity Build trust by always acting with integrity. ◎Foresight & Creativity With our progressive spirit and flexible thinking, we can create a new sense of value. ◎Respect for People Each of our employees is an invaluable resource. Hankyu Hanshin Holdings Contents 2 Financial Highlights (consolidated) 3 To Our Stakeholders 4 Outline of the Management Integration 8 Hankyu Hanshin Holdings Group 2007 Medium-Term Management Plan 12 Interview with the President Management Integration Operating Results FY2007 and Targets Group Medium-Term Management Plan ・ Business Management Numerical Indicator for FY2013 ・ Growth Strategy of each business ・ Large-scale Development Projects Dividend Policy Earnings and Estimates for FY2008 18 New Group Card 19 Corporate Governance and Compliance 21 Environmental Preservation Activities 22 Overview of Core Businesses 24 Urban Transportation 28 Real Estate 36 Entertainment and Communications 38 Retailing 40 Travel and International Transportation 42 Hotels 44 Business Risks 45 Financial Section 73 Corporate Data 74 Group at a Glance 75 Investor Information 76 The Hankyu Hanshin Toho Group Forward-looking Statements The reader is advised that this report contains forward-looking statements regarding the future plans, strategies, and earnings performance of Hankyu Hanshin Holdings, Inc., which are not statements of historical fact but constitute estimates or projections based on facts known to the Company’s management as of the time of writing. Actual results may therefore differ substantially from such statements. Figures are rounded up/down unless otherwise specified in the notes. Annual Report 2007 1 Financial Highlights (consolidated) ( ) (Thousands of U.S. dollars)1 Millions of yen * 2 2 2006 2007* 2007* Hankyu Holdings Hankyu Hanshin Holdings Hankyu Hanshin Holdings For the year : Revenues from operations ¥ 486,155 ¥ 743,377 $ 6,299,805 Operating income 64,842 87,003 737,314 Net income 25,326 36,619 310,331 Capital investments 52,091 53,795 455,890 At year-end : Total assets 1,609,117 2,366,694 20,056,729 Total shareholders’ equity 360,222 522,286 4,426,153 Amounts per share (in yen and dollars) : Net income—basic 25.36 31.84 0.27 Net income—diluted 25.22 Cash dividends applicable to the year 5.00 5.00 0.04 *1 The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥118=U.S. $1, the approximate Tokyo foreign exchange market rate as of 30th March 2007. *2 The Hanshin Electric Railway is included in the scope of consolidation with effect from the second quarter of fiscal 2006. Scope of consolidated accounts of Hankyu Hanshin Holdings 2007 Q1 Q2 Q3 Q4 Former Hankyu Holdings, Inc., ConsolidatedConsolidated Consolidated Consolidated and its consolidated subsidiaries Hanshin Electric Railway, Co., Ltd., Not Consolidated Consolidated Consolidated Consolidated and its consolidated subsidiaries Within the scope of consolidation for FY2007 For reference: Financial Highlights (on the assumption of merger with Hanshin at the beginning of the term; 12-month basis) (Millions of yen) 2006*3*4 2007*5 YoY comparisons For the year: Revenues from operations ¥ 799,396 ¥ 813,613 +1.8% Operating income 90,130 94,800 +5.2% Net income 31,730 40,507 +27.7% *3 The above figures have been calculated for convenience of comparison, and have not been audited by the Group’s accounting auditor KPMG AZSA & Co. *4 The figures shown are simple additions of the figures for Hankyu Holdings and Hanshin Electric Railway for the term ended March 2006. *5 The figures shown have been calculated on the assumption that Hankyu Holdings and Hanshin Electric Railway merged at the start of the term. 2 Annual Report 2007 Hankyu Hanshin Holdings To Our Stakeholders Kazuo Sumi Shinya Sakai President Representative director As a result of the management integration of Hankyu Holdings, subsidiaries from the second quarter of the term onward), Inc. with Hanshin Electric Railway Co., Ltd., a new holding showed good performances by all six core operations, resulting company came into existence on 1st October 2006 under the in large year-on-year gains in both revenues and earnings for the name of Hankyu Hanshin Holdings, Inc. However, the present Group as a whole, for an all-time high. annual report, the first under the new management, retrospec- To increase Group management efficiency, we continued tively includes the business performance of Hanshin Electric our overhaul of the Group in fiscal 2007 to focus resources on Railway and its consolidated subsidiaries with effect from 27th selected businesses. From 2008 onward, we will center the June 2006. department store business on Hankyu Department Stores The management integration of the two corporate entities Group, and strengthen competitiveness by integrating businesses was followed immediately by the establishment of the Manage- such as Travel and International Transportation and the property ment Integration Committee and a number of subcommittees management and building maintenance businesses of the Real dedicated to particular operating divisions or specific themes, Estate business, under the direct control of Hankyu Hanshin which reported to the Committee. Under the lead of this network Holdings. These steps are aimed at boosting profitability. of committees, the management and staff of the Group worked Particularly notable large-scale initiatives underway at the to devise measures to integrate and strengthen all the Group’s moment in the Group’s core businesses include the reconstruc- operations. The Hankyu Hanshin Holdings Group 2007 Medium- tion of the Umeda Hankyu Building, the development of the for- Term Management Plan (from fiscal 2008 to fiscal 2013) was mer site of the Hankyu Nishinomiya Baseball Stadium, the first drawn up to delineate the Group’s path for raising its enterprise phase of redevelopment of the Northern Railway Yard of Osaka value still further: the plan was announced in March 2007. Under Station, work to extend the Hanshin Nishi-Osaka Line, and reno- this six-year plan, the Group aims to achieve continuous growth vation work on the Hanshin Koshien Stadium. These projects by abiding by the recently released new Group management are making steady progress, and when completed, they will philosophy. The plan contains specific strategies and numerical make a significant contribution to raising the Group’s enterprise targets, and clarifies the direction that the Group’s management value. must take (for details see P.8-11). From here onward, the reins of management of the Hankyu During fiscal 2007 (ended March 31, 2007), in parallel with Hanshin Holdings Group are in the hands of the holding company the work of drawing up this medium-term management plan, Hankyu Hanshin Holdings, Inc., who will do their best to realise the four main operating companies of the Group — Hankyu maximum synergy from the combination of the businesses of the Corporation, Hanshin Electric Railway Co., Ltd., Hankyu Express two partners to the management integration. Through the efficient International Co., Ltd. and Hankyu Hotel Management Co., Ltd. allocation of management resources, we aim to raise the Group’s — worked to further raise the competitiveness of their core enterprise value and do everything else needful to fulfill the expec- operations and to improve collaboration among them. As a tations of our shareholders and market investors in general. result of these efforts, the Group’s business performance for fis- We look forward to the continued support and encourage- cal 2007 on a consolidated basis (which includes the figures for ment of our stakeholders in our future efforts. Hanshin Electric Railway Co., Ltd. and its consolidated Annual Report 2007 3 Outline of the Management Integration With effect from 1st October 2006, a management integration was carried out between Hankyu Holdings, Inc. and Hanshin Electric Railway Co., Ltd., as a result of which the two parties to the merger came under the umbrella of the newly created holding company Hankyu Hanshin Holdings, Inc. Hankyu Hanshin Holdings, Inc. was set up not merely to manage the business operations of the two corporate groups, but to create an integrated strategic direction for the unified enterprise while respecting the different corporate cultures that have grown up over the last 100 years or so. The holding company exercises overall control of the business operations carried out by the Group companies, principally the core operating companies Hankyu Corporation, Hanshin Electric Railway, Hankyu Express International, and Hankyu Hotel Management. The Integration Process April 2006 Start of discussion regarding the integration of Hankyu Holdings and Hanshin Electric Railway Hankyu Holdings Hankyu Hankyu Hankyu Hotel Hanshin Electric Corporation Express International Management Railway 30th May 2006 Takeover bid for Hanshin Electric Railway commenced by Hankyu Holdings 19th June 2006 Takeover bid completed 27th June 2006 Hanshin Electric Railway becomes a consolidated subsidiary of Hankyu Holdings Hankyu Holdings Hankyu Hanshin Electric Hankyu Hankyu Hotel Corporation